The_Power_of_1percent

ABOUT INCOME INEQUALITY : WHY DO THE 1% EARN SO MUCH ?

 

According to a recent survey, the share of national income taken by the top 1% of earners has risen in recent decades.

Some of the top earners are household names – sports and entertainers ( Show business, Television & Media, Movie Industry ),  but most are not.

The largest group is made up of executives in non – financial businesses, like Apple.

Depending on the country, but no more than 20 %  of the top earners are employees and not necessarily executives – in banks and finance houses.

Also, the fact that so many of the top earners work for a living is stricking as reported by Brian Keeley ( OECD Publishing, http://dx.doi.org/10.1787/978926426010-en ) and Denk Oliver ( OECD Publishing, http ://dx.doi.org/10.1787/5jrp1g39gkzw-en).

Multiple factors contribute both to the rise of top incomes and income inequality.

1. « Superstars » & high – skilled workers in both a global economy and highly competitive labour market.

2. « Financialisation » meaning here the rapid expansion of finance.

3. Tax and pay : Top earners have  benefited in some cases from tax regimes allowing them to build up wealth.

Put simply, today’s top earners are more likely to be either a salaried employee ( on the payroll of a corporation ) like the CEO of  a Multinational, or a company founder ( Facebook, Free…) meaning here an Entrepreneur (Entrepreneurship has traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire ).

The post – crisis recovery in entrepreneurial activity remains mixed across advanced economies, but new data released today by the OECD provides tentative signs of a turning point, with trends in enterprise creation rates pointing upwards in most OECD countries.

A revival in entrepreneurial activity could could help improve economic growth and provide an important longer – term boost to productivity,given the correlation between start – up rates and productivity growth.

Green shoots of recovery in entrepreneurship begins to appear, says OECD in a new report released to day ( http://oecd.org/std/business-stats/entrepreneurship-at-a-glance-22266941.htm).