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No 'bligh' for high earners this recession
The Government, the economic sectors and the trade union movement must ensure that lower-and-middle-income earners are not disproportionately disadvantaged by the effects of the recession. Indeed, to achieve a measure of equity, trust, fairness, and to encourage all to participate productively in nation-building in the reconstruction and recovery efforts, it is most important that the high earners and profit makers in the national community are demonstrably prepared to take cuts in profits, high salaries, and the perks of office.
Those who lose jobs and are made to take cuts in salaries cannot be the only victims of the recession; the reality is that those at the top-earning levels have far more fat on the body to cut compared to middle, low-and-no-income earners. And yes, this columnist is fully aware of the orthodox economic wisdom that investors and the owners and managers of capital need incentives to keep investing and that recovery depends on that investment. But added to those considerations must be another reality. To ensure that reorganisation and recovery take place, the sweat, expertise and productivity capital put into the enterprise must be recognised and its investors given due encouragement too because without them and their investment there can be no recovery.
Advocating equity in the adjustments to be made is based on the experience of what has taken place in the developed/industrial economies of the United States of America and in Europe during and post 2008 economic and financial meltdown.
Statistics and analyses made by Berkeley economics professor Emmanuel Saez on how the low-and-middle-income earners fared in the United States since the crash of 2008 indicate that a mere one per cent of the top income earners are now receiving 95 per cent of the wealth.
I will add, the crises caused by the greed of the owners and managers of capital and the laxity of financial regulators have imposed the full burden of the cost on the lower-and-middle-income classes while giving a “bligh” to the captains of industry and commerce.
The income inequalities which historically have heavily favoured a small percentage of income earners and profit makers in the US and Europe have become even more stark after the recession 2008-2012 and continuing. “America’s top ten per cent now average nearly nine times as much income as the bottom 90 per cent. But that gap pales in comparison to the divide between the nation’s top 0.1 per cent and everyone else. Americans at this lofty level are taking-in over 184 times the income of the bottom 90 per cent,” states the Institute for Policy Studies.
Historian, Prof Joyce Appleby, in her work on historical capitalism calculates that between 1978 and 2008 CEO salaries “went from levels of 35 times those of the average worker to 275 times. Her work was finished in 2010. It is reasonable to assume that the gap has widened even more since then as there have been no structural changes to the economic system of granting minor rewards to workers and allocating large profits and incomes to owners/managers.
President Obama struggled with the real possibility that state financial bailouts running into hundreds of billions would end up in the pockets of the owners/managers of the corporations whose actions caused the financial crisis.
We do not have the statistical data on salaries and incomes coming out of the post recession period of the late 1980s/1990s, but what we do have in T&T is the memory of the economic and social pain inflicted on low-and-middle-income earners.
There was mass social upheaval and financial suffering by those at the low end of the salary/earnings scale. Trade union and political party agitation circled the Red House. Abu Bakr and his gang took advantage of the discontent and suffering to make their unwanted violent intervention into parliamentary and social democracy.
The present recession has the potential to dig deeper into the social fabric and no one is predicting with any assurance how long it will last and the level of the economic and social fallout that will occur.
In front of Prime Minister Keith Rowley and his government today is a severe test of how the effects of the recession are to be distributed through the economy and how the transformation and hoped-for diversification are to be attempted.
Labour Minister Jennifer Baptiste-Primus, who was close to the ground during the 1990s, has made an excellent overture to the owners and managers of capital to find places and spaces to employ those who have and will lose jobs.
In an early column on the way forward, I advocated the establishment of a tripartite forum for government, business and labour to chart the way forward. The convening of the National Tripartite Advisory Council in the last few days must go beyond the opening ceremony. The council, admirably spread across the three sectors (lacking in representation from the NGOs), has to provide wisdom and demonstrate a conscience for those at the lower-income-earning levels.
The announced intention of ArcelorMittal to pull out of the steel-making industry here could be a blessing in disguise. Like with the vehicle assembly industry of the 1980s it can make greater overall economic sense to import steel for construction to create jobs in home and infrastructure building industries.
Angry gridlock in the council will help no cause.
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