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The Trickle Down Effect
by Joseph Toscano
Thursday February 02, 2006 at 01:53 PM
Repost from Anarchist Age Weekly Review 677
John Shields from the University of Sydney's Economic Department has blown a hole in the Howard government's assertion that the trickle down effect plays a central role in the Australian economy. In an article just published in the Journal of Australian Political Economy, he has demonstrated that Chief Executive Officers' (CEO) pay packets in Australia have exploded over the life of the Howard government.
click to enlarge
ceo_payrates_1990-2005.jpg, image/jpeg, 532x366
The wages of the CEO's whose companies are members of the Business Council of Australia have risen 564% since 1989-90, while the wages of adult workers have risen by 85% during the same period. Just in case you think that
increased profits are falling into the pockets of shareholders, since 1999 CEO's salaries and dividends paid to shareholders have increased by 60%. When you look at the fate of the 40% of Australians who rely on social security benefits to survive, they are running a long last behind CEO's, shareholders and people with full time jobs.
Rubbing salt into an open wound, the same CEO's that earn more in a week (over $60,000) than four social security beneficiaries earn in a year, are calling for the decrease in the top marginal tax rate and the abolition of the superannuation surcharge - who do they think they are kidding? Just in case you think that CEO's extraordinary wages mean they are paying 47cents tax in the $1 on their income think again, Australia' generous taxation laws for high income earners means they pay virtually voluntary taxation. No wonder philanthropy has become such a buzz word among the rich and powerful.
John Shields' research confirms what most people know - capitalism is a system that benefits the few at the expense of the many. The trickle down effect is a myth that has been propagated by corporations and governments to justify their greed. What we are witnessing in Howard's Australia is a treacle down, not a trickle down effect, wealth sticks to the fingers of those at the top of the corporate totem pole, those at the bottom hold up their empty hands hoping that a drop of the treacle the corporate sector are bathing in, will spill out and drop into their outstretched hands.
References:
SETTING THE DOUBLE STANDARD: CHIEF EXECUTIVE PAY THE BCA WAY - John Shields, Journal of Australian Political Economy, Issue 56, December 2005 (http://www.jape.org/)
http://www.jape.org/jape_56_24_shields.pdf
www.anarchistmedia.org/
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