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Economic Policy Institute

Breaking News: The Rich Discover Inequality

Don't let the pr mavericks of the 1% fool you. (Photo: Andrew Burton/Reuters)

After forty years of rising income and wealth inequality, some of America's rich seem worried that maybe things have gone too far. In a recent New York Times Op Ed (August 9), for example, Peter Georgescu, CEO emeritus of the multinational public relations firm, Young and Rubicon, wrote that he is "scared" of a backlash that might lead to social unrest or "oppressive taxes."

The Times was so impressed with such enlightened views from this prominent capitalist that a few days later they devoted another long article with his answers to questions submitted by readers.

We should, I suppose, be grateful that Georgescu seems to understand that the gap between the rising value of what American workers produce and the stagnation of their wages has channeled the benefits of economic growth to shareholders (and, he might have added, but didn't, corporate CEOs). But if you are waiting for him and other members of his class to get serious about the problem, don't hold your breath.

Georgescu writes that he would like to see corporations pay their workers a fair wage. But with few exceptions, they don't. He doesn't tell us why, but the reason is obvious -- paying workers less has made their owners and top executives rich.

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So, what to do?

We could, suggests one of his readers, stop the offshoring of jobs, which has undercut the wages of American workers. No, Georgescu responds, that would be "protectionist." End of discussion.

Another reader suggests we raise taxes on the rich. Certainly not, says Georgescu; government is too big and inefficient to give it any more money. And besides, "many wealthy people use their wealth wisely"; their contributions (tax subsidized, he omits to note) "help make this nation a more civilized place."

So what is our compassionate plutocrat's "free-market" solution? Businesses he says should get tax subsidies to increase the wages of people making less than $80,000. In other words government should pay a corporation every time it gives a raise to a low to middle income worker. With a straight face, Georgescu assures us that this would not be "an increase in government support."

And where, in the absence of taxes on the rich and in lieu of government borrowing, which he also denounces, would we get the money for this new program of corporate welfare? A deafening silence.

Despite all the hard thought and study Georgescu claims he has put into this problem (he's writing a book on it), he is also silent on the central role that his own corporate class has played in undercutting the bargaining power of the majority of Americans who work for a living. For these past four decades, CEOs have waged a relentless political war against trade unions, minimum wages, labor market regulation and public sector programs that in the past helped offset the natural advantages of capital over labor in a market economy.

Georgescu is thus a prime example of the liberal rich, who would prefer to see a somewhat fairer society, but not if it requires any reduction in their own wealth and privileges. And, if in the name of fairness, their corporations could tap into another vein of cash at the U.S. Treasury, so much the better.

It's easy to see why Georgescu was in the public relations business. Getting the Times to give him all that free space was a piece of high-class P.R. But do not be fooled; it's mostly B.S.

Jeff Faux

Jeff Faux

Jeff Faux is the founder and now Distinguished Fellow at the Economic Policy Institute. His latest book is The Servant Economy.

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