Looking at Income Inequality

Updated: Friday, May 16, 2014
Looking at Income Inequality story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - A surprise best-selling French author has stoked the fires of class warfare in the United States with the recent publication of his book "Capital in the 21st Century."

Tonight, in Tom's Corner, our Tom Van Howe says whether the book is right or wrong is irrelevant right now; its publication has people talking.

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The author's name is Thomas Piketty. And his premise is this: unless governments start using heavy taxes to break up large concentrations of wealth, our economy and the world's economy will become increasingly unbalanced, with only a few people inheriting massive fortunes.

And he says the only way to penetrate that socio-economic class would be to marry into it--because good old-fashioned hard work won't get you there.

The book has been pretty much kicked to the dirt by conservatives and hailed by liberals. I'm stuck in the middle because I struggled with economics in college.

But I'm not sure you need  a dollars-and-sense degree to get a sense that things aren't going well--that somehow the game is rigged; that the fix is in.

Take a look. The pay of the typical American worker peaked in 1978 and has been dropping ever since.

Since 2000, the wages of the median male worker across all age brackets has dropped 10 percent after inflation.

Compare that to what has happened to CEO's over that same period of time. According to former Labor Secretary Robert Reich, until about 1980, CEO's were paid, on average, 30 times what their typical worker was earning.

Since then, CEO pay has skyrocketed to roughly 300 times the pay of a typical worker.

Its good to be on top--not so good for those who are not.

And I can hear you say, 'Well, let's not pick on the job creators.'

But I can't find a single economist to say they're creating that many jobs.

What those CEO's are doing instead is taking their millions and investing it. Maybe hoarding it is a better word.

Maybe--just maybe--if they increased the pay of their workers, those same  workers would have more money in their pockets to buy more of the product they're making.

Kind of like Henry Ford, who doubled the pay of his workers to five dollars a day, so they'd be able to afford their own cars.

That would seem to be a good thing for the economy.

If a company can sell more of what is has to sell, it has reason to expand and hire more people. So customers are really the job creators.

Absent that, however, what do we do to level the paying field?

The french economist Piketty says we ought to start by taxing the hell out of the wealthy and then redistribute all that money to balance the scales.

But--to be real--that doesn't seem likely.

After all, our lawmakers, who rely on the monied classes for their political survival, aren't going to start gnawing on the hands that feed them. Can't see that happening next week.

How about the return of labor unions? To sit down and negotiate wages and benefits.

Well, unions are out of vogue right now, and while we do have the right to collectively bargain in this country, why don't you try organizing a union chapter where you work and see where that gets you.

The best idea I've heard so far is in a bill coming up for consideration in California.

It called Senate Bill 1372, and would set corporate tax rates according to the ratio of CEO pay to that of a typical worker.

The higher the ratio, the higher the tax. The lower the ratio the lower the tax.

All of a sudden, board members at 'Corporation A,' who set CEO pay, would have to start answering to stock holders who'd suddenly have a different set of questions.

I don't know if the Frenchman's book about capitalism is on target or not, but it has, indeed, set people to talking.

The elephant has left the building and we're talking about class warfare in this country as if it were a real thing.

And that's good--because it is.

In this corner...I'm Tom Van Howe.

Business News

Last Update on November 28, 2014 20:00 GMT

HOLIDAY SHOPPING-BLACK FRIDAY

UNDATED (AP) -- A lot of Americans seem willing to head out to the malls, right after Thanksgiving dinner.

The Mall of America in Bloomington, Minnesota, says it drew 100,000 customers between 5 p.m. yesterday and 1 a.m. today. A spokesman says traffic slowed down after 2 a.m., but it's been picking up again today. And mall officials are still hoping to top last year's total of 230,000 Thursday-to-Friday visitors.

One shopper at a mall in Aurora, Illinois, this morning said she thinks people are feeling more confident about the economy this year. But Kimberly States said she still plans to spend about the same amount -- or maybe less -- on Christmas gifts compared with last year.

For retailers hoping for strong online sales, it's not the best time for technical issues. But Best Buy's website has been down this morning, with a message that asks customers to "Check back soon."

BRITAIN-BLACK FRIDAY

LONDON (AP) -- Americans celebrating Thanksgiving in Britain may have felt right at home as Black Friday shopping chaos caused some disruption.

The practice of offering bargain basement prices the day after Thanksgiving has spread across the Atlantic, with some retailers opening overnight to lure determined shoppers.

Police were called early Friday morning to help maintain security at some supermarkets and outlets that offered deep discounts starting at midnight.

Fights broke out at some stores and major websites stopped functioning because of too much traffic as shoppers sought online bargains.

Greater Manchester Police said two arrests were made and injuries reported as police closed some stores to prevent more severe problems.

The force tweeted "Keep calm, people!" at one point.

