Common sense tells us it's wrong that hedge fund manager John Paulson made $3.7 billion in 2007, while a typical nurse earned about $45,000.
Paulson made his billions by betting against the subprime mortgage market, helping trigger the 2008 financial collapse. In what moral universe is he worth as much as a single nurse -- let alone 82,000 nurses?
Our tolerance for this sort of absurd discrepancy illustrates our abject submission to the dictates of modern economic doctrine. According to this economic dogma, Paulson's income -- just like the income of a nurse -- is determined by natural market forces, and any attempt to adjust incomes amounts to meddlesome interference in the free workings of the marketplace.
It's a doctrine which has been good for Paulson, and others who dominate the financial and corporate world, while helping to keep nurses -- and women in general -- much lower down the income pecking order.
But, in fact, there's nothing natural or innate about the marketplace. The so-called "free market" is nothing more than a set of laws devised by humans.
Change the laws, and you end up distributing income very differently.
Hedge fund managers, for instance, have been able to score fabulous jackpots in recent years because of the particular laws that govern banking and finance. Under the very different set of laws that governed banking and finance 30 years ago, such massive windfalls weren't possible. (And yet the overall economy did well back then; indeed, it did much better than today.)
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Similarly, today's CEOs earn dramatically more than CEOs did 30 years ago -- largely because of changes in laws governing executive stock options. (After these changes were implemented in the 1990s, stock options became much more lucrative. The value of stock options for Canadian CEOs in the 1990s exceeded the value of their salaries by 300 per cent.)
In other words, incomes are heavily determined by the particular laws in place at a given time. And those laws are determined by which groups have power and are able to influence governments. So, as labour has lost its political clout in recent years, governments have watered down laws protecting labour, and workers' pay has declined.
The fact that women have traditionally wielded less power and influence than men helps explain why their pay has always lagged behind.
That began to change with the rise of feminism and organized political action by women in the 1960s and '70s. Protesting the fact that Canadian women were earning 64 per cent of what men earned, women's groups succeeded in pushing the Trudeau government to introduce some limited pay equity legislation in 1977.
There was initial progress, with women's wages catching up to about 70 per cent of men's -- where they've been stuck for several decades.
In 2004, a federal task force called for stronger, proactive pay equity legislation. The Liberal government promised action, but the Harper Conservatives, taking over in 2006, rejected stronger pay equity laws. Instead, the Harper government introduced legislation that effectively strips women in the public service of pay equity coverage.
On this rather sombre International Women's Day, it's worth reminding ourselves that the gigantic incomes of the financial elite and the low incomes of nurses have little to do with merit -- or even the workings of a "free market" -- and a lot to do with who gets to make the rules.
Linda McQuaig is author of It's the Crude, Dude: War, Big Oil and the Fight for the Planet and The Trouble With Billionaires. This article was originally published in The Toronto Star.
Some good points here, but...
Firstly, saying that John Paulson "made" $3.7 billion is just buying into and perpetuating the propaganda of the ruling class in the first place. It is a fact that John Paulson didn't "make" $3.7 billion in 2007, he "took" $3.7 billion.
There is a reason that capital gains are called "unearned income", even when you look at income figures from the DOL or Treasurey, they separate out capital gains from other forms of income, even other forms of capital income, because all capital gains represent TRANSFERS of wealth, they don't represent CREATION of it.
By even the most status-quo and accepted definitions of neo-calssical economics, John Paulson didn't create $3.7 billion in value, he was able to engineer the TRANSFER of around $3.7 billion to himself from other people, since virtually all of that $3.7 billion was "capital gains".
So let's first be clear, John Paulson didn't MAKE $3.7 billion, he TRANSFERED $3.7 billion from others to himself, while the teacher actually CREATED value.
For more on this issue see my post here (The Linguistics of Economic Deception): http://www.rationalrevolution.net/blog/index.blog?entry_id=1022617
Secondly, as to women's incomes, this is a complex issue, and there are many legitimate ways to discuss income inequality between men and women, however it is not correct, as many feminists tend to do, to simply take the difference between aggregate women's income and aggregate men's income.
You have to look at income for equal work. It is simply a fact that women do tend to work fewer hours than men (the reasons for this may be something worth discussing but you can't just ignore that fact) and that women tend to work in lower paying occupations than men.
Income disparity between men and women is two separate issues. One is equal pay for equal work. On that front, the disparity between men and women still exists, but it is now very small in America. This work to pay disparity, I believe, can be explained with market theory if one considers that men in the labor market are viewed like "name brand" commodities, whereas women are viewed as "generic" commodities. This is to say, even when the two products are actually identical, there is a tendency to pay more for the "name brand" due purely to irrational conceptions. If, in theory, men and women provide equal work, market theory would, on the face of it, predict that their pay would equalize because employers wouldn't pay men more for equal work, when they could just hire a women instead, BUT, the way to explain this is to understand that employers may have an "irrational bias" toward men, just as people have an "irrational bias" toward name brands over generics, when both are of equal quality.
The second issue, however, is more complicated. Let's just take a simple scenario. Dentists vs hygienists. For obvious reasons dentists have a much higher income than hygienists. At dentist may have an income of $300,000 a year, while hygienists have an income of $40,000 a year. This is a huge disparity, but not necessarily an undeserved one.
Now, roughly 80% of dentists are men, while 98% of hygienists are women. If every dentist has exactly $300K in income and every hygienist gets $40K, in a population of 100 dentists and 100 hygienists you would find an average male income of $240,800 and an average female income of $99,200.
But calling that "unfair" or a product of "discrimination" would be incorrect, it would be a product of the fact that most dentists are men and most hygienists are women.
And let's not forget, you can't simply increase the number of women in high paying jobs, in order to balance things out you would have to also increase the number of men in lower paying jobs.
In other words, the idea that we simply need more women engineers, programmers, doctors, lawyers, executives, etc. isn't enough. In order for that to happen, and in order for everything to balance out, it means would we also need more male elementary school teachers, day care workers, nurses, hygienists, secretaries, wait staff, cashiers, etc., etc. which is something that I see very few feminists considering or even talking about.
rationalrevolution on March 8, 2011 - 11:44am. states
"Now, roughly 80% of dentists are men, while 98% of hygienists are women. If every dentist has exactly $300K in income and every hygienist gets $40K, in a population of 100 dentists and 100 hygienists you would find an average male income of $240,800 and an average female income of $99,200."
But this is usually not how equal pay for equal work is viewed. You are comparing two unequal jobs. You would need to look to see if there is a disparity between your hypothetical 20% women dentists and 80% men dentists. Then as you suggest may wish to filter through hours worked. However this filtering may result as many claim, that women would have less hours, and as is then claimed should earn less due to lack of continuity in work force.
On the other side of the argument is that women shouldn't be penalized for being the sex that is tasked, through biology, with carrying the next generation and being forced - most men won't do it - into the role of unpaid caregiver to children, men and elderly.
But I think the main thrust of this article was to consider that jobs may not be appropriately valued. That a hedge fund manager may not be more valued than a nurse.