An interesting article in the timesonline caught my eye yesterday. Warren Buffet, claimed to be the third-richest man in the world, spoke about the tax system during a fundraiser in New York for Senator Hillary Clinton. He felt the tax system that allowed him to pay a far lesser rate of tax than his personal assistant or cleaning person was totally unfair. His tax rate is 17.7% while his secretary is taxed at 30%. His worth is estimated at $52 billion, his PA earns $60 000 per year. The sums don’t make any sense to me.
For some time now, I have felt that the world, and in this case I don’t want to just focus on the western world, has some kind of conspiracy that is keeping the ordinary man and woman from actually making a decent living. Possibly conspiracy might be too strong a word, but still, there seems to me a move to keep the masses in economic slavery.
In the past, the ordinary people were quite blatantly forced to remain in their social strata. In some societies such as India the caste system ensured that lower caste members were unable to move into higher castes. In the western world the royal houses had a similar hold on the population with very few commoners managing to crack the upper echelons of society. This shifted slightly during the industrial revolution where the split was between white and blue collar workers. However, the haves and have-nots were as divided as before.
I even have some family history that demonstrates this. My grandfather, on my father’s side, was an ordinary brick layer and odd jobs man in his smallish home town. He ended up marrying the daughter of a very well to do family. For her it wasn’t an easy transition. She came from a home with servants and ended up in a home where she had to do everything. But this wasn’t the half of it, her family totally disinherited her and refused to have anything further to do with her.
As a more recent example, the German telecom industry’s strike resulted in the workers actually ending up working more hours per week at a lesser rate. The share price of the telecom company moved up on the German stock exchange. That means, the financial community and investors felt that workers getting a worse salary deal was a good result and worthy of valuing the share higher.
Looking at salaries closer to home in the UK, I see regular offers of Â£12 000 per year for hard work such as carers, cleaners, receptionists, personal assistants and many more. I have no idea how anybody can live off less than Â£1 000 per month which one would receive after paying tax and National Insurance.
The gap between the workers and senior management has widened. The average package for chief executives in the UK is around Â£500 000 per year and this report on the survey was held in 2001. In the manufacturing sector the average wage is Â£20 000 per annum. In the UK the average executive’s salary package has risen almost one-third since 1999, which is over a period of two years in this survey.
Add to this the fact that the worker faces clearly defined tax structures whereas the CEO is able to have his package structured to take advantage of tax loop holes and one sees that the gap is even more pronounced. In the super rich bracket, it is reported that a bare 65 out of hundreds of people who are paid more than Â£10m a year actually face income tax bills.
Besides the issue of greed and what do people actually do with an income of Â£10m a year, one wonders how this inequality can continue. How do the masses of people actually buy into this mindset? Why is not a huge groundswell of people objecting to this huge division. At one stage one thought that the Unions would champion better deals for the people.
The Unions seem fairly ineffectual nowadays as the telecoms Unions in Germany demonstrated, or the civil service Unions in South Africa who ended up brokering an almost worst deal than workers were getting before. The SA government offered such a small increase, that the wages the workers lost during the month long strike would negate the increase for many months. What was even more sad in South Africa, was that public opinion was in support of the civil service earning more.
What was in past times a banding together of royalty to maintain the status quo of haves and have-nots has now moved to the global financial stage. Internationally top management is feathering its bed at the expense of the worker and the trend does not seem to be slowing down. In fact the gap continues to widen.
Yet these CEOs depend on the worker’s consumption of product for their huge salaries. What is filling the gap? It is the personal debt which the average person is allowed and encouraged to accumulate that is making this possible.
With other words the average person ends up working for a miserable salary, is persuaded to borrow huge amounts of money to buy into the kind of lifestyle the advertising industry promises the consumer. In the end they have to cling to their pathetic jobs because without that small income coming in, their treadmill would collapse.