Does responsibility at the top really justify the rising inequality?

by Jul 13, 2020Thinking outside the bottle0 comments

disparities and inequality in payment - CR Sasikumardisparities and inequality in payment - CR Sasikumar

Paulo Pinto

Alti Wine Exchange founding member

Dear reader,

When it comes to the economy, thinking about history often provides us thoughtful insights. That is why today I will be going back some centuries to debate the price of inequality and pay gaps.

During wartime in the XVI and XVII centuries, permits were given to certain fellows to legally steal, fight, or sack cities of the enemy. They were called privateers. The legendary pirates.

Back then – as now – they had to give a chunk of the proceeds to the government, of course.

To make a long story short, this was business open for private investment.

One could invest in a ship and a captain, and if they were successful at stealing booty, investors were entitled to a piece of the action.

* * *

More below. But first…

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* * *

Back to privateering.

Check this excerpt on how money was distributed – from an article on History.com.

Salaries were based on a strict commission basis of ‘no prey, no pay’ and were doled out by shares, except in the case of certain specialists, such as the carpenter (who received 100 or 150 pieces of eight) and the surgeon (who provided his own medicine chest and received 200 or 250).

At the end of the cruise, the profits, if any, were divided up and each of the crew received a single share, except for the master, who got five or six, and the mate, who received two.

How much the world has changed. Today’s CEOs have salaries that represent 100 to 200 times the average worker pay. CEO compensation has grown 940% since 1978, while typical worker compensation has risen only 12% during the same period, according to the Economic Policy Institute.

Some will say the reason for it is due to rules, regulations, restraints and sanctions, that put too much responsibility on these CEOs’ shoulders.

But the real responsible are Central Banks, with printing presses encouraging speculation and dividing people, creating inequality and worsening disparities. Putting this into context, a bulked up ‘no prey, no pay’ in modern dynamics, benefitting only very few.

The world needs a new monetary system based on a new concept to free society, a Central Bank of Social Security, for a new social contract. Increasing inequality will only lead to social unrest and aggravate the ongoing and the future economic and financial burdens.

I have been arguing for such new model of Central Banks in my past articles published here. Find them below.

Until then.

Paulo


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