The Power Of The Top 1%

The Power Of The Top 1%

Michael Maiello / Forbes
07.06.09, 12:00 AM EDT

The debate over income inequality is about democracy, not economics.

In two well-reasoned and, even better, well-sourced columns this
summer, Thomas F. Cooley, the dean of NYU’s Stern School of Business
and one of my favorite conservatives, tackles the problem of "the
beleaguered middle class."

He finds first that labor’s share of the U.S. economy
hasn’t been shrinking, it just hasn’t grown anywhere near as quickly as
the share controlled by those capitalists at the top 1% of society. He
finds that skilled workers have done better than unskilled workers. And
he finds that, in the end, we should realize that the economy isn’t a
zero-sum game. So long as the whole thing is growing, people’s lives
can improve even if they don’t take home the lion’s share of progress.

If you haven’t read "Has Rising Inequality Destroyed the Middle Class?" and "There’s No News Like Bad News,"
they’re well worth the time. I accept the world as he describes it as
fact. But that still leaves us with a vast inequality problem, and I
think even the dean can be convinced that something has to be done
about it.

Let’s dispense with the notions of class warfare and class envy because
both trivialize the concerns of average Americans. The debate over
income inequality and its effect on society isn’t about the rich having
more toys than the rest of us or about an unworthy few living lives of
ease while the masses toil. If it were, some noble Robin Hood would
have forcibly liquidated the assets of The Real Housewives of Atlanta by now and Paris Hilton would be laying low in a safe house.

the problem of inequality isn’t how many flat screens one person can
buy. The problem is how many senators (or Senate seats) one person can
afford. Ultimately, it’s about how many lives they can control. It’s
really a debate about democracy rather than economics.

The power of wealth has been badly abused in America’s past. Henry Ford
developed a sociology division with his own company that kept tabs on Ford Motor


employees and even tried to influence their private, off-the-clock
behavior. He felt he had both a right and responsibility to treat his
employees in an authoritative and paternal way that recalls Russian
landowners and their serfs.

Before that, rail car manufacturer
George Pullman put his workers in a company town outside of Chicago,
referred to them as "my children" and controlled every aspect of their
lives by renting them their homes and selling them food through company

Obviously, the situation has improved, but the past
shows us how bad things can get. Even in these more enlightened times,
employers find reason to investigate the private behavior of employees,
even when they’re off duty. For one, we have tests for illegal drug
use. In most states with "employment at will" laws, an employer can
fire an employee for a perfectly legal but perhaps ill-advised private
activity like tobacco use. People have been fired for having political
bumper stickers on their cars and for writing things on the Internet,
even from their home computers.

If people don’t like their employers, they can always leave–in
principle. But, practically speaking, that choice doesn’t usually
exist. Kids need to be cared for, and our insane health system means
that a lot of people will have no affordable access to basic medicine
unless they keep their jobs and the insurance that’s provided.

Cooley talks about the growing wage divide between skilled and
unskilled workers. But obtaining the skills necessary to enter the
skilled work force is quite a struggle for people not blessed with the
advantages of wealth.
breaks down average SAT scores by, among other things, family income.
In 2008, a student from a family with income of over $200,000 a year
scored a 550 in reading, 570 in math and 552 in writing. At income
levels between $80,000 and $100,000 the scores are all well lower, but
above 500 in each category. Down at $40,000 a year, none of the
averages are above 500; and below $40,000 a year, the scores are all
below 450.

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