Tag Archives: executive pay

The Executive/Financial Class, the Political/Union Class, and the Serfs, Redux

Two kinds of people have been getting richer. The top executives who sit on each other’s boards of directors and vote each other a higher and higher share of private sector pay, to the detriment of investors, consumers, and other workers. And retired and soon-to-retire public employees in places like New York City, who cut deals with the politicians they control to retroactively increase their already rich pensions, to the detriment of public service recipients and taxpayers. There is the executive/financial class, the political/union class, and the serfs.

The serfs continue to become worse off, adjusted for whatever point we are in the economic cycle. Today they may be a little better off than the were in 2010, but they will still end up worse off than they were in 2007, at the prior peak, which was worse off than they were in 2000, the one before, which was worse off than they were in 1987, etc. The next bottom can be expected to follow the same pattern. And the serfs continue to be lied to and manipulated by the executive/financial class, the political/union class, the media, and “truth telling” professions such as public employee pension actuaries, city and state comptrollers, certified public accountants, stock analysts, bond raters, and executive pay consultants.

This post uses recently released Local Area Personal Income data through 2016, from the Bureau of Economic Analysis, to document the trend. We had better use it while we have it, because the falsification of federal statistics in the interest of the entitled over-privileged is the logical next step in the direction of our society. And if you are a serf who rides the subway who really wants their blood to boil, be sure to read through to the commentary at the end of this post.

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The American and New York Economy: Stagnation and Oligarchy or Renewal and Entrepreneurship?

One of the more positive trends of the past few years has been the acknowledgement by at least some New York politicians, staring with Mayor Bloomberg and including Governor Cuomo and those in some cities upstate, that new businesses and new types of businesses are important. And that economic development involves acts of creation, rather than just being an excuse for the government to redistribute wealth to powerful existing interests through tax breaks and subsidies. A lesson not yet learned in New Jersey and Connecticut. At the same time, there has been a surge of new businesses in the Bay Area of California, and a cultural interest in early stage companies as a result of TV shows such as Shark Tank.

While there has been increasing interest in entrepreneurship, however, there is some evidence that there has been decreasing entrepreneurship. According to an article in the Wall Street Journal

http://www.wsj.com/articles/why-corporate-america-needs-competitive-spirit-1436384494

Across the country, the rate of new-business formations has been trending down for decades. According to Census data, the number of new firms in 2012 was equal to just 8% of the total, slightly below the number that closed. While that “entry rate” was up from the 2010 trough, it remains well below the levels that prevailed until the recession hit in 2007.

We are heading, the article’s author fears, toward an oligopolistic economy with less creativity, less investment, a less good deal for consumers and lower returns for investors, as a business/political elite seeks wealth not by starting small businesses and growing them into large ones, but seizing control of large existing organizations and pillaging them. Is this true, and how do New York and New Jersey compare? Let’s look at some data.

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