Last week, I wrote about leadership. This week, I write mostly about wealth.
Let me begin with what I heard earlier in the week from retired Army Col. Jack Jacobs, who was a recipient of the Medal of Honor for gallantry in the Vietnam War and is now an analyst for MSNBC.
Col. Jacobs said in transitioning from the Army to a successful career on Wall Street, he noticed that most combat platoon sergeants in the Army exhibited better leadership skills than the titans that he was coming into contact with in the business world.
And while Wall Street execs are by and large a pretty wealthy bunch, the jobless rate of veterans of the most recent fighting in Iraq and Afghanistan was 12.1 percent in May, up from 10.6 percent a year earlier, according to the federal Bureau of Labor Statistics. In the same period, unemployment among all U.S. workers fell from 9.6 percent to 9.1 percent.
Theories abound on why recent veterans are having difficulty finding work. It could be that employers do not fully appreciate the ways that military skills might translate into nonmilitary jobs.
A recent Congressional report suggests the typical work experiences of recent veterans are best suited to the very industries which were particularly hard hit by the recession.
“Prior to the start of the recession, post-9/11 veterans were more likely than nonveterans to be employed in mining, construction, manufacturing, transportation and utilities, information, and professional and business services — all industries that experienced significant drops in employment during 2008-2009,” the report says. “These veterans also were less likely to be employed in education and health services, the only major sector that added jobs during the Great Recession.”
Wall Street Doing Good
Five of the big Wall Street banks — Bank of America, Citi, Credit Suisse, Deutsche Bank and Goldman Sachs — have joined forces with the U.S. Chamber of Commerce and the federal Labor Department, in launching a nationwide campaign to find jobs for veterans.
“What we’re doing is connecting employers with those veterans,” said Kevin Schmigel with the Chamber. The former Marine notes that most vets make great workers, saying, “90 percent of all military occupations are directly transferable to jobs in the private sector.”
It is difficult for me to praise Wall Street for a variety of reasons, but I have to admit that what these banks are doing is a good thing. These young veterans returning home from harm’s way, some with disabling wounds, have given much to their country. I think we owe them.
Back in November 2007, then Illinois Sen. Barrack Obama, on the campaign trail for the presidency, said this in Iowa.
“While some have prospered beyond imagination in this global economy, middle-class Americans — as well as those working hard to become middle-class — are seeing the American dream slip further and further away,” he said.
It was a central theme of the Obama campaign to take the White House.
Realizing a Growing Gap
Now we have known for some time of a growing income disparity in the United States. Economists believe this gap has been growing since the 1970s, although they are divided as to the reasons. But the numbers are becoming startling.
In 1975, the top 0.1 percent of earners garnered about 2.5 percent of the nation’s income, including capital gains, according to data collected by University of California economist Emmanuel Saez. By 2008, the top 0.1 percent of earners took in more than 10.4 percent of the personal income in the United States, including capital gains, and the top 1 percent took in more than 20 percent. You may want to read that again.
Research shows that a critical feature in the widening gap is the rise in pay for company executives. The single largest group of the highest-income earners, it turns out, are corporate executives. I only wish I could say I was surprised.
Defenders of executive pay have argued that today’s chief executives are worth more because, among other things, companies are larger and more complex. But I cannot help but be reminded of Col. Jacobson’s comments that most Army platoon sergeants have better leadership skills than corporate executives that he has met during his business career.
Now if you are a defender of capitalism, and I am, you have to come to terms with the fact that inequalities will always exist. It is the market that sets compensation levels. It is the market that leads workers into pursuits that are most productive to society. It is the market that rules, and if some CEO is going to be making $10 million a year, so be it. This is just the way it is.
But the growing income gap makes many if not most Americans, who are not wild-eyed socialists, uneasy. They may not recognize or agree to a remedy being offered by government, but they still view the income inequality as being excessive, almost obscene.
This notion has created an undercurrent – while millions struggle to find jobs in the wake of a brutal recession that the extremely wealthy might actually be restricting opportunities for everyone else. Of course, the 1 Percent Club would scoff at this as class envy, but I am not so sure.
The gap between the very wealthy and the huddled masses is widening not just in the United States but throughout of the world, according to the latest annual Merrill Lynch-Capgemini World Wealth Report.
Even among millionaires, wealth grew more concentrated: The super-rich represented fewer than 1 percent of millionaires, yet held more than a third of that elite group’s wealth, according to the report.
Assets held by millionaires worldwide rose by 9.7 percent to a record $42.7 trillion — surpassing the previous high-water mark set in 2007 — while the ranks of people with at least $1 million of investable assets, excluding their primary residence, rose 8.3 percent to 10.9 million, the report found.
A Historic Sea Change in the Making
The ultra-rich — people with more than $30 million to invest — did even better than their regular-rich peers last year. Their ranks grew by 10 percent to 103,000, while their combined wealth rose 11.5 percent to roughly $15 trillion.
I cannot help but think that we are witnessing a historic sea change of wealth from North America and Europe to Asia. The ranks of millionaires in Asia for the first time surpassed Europe and in a few years are expected to overtake the United States, according to the Merrill Lynch-Capgemini report.
Powered by fast-growing China and India, the Asia-Pacific region’s millionaire ranks rose 10 percent to 3.3 million, second only to the 3.4 million residing in North America and inching ahead of Europe, which had 3.1 million.
Asia’s combined wealth, up 12 percent to $10.8 trillion last year, surpassed Europe and threatens to overtake the United States and Canada, where wealth rose 9 percent to $11.6 trillion.
What all this means is that the rich really are getting richer while the ranks of millionaires continue to grow.
Some Final Thoughts
So how do I feel about wealth concentration becoming more concentrated? Well, I will admit that I am a bit torn on this subject. I want the lure of becoming a millionaire to remain a steadfast goal for any and all who want to take that journey.
I want little Johnny or little Mary, coming up from humble circumstances, to live in a country whereby they, too, can through hard work and determination, join the ranks of the elite rich. Holding that promise preserves capitalism, which for better or for worse, is still the best system we have. In that regard, capitalism is not unsimilar to democracy. It’s messy. It’s hurtful, but there is no better alternative.
A soldier coming home from Afghanistan struggles to find work, while a hedge fund manager on Wall Street pockets millions for ethereal transactions that result in nothing real being made, with the exception of wealth.
Yes, sometimes I ponder on these things. And then I have to get back to work.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com He can be reached at firstname.lastname@example.org