To get rich is glorious, as Deng Xiaoping famously said. But the US Republican right have made another Great Leap Forward to claim that the rich are also gloriously important to the economy because they produce jobs and thereby stimulate growth.
Questions about the contribution of the rich are especially important just now when western economies are in a continuing slump, unemployment is stubbornly high and Republicans offer their creed of small government, diminishing taxation and making the rich richer as the panacea to end the world's slump.
Unfortunately for the Republicans, the US and probably the world, the claim that the rich should be encouraged by lower taxes and more opportunities to make even more money is bogus. Worse, pursuing this claim could do enormous damage not only to economies but to political and social order.
Globally, from the US to the mainland, Hong Kong, India and even Japan, the rich are getting ever richer and taking a bigger share of the pie, while the poor are being pushed to the margins. The Organisation for Economic Co-operation and Development, the club of rich industrial countries, last month warned that inequality was becoming one of the biggest challenges for governments.
The philosopher Plato said the income of the highest paid should never be more than five times that of the lowest paid. What would he think now? The chief executives of the 100 largest companies in Britain in 2009 earned 81 times the average pay of full-time workers. In the US in 2010, when wages were stagnating and unemployment was high, total realised compensation of chief executives of the S&P500 companies increased by a median of 36.47 per cent, and the highest paid CEO took home US$145 million.
OECD secretary general Angel Gurria warned last month that: 'Inequality has become a universal concern among both policymakers and societies at large. Today in advanced economies, the average income of the richest 10 per cent of the population is about nine times that of the poorest 10 per cent.' In the US, the richest 10 per cent get 14 times that of the poorest 10 per cent. Even in traditionally egalitarian countries, such as Germany, Denmark and Sweden, the income gap has risen from 5 to 1 in the 1980s to 6 to 1. In Japan, South Korea and Britain, it is 10 to 1.