There were problems in many parts of Britain, including Wales and Scotland.

FERGUSON

FERGUSON, Mo. (AP) -- Demonstrators are looking to grab the attention of post-Thanksgiving shoppers today, to voice their anger over a grand jury's decision not to indict the police officer who shot and killed Michael Brown in suburban St. Louis.

They've been going to major retailers around the St. Louis area to speak out. And similar protests have been planned at shopping centers around the nation.

In Chicago, about 200 people gathered near the city's Magnificent Mile shopping district. One demonstrator called it "a day of awareness and engagement." Kristiana Colon said, `We want them to think twice before spending that dollar today." She added, "As long as black lives are put second to materialism, there will be no peace."

Early today in the St. Louis suburb of Manchester, about two dozen people chanted, "No justice, no peace, no racist police" after police moved them out of a Wal-Mart.

Other planned events around the country seemed relatively brief and thinly attended. In Brooklyn, New York, a "Hands Up, Don't Shop" protest had been scheduled, but no one materialized.

Security was heightened at the Wal-Mart in Ferguson on Friday morning, with military Humvees, police cars and security guards on patrol. The store was busy, but there were no protesters.

CANDY CENTER FIRE

MAPLE HEIGHTS, Ohio (AP) -- Some orders for chocolates have been halted after fire gutted a candy warehouse and distribution center in northeast Ohio.

Authorities are trying to determine what caused the blaze that began Thursday morning at the Fannie May Fine Chocolates center in Maple Heights, Ohio. Authorities said there were no injuries.

Firefighters from several departments responded, and hazardous materials units stood by because of ammonia in the center.

Fannie May Chocolates is a division of 1-800-Flowers.com Inc. The company says it is assessing the effects of the fire and the contingency plans that will be needed for the holiday season.

The company on Friday posted a message on its website saying Fannie May and its Harry London gourmet chocolates business have temporarily halted orders for most of their candies and confections.

TRADE-MEAT LABELING

WASHINGTON (AP) -- The United States is appealing a World Trade Organization decision that made it harder for U.S. consumers to know where meat in the grocery store came from.

The WTO in October rejected U.S. rules requiring labels on packaged steaks, ribs and other cuts of meat identifying where the animals were born, raised and slaughtered. The WTO said the "country of origin labeling" requirements put Canadian and Mexican livestock at a disadvantage.

On Friday, the Office of the U.S. Trade Representative appealed the ruling.

U.S. farmers who compete with Mexican and Canadian ranchers welcomed the appeal. National Farmers Union President Roger Johnson on Friday called it "the right thing to do for American family farmers, ranchers and consumers." But meatpackers oppose the labeling requirements, saying they impose costly paperwork.

EUROPE-ECONOMY

BRUSSELS (AP) -- Sharp falls in energy prices as a result of the dramatic decline being recorded in oil markets has pushed inflation across the 18-country eurozone down to 0.3 percent in the year to November.

Preliminary figures from the European Union's statistics agency, Eurostat, show that the fall in eurozone consumer price inflation from the previous month's 0.4 percent was largely due to a 2.5 percent decline in energy costs.

The drop takes inflation further away from the European Central Bank's target to keep price rises just below 2 percent. It's likely to maintain pressure on policymakers to launch in the coming months a monetary stimulus similar to the one the Federal Reserve recently brought to an end.

Eurostat also said Friday that unemployment was steady in October at 11.5 percent.

EUROPE-BUDGETS

BRUSSELS (AP) -- The head of the European Union's executive is opting not to sanction France or Italy just yet over their failure to meet targets on their public finances.

Instead, EU Commission President Jean-Claude Juncker is giving them until spring to deliver on commitments.

In an interview with eight European papers, published Friday, Juncker says he has "made the choice not to sanction," for the failure of Paris and Rome to meet rules that force the euro member states to observe strict limits on spending.

France and Italy have been accused of being too profligate in their budgetary spending plans at a time when the EU and the 18-country eurozone have been advocating strict austerity as the best way to get their public finances into shape.

EUROPE-UKRAINE SANCTIONS

BRUSSELS (AP) -- The European Union is extending economic and travel sanctions to 13 people and five entities it accuses of involvement with pro-Russian separatists in eastern Ukraine.

The EU's 28 member countries agreed to the action Friday, the bloc announced in a news release.

The EU said the names of the people, organizations and businesses affected will be made public Saturday.

The decision brings the total number of people subject to an EU-wide travel ban and asset freeze for allegedly undermining Ukraine's territorial integrity to 132, and the number of entities whose assets have been ordered frozen to 28.

Earlier this month, EU foreign affairs chief Federica Mogherini said more sanctions alone will not end the crisis in eastern Ukraine, and that there is a need to relaunch a dialogue with Russia.

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