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European austerity: Who should pay?

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Europe is in turmoil.  Unemployment is up; wages are down.  Industrial production is stagnating.  Most importantly, European people are demonstrating on the streets and on the internet in outrage over cuts to social services and worker protections.  Economists and Eurocrats demand more suffering, but ordinary citizens seem certain that European austerity policies are the root of the problem.

Voters in Greece have overwhelmingly rejected the austerity politics of the past three years.  Voters in France agree.  In the UK the governing Conservative-LibDem coalition lost local elections over austerity policies that have plunged the UK back into recession.  A battle over austerity even forced the collapse of consensus government in the Netherlands.  Irish voters have their say on European austerity May 31.

On the other hand bond markets are demanding higher and higher interest rates as the price of financing Europe’s debt as fears of default mount.  The battle lines have been drawn in Europe’s Austerity Wars.  It’s the voters versus the bond markets, and in the short term the bond markets are winning.

Just who are “the markets”?  There are two main groups of investors in Europe’s government bond markets.  The first are Europe’s big banks.  Banks understandably want to be repaid for the loans they make, and they should be repaid.  European countries should institute financial transactions taxes, clamp down on corporate tax avoidance, and impose windfall taxes on bankers’ bonuses in order to raise the money to repay the banks.

Better yet: to reduce tax evasion, European countries should give the European Union the right to collect these taxes at the pan-European level, then put the money collected into a pan-European fund to help out countries in need.

The second main group of bondholders are the vulture funds.  These funds buy up the distressed debt of troubled countries like Greece, Portugal, and Spain at bargain prices, then push for full payment.  This second group has no moral right to full payment.  Where vulture funds have bought bonds at a discount, governments should simply tax them to make up for the discount.  Making money through speculation is, frankly, speculative.  Speculators have no inalienable moral right to a tax-free profit.

Austerity is nothing more than a way to make sure that banks and vulture funds get paid.  It’s about deciding who deserves more of society’s limited resources and who deserves less.  Put that way, it’s hard to see how anyone can think that hedge funds deserve more and minimum wage workers deserve less.  If the law implies a different answer, then the law should be changed.

If a country decides that its contracts are sacrosanct, that’s fine.  Then the contracts must be paid.  But who should be made to pay them?  That’s also for the country to decide.  If justice demands it, a 50% tax on bond interest can be passed and the proceeds used to pay the interest on bonds.  A constitution might require a country to pay its debts, but there’s no constitution in the world that specifies who must be taxed to pay them.

European austerity: Following in America’s footsteps

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European austerity policies — cutting minimum government jobs and services, reducing pension payments and minimum wages, transferring the tax burden from the rich to the middle and poor — have deeply damaged most European economies, including especially Greece and Spain.

Most other European countries are suffering, even if they’re not facing debt crises.  France has just kicked out its austerity president, and other countries look to follow.  The popularity of Britain’s austerity government is at an all-time low, and even in Germany Chancellor Angela Merkel is not immune from criticism.

If Germany has avoided the worst of the European downturn, it’s only because Germany has been in austerity mode for the past 12 years.  That’s how long it’s been since the average German worker has gotten a raise.  If Greek and Irish workers are being forced to give up a decade’s gains, German workers never had the gains in the first place.

It’s a sad and strange world that makes a virtue of austerity-chic terms like “government cutbacks” and “wage moderation.”  In a healthy world, government services expand.  In a healthy world, wages go up.  Government cutbacks and wage moderation are only virtues for the rich, not for the rest.

Take HSBC, Europe’s richest bank.  For the first quarter of 2012 HSBC reported a profit of almost $7 billion.  Its executives stand to benefit enormously from the UK government’s proposed reduction in the top individual tax rate from 50% to 45% (with an eventual target of 40%).  Do HSBC bankers care much about cuts in low-income housing allowances, student tuition assistance, and social services?  Probably not.

On the other hand, by cutting 14,000 jobs in 2011 HSBC has contributed mightily to the very social problems that government exists to solve — and that the current British government shrinks from solving.

Banks like HSBC can only make profits when their debtors repay their loans — and that means governments.  Europe’s austerity budgets have clearly set national priorities to put debt repayment first, low taxes for the wealthy second, and the good of everyone else last.  That recipe serves the rich very well, but it doesn’t serve anyone else.

These policies are certainly driving levels of inequality in Europe up toward American levels.  Statistics are only released with a time lag of several years, but the impacts of austerity are obvious.  Europe’s austerity policies are making the rich richer and everyone else poorer.  The European Union, the European Central Bank, and Europe’s establishment political parties seem to be doing everything they can to turn Europe into a new United States.

Lest Americans cheer that outcome, Americans should understand that American wages have been stagnant for almost forty years.  The United States has been in permanent austerity for so long that we have forgotten what normal once looked like.  Germany has been following in America’s footsteps for 12 years, the rest of Europe for two or three.  But American workers have been treading Austerity water for decades.

America’s political system has become so dysfunctional that Americans may no longer have a choice.  It’s austerity or emigration.  As France’s voters have shown, Europeans at least have a choice.  Europe hasn’t yet passed the point of no return.  Europe can follow America down the river to a premiumized world for the few and perdition for the many, or Europe can return to sanity.

European austerity is a transparent ploy for profitability being made by wealthy banks, bankers, and investors at the expense of European populations.  European voters can still reject this future for their continent.  Europeans must have the courage to take a stand for themselves, and for the future of the world.

Someone somewhere must decide whether our societies are to be governed by the people, for the people or by the market, for the market.  Many Americans are heartbroken that it’s not America taking this stand.  But if America won’t, someone else must.  Liberté, égalité, fraternité?  Bonne chance.

Gun-toting vigilante lunatics versus tree-hugging bleeding hearts

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Gun-toting vigilante lunatics versus tree-hugging bleeding hearts

This election season is full of laments about how polarized American politics has become.  Extreme right-wing Republicans claim they can’t see eye to eye with extreme left-wing Democrats.  Politicians are out of step with the people.  An elite media establishment serves only its own interests and has given up on reporting the truth.

Sadly, the lamenters are right.

If only the three big forces of American politics would faithfully serve their constituents, the 2012 election could be about real choice.  Instead, all three forces — the Republican party, and Democratic party, and the elite media — have come to serve only themselves, and by extension the corporations and rich individuals who pay their bills.

To start with the Republicans, the Republican party is nowhere near as extreme as most committed Republicans.  Rank-and-file Republicans’ top issues are, in order, to end women’s right to an abortion, to fire all government employees, to keep all sex offenders in jail forever, and to invade any country suspected of “hating America.”  The Republican attitude toward climate change is “bring it on.”  Republican leaders are far too tame for most active Republicans.  That’s why Mitt Romney had such a hard time in the primaries.

Democrats, on the other hand, really do hold extreme left-wing views.  The vast majority of active Democrats want universal government-provided health insurance — now.  Grassroots Democrats want an end to high pay for bankers and executives.  Democratic unionists want the closed shop.  Nearly all Democrats believe in people’s rights over their own bodies and our shared human responsibility to preserve the natural world.  Many committed Democrats even believe that white America should pay financial reparations for slavery.

A real election in 2012 would see these two visions of the future pitted against each other, a Republican vision of a heavily-armed Dodge City America of gun-toting vigilante lunatics battling it out for supremacy over the Earth versus a Democratic vision of tree-hugging bleeding hearts who want everyone to live together in fairness and harmony.

Instead we have Mitt Romney versus Barack Obama.

The elite media is complicit in our lack of choice.  Voters decide elections but the media decides what views will be taken seriously and what views will be derided or ignored.  The candidates fall in line with the media.  Given that the elite media are wholly owned either by large corporations or rich individuals, it is not surprising that the views of large corporations and rich individuals define what is considered reasonable by the elite media.

As Karl Marx wrote in 1846, “the ideas of the ruling class are in every epoch the ruling ideas.”  In practical terms this means that a Constitutional amendment to ban abortion — a staple of grassroots Republican politics since the late 1970s — has never been put forward by Republican politicians, even when they controlled all three branches of government.  Similarly, no Democratic president since Franklin Delano Roosevelt has raised taxes on the rich.  On the contrary: in December 2010 President Obama extended the Bush tax cuts.

What America deserves is a straight-out choice between the extreme right and the extreme left.  I sincerely believe that given the choice, few Americans would choose the right.  A lot more Americans want to plant trees than cut them down.  Unfortunately, the Republican party, Democratic party, and elite media won’t give us that choice.  The only choice they’ll give is between pro-wealthy Barack Obama and actually wealthy Mitt Romney.  It’s the only “respectable” choice.

Give me a Democratic politician who’s willing to speak for Democratic voters to run against a Republican politician who’s willing to speak for Republican voters.  At least the Republicans have their Michelle Bachmanns, Rick Santorums, and Sarah Palins.  Who speaks for grass-roots Democrats?  If people would they might find themselves wildly popular — if the elite media would let them be heard.

What’s penny-wise, pound-foolish, and completely heartless?

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Governor Jerry Brown proposes to carve $946 million out of CalWORKs, in a total 2012-2013 budget of over $94 billion. That’s about a one percent swing in state government spending. Is it worth it?

Most of the proposed $946 million savings will come from reducing full CalWORKs eligibility from 48 months to 24 months. Benefit levels will also be frozen or cut. The total result will be payment cuts for about 432,000 low-income families, according to Legislative Analyst’s Office (LAO) estimates.

All budget cuts, and all tax increases, have undesirable side-effects. But governments have to raise and spend money. The question is which spending items justify the cost in taxes. On this metric, how do the proposed CalWORKs cuts compare?

From the budget-maker’s perspective, a spending cut is a spending cut and that’s the end of the story. Money not spent is money saved. But squeeze a balloon here and it puffs out there. Squeeze it too much and it explodes.

What will happen if spending in support of low-income families is cut by $946 million? The first thing that will happen is that hundreds of thousands of very low-income families will have to cut their own budgets. This will immediately harm the rest of the California economy.

Families living at or under the poverty line don’t put aside their income to invest in business opportunities out-of-state or overseas. They spend their money – every cent, every month.

When they spend it, they employ people in grocery stores, child-care centers, discount stores, anywhere people spend money. That keeps other people employed, who then go on to spend money as well. Economists call this the multiplier effect: a dollar of government spending doesn’t just generate a dollar in the state economy. It generates much more, especially when the people who get it spend it quickly and locally.

The second thing that will happen if CalWORKs is cut is that CalWORKs families will start to feel additional financial strain. Sadly, family financial pressures are well-known to predict future child abuse – physical, sexual, and emotional. The rise in violence against children resulting from additional financial pressures being placed on their families is predictable and preventable.

In addition to the terrible human impacts, the rise in child abuse will result in increased parental interaction with the criminal justice system and higher levels of child assignment to foster care.

It is impossible to predict the amount of additional abuse that will be generated and the proportion of this abuse that will result in state intervention, but even a small rise could wipe out any immediate cost savings from reductions in CalWORKs spending.

Third, when the state pulls back from helping mothers care for their own children, growth in the state’s foster care caseload is inevitable.

As children move from CalWORKS-subsidized home care to state-supported foster care there is a direct increase in state costs. The average per-child foster care payment is about equal to the average per-family CalWORKS payment. The indirect costs, however, will be even higher.

For example, the chance that mothers will be medicated for severe psychoses is 60 percent higher when their children are placed in foster care (once proper statistical controls have been made).

Mothers trying to complete drug programs are also much more successful when their children live with them than when their children are in foster care.

Foster care should be an option of last resort to remove children from dangerous family environments, not a financial substitute for keeping families together.

The LAO estimates that 432,000 California families in all will be affected by the proposed cuts, with 104,000 families to have their benefits completely eliminated within one year.

There are only about 4,151,000 families with children in California.

The cuts will thus affect more than one-tenth of all California families. The proportion of California’s children affected will be even larger, since CalWORKS participants have more children, on average, than non-participants.

We must ask: Would it cause more damage to increase taxes on the richest 10 percent of California families, or to cut benefits for the poorest 10 percent?

Put that way, it is hard to believe that the correct answer is to cut CalWORKs.

Cutting the CalWORKS budget won’t eliminate the problems CalWORKs exists to address. It will make them worse, potentially much worse. The proposed cuts are penny-wise, dollar-foolish, and completely heartless. They should be abandoned.

Why the jobless recovery?

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Ever since the sharp recessions of the early Reagan years, each new expansion has yielded fewer and fewer jobs.  A recession is bad enough for most people.  A jobless recovery is even worse.

Recessions wreak terrible damage on millions of ordinary households.  For top 1% households, the damage may be real but it’s usually manageable.  Families cut expenses, draw down savings, and get through one way or another.

For the other 99% of households, recessions can be catastrophic.

In the realonomy where most Americans live and work, losing a job often means losing the family home, losing the family’s health insurance, and having to move to a new state to find work.

Most economists celebrate the “flexibility” of the American workforce.  By this they mean that Americans are willing to move thousands of miles away from friends and family to get a job.  But most people aren’t so much willing to move for work as forced to move for work.

In today’s recession, there’s not even work to move for.  The recovery — now in its third year — has produced essentially zero jobs.  For all practical purposes, it’s been a jobless recovery.

Why the jobless recovery?  Economists will give you all sorts of answers based on technical factors, but in the end it all comes down to one word: inequality.  Or, to be more specific, two words: rising inequality.

Once upon a time, from the middle 1930s through the middle 1970s, incomes in America were becoming more and more equal every year.  In the four decades from 1935 – 1975 executive pay barely kept pace with inflation.  By contrast, ordinary workers’ real incomes nearly tripled.

When the economy expanded, nearly all of the increases in output went into workers’ paychecks.  As a result, employment bounced back sharply after a recession.  The economy might have a hiccough now and then, but in the forty years after the Great Depression it never caught pneumonia.

Now things are very different.  The US economy has expanded by roughly 8% since the beginning of the recovery in mid-2009.  Imagine if all that money had gone into hiring new workers.  If it had, unemployment today would be around zero percent.

Instead, nearly all that money — economic growth of 8%, totaling over $1 trillion worth of output per year — has gone into corporate profits and the incomes of the top 1% of Americans.

Any economist can tell you that things aren’t really as simple as the story told here.  Labor market flexibility has its advantages; there have been structural changes in the economy since the 1970s; money doesn’t just put people to work.

Nonetheless, the big picture really is as simple as the story told here.  We have the power to choose what kind of economy we want.  We could have an economy with strong unions, generous unemployment benefits, and universal healthcare.  Or we could have an economy optimized to benefit a small number of very rich people.

Starting in the 1970s, Americans have increasingly chosen the latter.  We’ve virtually outlawed unions in most states, privatized the provision of social services, and deregulated Wall Street.  We’ve built prisons instead of schools.  We chose this economy.

We can say we’ve been tricked, but really … come on.  Who ever truly believed Ronald Reagan’s claim that we could stimulate economic growth by cut taxes on the rich?  If anyone did believe it then, we’ve now had thirty years of low taxes on the rich.  Where’s the growth?

No one can take such arguments seriously anymore, if the ever did.

Low taxes on high incomes are good for people with high incomes, period.  Cutting government services is good for people who don’t use government services, period.  Deregulating Wall Street is good for Wall Street, period.  Anyone who thinks otherwise is (to be blunt) stupid, lying, or both.

Today’s jobless recovery is just the latest and worst in a long line of jobless recoveries.  Given how damaging job loss is to the vast majority of people, a government of the people, by the people, or at least for the people would do everything in its power to keep people employed.

We don’t have to have these jobless recoveries.  But then, we don’t have to have such enormous and rising levels of economic inequality.  We have them because we’ve chosen them.  We know how to run a pro-people government.  We just don’t seem to want one.

When did America give up on progress?

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Once upon a time, America was always getting better.  It was never perfect, but it was always improving itself.  The ideal — and usually the reality too — was progress.

Not any more, not in a long time.  Yes, there are more and more toys for the wealthy and well-living.  We have ever more computers, ever more smartphones, ever more predator drones.   But progress?  Progress ended sometime in the mid-1970s.

Of course, it all depends what you mean by progress.  What I mean by progress is that ordinary people live better and better lives.  They have to worry less and less about random catastrophes like losing a job or a limb.  They work less and less hard.

Progress means that things get better, not just for a few at the top, but for everybody.  Not just for the mythical “middle class” but for the poor as well.  Progress means that even people in prisons should live more humane lives than they did in past years.

It’s not popular today to stand up for the poor, the homeless, the addicted, or the imprisoned.  But progress means progress for everyone.  There’s no such thing as progress for a few.  Only a society can become more civilized, not an individual person.

We used to have progress.  It was such a constant in America that we expected it, even demanded it.  Between 1870 and 1970 the typical workweek in America dropped from 60 hours a week to 35.

When Dolly Parton sang “9 to 5″ she meant 9:00 am to 5:00 pm with one hour off for lunch, not 8:00 am to 6:00 pm with half an hour off for lunch.

Over those same 100 years, the typical American annual wage (adjusted for inflation) increased by a factor of 10.

Since 1970 median wages have gone down while working hours have gone up.  It’s like progress was thrown into reverse.  People — ordinary people — now work more hours for less money than they did forty years ago.

It’s not like the economy stopped growing.  Between the 1870s and the 1970s the US economy grew on average about 2% per year.  Since the 1970s the US economy has grown on average . . . about 2% per year.

The growth is there.  It’s just that for forty years all the growth has gone to the wealthy and well-off.  Not a cent has gone to the average American.  Not a cent has gone to the poor.

Forty years is a long time.  For those of you who can remember the 1970s, imagine how much better average Americans lived in the 1970s than in the 1930s.  Imagine how much better equipped prisons were in the 1970s than in the 1930s.  Imagine the improvement in attitudes toward drug addiction.  Imagine how much improvement there was in support for the poor and homeless.

Now imagine in 1975 being told “this is as good as it gets” and that the next forty years would bring no further improvement, period.

America doesn’t have to be the harsh, bullying, bigoted, violent, and vitriolic place it is today.  It wasn’t always such a place.  American used to be the sort of place that got better and better every year.  America used to have a heart.  But it’s hard to imagine the pendulum swinging back.  How sad.

The invisible recession: How forty years of stagnant incomes got lost in the shuffle

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The recession is over.  The US economy has been growing since July, 2009.  In the final quarter of 2011 it grew at a 3% annual pace.

Personal spending is up.  New unemployment claims are down.  The economy is back.

So why are so many people still having such a hard time?

The economy may be back, but the realonomy has been in recession for almost forty years.  This invisible recession continues today.  The last time the average American had a raise was 1973.  That’s not socialist rhetoric; that’s statistical reality.

It’s even worse if you’re young.  The average young American worker today (age 25-34) makes an astonishing 26% less than the average young American did in 1973.

Many people don’t see how that can possibly be true.  Older people especially look back to what they were making in the 1970s and see themselves being much better off today.  Is it really true that ordinary people made more forty years ago?

There are several reasons why people don’t get the math right when they try to remember what things were like forty years ago.  The first is inflation.

It’s very difficult to adjust for inflation in your head, but conveniently the Bureau of Labor Statistics has a handy inflation calculator on its website.  One dollar from 1970s is worth $5.87 today.

According to a 1987 Harvard study published in the Economics of Education Review, the average starting salary of a Michigan teacher was $7581 in 1970.  That would be worth about $44,500 today.  According to TeacherPortal.com, the average starting salary of a teacher in Michigan today is just $35,557.

Another reason people have trouble seeing the invisible recession in wages over the past forty years is that they rely on their own personal experiences.  For most people, their wages go up as they get older.  As a result, they think wages are rising.

The proper way to think about wage changes over time is to ask “how much does someone make today who is as old as I was then?”  If you’re 40, don’t compare your ages with what they were when you were 30.  Compare them to what 40-year-olds made ten years ago.  You’re likely to come away disappointed.

The third reason we don’t hear much about the invisible recession in ordinary people’s wages is that most of us who follow economic news aren’t ordinary people.

The average American graduated high school and maybe did a few credits at community college.  One out of four Americans didn’t even graduate high school.  For most of you reading this article, that’s hard to believe, but look up the statistics: it’s true.

While Americans with advanced degrees have experienced rising wages over the past forty years, American high-school dropouts and high-school graduates haven’t.  Their wages have declined.  And they’re Americans too.

They’re not just Americans; they’re the majority.  Roughly speaking, the bottom quarter of Americans drop out of high school while the top quarter finish college.  The fifty percent in the middle are typical Americans.

The “ordinary” American doesn’t have a post-graduate degree.  The ordinary American was lucky to graduate high school.  And wages for ordinary Americans have been declining for almost forty years.

There’s no reason for anyone’s wages to be going down.  Personal income per capita, adjusted for inflation, has doubled over the past forty years.  If the income distribution today were as equal as it was in 1973, everyone’s wages could be twice as high.

Instead, a few people at the top make 1000% more than people at the top did in the 1970s, while the bottom half of Americans have had no raises at all.

Literally all of the economic growth of the past forty years has gone to the top half of Americans.  Most of it has gone to the top twenty percent, and an obscene proportion of it has gone to the top tenth of one percent.  That’s just not right.

We’ve gotten so used to the idea that the rich get richer that most of us now take it for granted.  What America needs, however, is forty years in which the rich get poorer.  The rich can afford it.

Would it be such a terrible thing if fast food workers got a twenty percent raise this year while executives took a pay cut?  It’s sad that most people seem to think so.  If that’s true, it’s not our economy that needs rethinking; it’s our entire system of values.

CEO pay: money well earned?

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The 21st century has been a terrible century so far for US stock markets. Adjusted for inflation, all major stock market indices (Dow Jones, S&P 500, NASDAQ, Russell 3000) have been flat or down since the turn of the millennium.

Stock markets in general have been moving sideways since the 1990s. There’s been lots of volatility, but not a lot of gain. That’s a bit surprising, because for the past twenty years we’ve been living in the “shareholder value” era.

The idea that corporations should seek to maximize shareholder value – and nothing else – was born in the 1980s and rose to dominance in the 1990s.

Read More: The Public Intellectual Project

Before the 1990s, many people believed that corporations existed to produce useful goods, provide important services, generate meaningful employment and support vibrant communities. How quaint that sounds today.

After two decades of laser-beam focus on maximizing shareholder value, you’d think American corporations would be generating more value by now. They’re certainly generating lots of profit. Why no value?

One answer is executive pay. While shareholder value has been sliding sideways, executive pay has gone through the roof. The AFL-CIO reckons that the ratio of chief executive pay to median worker pay rose from 42-1 in 1980 to 343-1 in 2010. The average S&P 500 CEO now makes over $10 million a year, according to a report from the Institute for Policy Studies.

Investors are unhappy. According to the Wall Street Journal, a recent survey by executive consultants Towers Watson shows that “companies that give their CEOs high pay opportunities are more likely to receive lower levels of shareholder support.” You don’t have to be an Occupy Wall Street protester to be angry over CEO pay.

But is CEO pay such a problem? The average S&P 500 company is thought to have made around $2 billion in profit in 2011, so $10 million for a chief executive will hardly break the bank. It’s half a percent of the average company’s profit.

Put another way, though, that half a percent is a staggering sum. An S&P 500 company is an enormous organization with thousands (or in a few cases, millions) of employees. The fact that one employee could rake in one two-hundredth of the firm’s total profit is pretty extraordinary.

Take Walmart. Walmart made over $16 billion in profit in 2011. It paid its CEO, Michael Duke, just over $18 million. That’s just over 0.1 percent, or one one-thousandth, of its profits. It doesn’t sound like much, until you realize that Walmart has over two million employees.

Duke is a modest example. Take Robert Iger of Walt Disney. He made over $53 million in 2011. His company made $3.9 billion. Iger took home over 1 percent of Walt Disney’s profits for the year, and that in a company of 156,000 employees.

The problem isn’t the money. The problem is what these men – and 488 of the Fortune 500 CEOs are men – will do for the money. If history is any guide, they’ll do anything. It’s worth rolling the dice and risking bankruptcy for your company if the potential payoff is a multimillion dollar bonus.

Executives involved in many of the largest corporate collapses in American history were extraordinarily well paid. Richard Fuld (Lehman Brothers), Bernie Ebbers (Worldcom), Kerry Killinger (Washington Mutual), Kenneth Lay (Enron) and Stanley O’Neal (Merrill Lynch) all had seven-digit annual pay packages.

Moving beyond specific cases, research shows that high executive pay isn’t systematically associated with better (or worse) performance. Instead, it seems to be driven by broad cultural change. Call it the premiumization of society.

Those who believe that the rich always get richer will be surprised to hear that CEO pay hardly increased at all from the 1930s through the 1970s. Research published in 2010 in the Review of Financial Studies by Carola Frydman of MIT and Raven E. Saks of the Federal Reserve shows that the average American CEO in the 1970s earned about 4 percent more than the average CEO did in the 1930s (adjusted for inflation).

Between the 1930s and the 1970s average earnings of ordinary Americans more than doubled, but CEO pay remained about the same. It actually fell from the 1930s through the 1960s. The post-war economic boom was accompanied by declining real (inflation-adjusted) CEO pay.

Frydman and Saks report that, since the 1970s, CEO pay has risen by a factor of eight. Pay for ordinary Americans, by contrast, has been stagnant. It’s hard not to see a link.

Companies run by more highly paid CEOs don’t do any better or worse than companies run by less highly paid CEOs, but as CEO pay has risen over time the pay of ordinary workers has fallen.

The issue isn’t CEO performance; the issue is CEO greed.

In addition to their findings on trends in CEO pay, Frydman and Saks tracked the CEO “pay slice”: the proportion of total executive team pay that goes to the CEO. The average CEO pay slice reached a minimum in the 1960s and has been expanding ever since.

In other words, it’s not just that all executives are getting paid more. As I have reported elsewhere, between 1993 and 2006, CEOs at America’s top 1,500 public companies received average annual raises of 8.8 percent per year, while their corporate seconds in command received annual raises averaging 5.4 percent, thirds in command 5.2 percent, fourths in command 5.0 percent and fifths in command 4.6 percent.

This is greed at its most glaring. And it’s not just morally offensive. It’s bad for companies as well.

A 2011 paper in the Journal of Financial Economics by Lucian A. Bebchuk, K.J. Martijn Cremers and Urs C. Peyer found that the CEO pay slice is associated with lower profitability, lower stock returns and a range of other negative outcomes. Greed is not good.

When chief executives are earning tens of millions of dollars a year for doing the same job as executives at other times and in other countries have done just as well for a fraction of the price, it’s reasonable to ask “is CEO pay money well earned?”

Both morally and empirically, the obvious answer seems to be no.