Simon asks why there's so little outrage about the high incomes of the top 1%. Let me deepen this question.
I suspect that one reason is that people don't see top incomes as affecting them; they don't look at Euan Sutherland's pay and think "that's coming out of my pocket".
But this lack of reaction is contestable. It's quite possible that we would be better off if the top 1% were less well-paid.
Simple maths tells us that if the income share of the top 1% could be reduced from its current 12.9% to 9.9 per cent - its level in 1992 - then the incomes of the 99% would rise 3.4%, equivalent to a gain of £72 per month for someone on £25,000 a year.
Of course, this calculation only makes sense if we assume such redistribution could occur without reducing aggregate incomes. But such an assumption is at least plausible. The idea that massive pay for the 1% has improved economic performance is - to say the least - dubious. For example, in the last 20 years - a time of a rising share for the top 1% - real GDP growth has averaged 2.3% a year. That's indistinguishable from the 2.2% seen in the previous 20 years - a period which encompassed two oil shocks, three recessions, poisonous industrial relations, high inflation and macroeconomic mismanagement - and less than we had in the more egalitarian 50s and 60s.
What's more, there are reasons to suppose that the disease of which high top pay is a symptom - the managerialist ideology which empowers CEOs to enrich themselves - is bad for the economy:
- It encourages short-termism, as managers try to deliver financial results to justify their high pay at the expense of long-term investment and research.
- CEOs who think of themselves as heroic leaders can become emboldened to take reckless decisions, especially if they refuse to countenance criticism and so, in Ken Boulding's phrase (pdf), end up "operating in purely imaginary worlds.“ Fred Goodwin's disastrous takeover of ABN Amro wasn't an idiosyncratic failure, but rather the result of the cult of narcissistic bosses.
- Leader-dominated organizations can demotivate junior staff who look to the top for guidance rather than solve problems themselves. This problem can be exacerbated because staff in top-down organizations are often insufficiently well supervised and thus prone to skiving and thieving. There's reasonable evidence that organizations which empower workers (pdf) are more productive than those that don't.
It's a reasonable hypothesis, then, that the power of the 1% is bad for the economy.
However, in popular discourse, this hypothesis is not so much explictly rejected as not even considered, whereas the idea that immigration is bad for the economy is widely accepted even though it's wrong.
What can explain this? Simon blames the media. But I'm not sure this is the whole story.
For one thing, there has been cross-party support for the 1%. New Labour rarely saw a boss it didn't cringe towards, and social democrats main gripe with power has long tended to be not that it is too concentrated but that it just happens to be in the wrong hands. And for another, we shouldn't write off false consciousness: cognitive biases can indeed help to sustain inequality.
Whatever the cause, the fact is that the lack of outrage about CEO rip-offs is itself evidence of the great power they have - the power to keep some debates off the agenda. As Steven Lukes wrote:
Is it not the supreme and most insidious use of power to prevent people, to whatever degree, from having grievances by shaping their perceptions, cognitions and preferences in such a way that they accept their role in the existing order of things, either because they can see or imagine no alternative to it, or because they see it as natural and unchangeable? (Power: A Radical View, p28)