Money madness: Income inequality has reached outrageous levels

 

Share

JP Morgan, the American banker, believed that the head of a company should not earn more than 20 times those at the bottom. As recently as the mid-1990s, our experience in Britain was not a million miles from that: in 1998, chief executives earned 47 times the average pay in the companies they ran.

But today their earnings have rocketed out of sight: in 2013 the average pay of a FTSE chief executive was 143 times the average in the company.

For several decades in the middle of the 20th century, when the socialist dogma of equality was still taken seriously, the differentials gradually reduced. But from 1980 on, that trend was reversed. Now the acceleration of top pay seems to be out of control.

Many people understand the severity of the problem, but no one knows what to do about it. Shareholder revolts have failed. The Government shows no appetite for intervening. Even the crash of 2008 failed to put a dent in the trend, thus confirming J K Galbraith’s still-pertinent aperçu: “The salary of the chief executive of the large company is not a market reward for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”

We may grow accustomed to the increasing signs of disparity all around us, the explosion of the market in luxury goods and properties, but for young people, the result is growing disaffection. Way back in the 1930s, J M Keynes called income inequality one of “the outstanding faults of the society in which we live”. That is truer than ever today. Finding an effective way to reduce it is one of the greatest challenges of the age.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Teacher

£120 - £130 per day: Randstad Education Chelmsford: The JobOur client is looki...

Teacher

£130 - £131 per day: Randstad Education Chelmsford: The JobOur client is looki...

Foundation Stage Teacher

£130 - £131 per day: Randstad Education Chelmsford: The JobOur client is looki...

Supply Teacher

£100 - £120 per day: Randstad Education Chelmsford: Would you like to have a b...

Day In a Page

Read Next
 

Daily catch-up: EU news, and other reasons to be cheerful

John Rentoul
The influx of hundreds of thousands of eastern European workers has significantly altered the composition of some parts of Britain  

Immigration is the issue many in Labour fear most

Nigel Morris
Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker