A couple of weeks back, out in Omaha, I happened to share a ride to the airport with a pair of United pilots. Both were classics of the type—trim, square-jawed, silver-haired, twangy-voiced white men, one wearing a leather jacket. Sam Shepard or Paul Newman could’ve played them. They spent the entire trip sputtering and whining—about being baited and switched when their employee ownership of the airline had been evaporated by its bankruptcy, about the default of their pension plan, about their CEO’s 40 percent pay raise, about the company to which they’d devoted their whole careers and now didn’t trust a bit, and, in effect, about turning from right-stuff demigods who worked hard and played by the rules into disrespected, sputtering, whining losers. The next morning back in New York, I read the news about the record-setting bonuses on Wall Street, an aggregate amount 1,100 percent higher than in the go-go year of 1986. The 2006 revenues at just one bank, Goldman Sachs, were larger than the GNPs of two-thirds of the countries on Earth—a treasure chest from which the firm was disbursing $53.4 million to its CEO and an average of $623,000 to everybody who works at the place.
Ordinarily, I would shrug and move on with New Yorkerly indifference—the pilots are still flying, their reduced pensions notwithstanding, and I wouldn’t trade my life for any banker’s. But I haven’t been able to stop thinking about my jump-cut visions of those defeated pilots and the megabonused Wall Street guys shopping for $15 million apartments. And as a result, this holiday fortnight has felt to me fully Dickensian—the jolly bourgeois bustle and glow, as usual, but also in the foreground the conceited, unattractive rich, our Dombeys and Bounderbys and unredeemed Scrooges.
A month ago, I was ragging on CNN for presenting Lou Dobbs’s hour of pissed-off populism as if it were a traditional nightly news show, and I still think it has a serious truth-in-packaging problem. But (like Dickens’s Mr. Gradgrind, with his epiphany about the poor in Hard Times) I now get Dobbs’s and his followers’ anger and disgust about the ongoing breaches of the social contract, an American economic system that seems more and more rigged in favor of the extremely fortunate.
I know capitalism is all about creative destruction, that the pain of globalization must be endured and flexible labor markets are good; inequality is endemic; life is uncertain and unfair, sure, yeah, of course. We’re all Reaganites now—or at least no longer socialists by instinct. But during the past two decades we’ve not only let economic uncertainty and unfairness grow to grotesque extremes, we’ve also inured ourselves to the spectacle. As America has become a lot more like Pottersville than Bedford Falls, those of us closer to the top of the heap have shrugged and moved on.
The asymmetry between the Goldman boss’s compensation and that of his average employee—85 times as big—is virtually Ben-and-Jerry’s-like these days: An average CEO now gets paid several hundred times the salary of his average worker, a gap that’s an order of magnitude larger than it was in the seventies. In Japan, the ratio is just 11-to-1, and in Britain 22-to-1.
This is not the America in which we grew up.
Back before the Second World War, in the teens and twenties, the richest one-half of one percent of Americans received 11 to 15 percent of all income, but from the fifties through the seventies, the income share of the superrich was reasonably cut back, by more than half. The rich were still plenty rich, and American capitalism worked fine.
Starting in the late eighties, however, the piece of the income pie taken each year by the rich has once again become as hugely disproportionate as it was in the twenties. Meanwhile, the median household income has gone up a measly 15 percent during the past quarter-century—and for the last five years it has actually dropped.
It used to be that when the economy thrived and productivity grew, pay for working people rose accordingly. Yet as the Times reported this past summer, the first six years of the 21st century look to be “the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.”
People have put up with all this because it happened so quickly and for the same reason that the great mass of losers in casinos put up with odds that favor the house: The spectacle of a few ecstatic big winners encourages the losers to believe that, hey, they might get lucky and win, too. We have, in effect, turned the U.S. into a winner-take-all casino economy, substituting the gambling hall for the factory floor as our governing economic metaphor, an assembly of individual strangers whose fortunes depend overwhelmingly on random luck rather than collective hard work. And it’s been unwitting synergy, not unrelated coincidence, that actual casino gambling has become ubiquitous in America at the same time.