How much does your Neighbor Earn

Philip Hensher in the article, How much does your neighbor earn? is an insightful story that the author wrote recently in the The Indepenent about the levels of earnings that people have in the society. The author begins by posing the questions and introduces the stockbroker and the shop assistant in what is presumably, a representation of wage disparity. The high-income earners in the society have unjustifiable income increment rising up to 49% in the long term despite the staggering of the global economies like Britain. Following public outcry; for instance, lamentation by the GMB that refers to the high-income earners as ‘elite greedy pigs’ and other union organizations call for shareholders to exercise restraint in a bid to narrow the gap between low and high income earners. Hensher (2011) in his opinion poses that, “I’ve tried extremely hard, but I find it almost impossible to give a toss about inequality per se.” real picture of the high of this matters follows an analysis of Britain’s top 10 CEOs who earn between £18.4m and £8m. The author notes that with the level of poverty in the nation, it does not make sense when such salaries when they reduce their pay and give to the ordinary person. It only translates to about £3.68 increment in an ordinary person’s monthly income. On the other hand, such salaries make the CEOs to drive businesses earning of supernormal profits like Tesco’s profit record in the world. There is change of tone in the article as the writer who started by criticizing the wage disparity now justifies the earnings by the CEOs in the private sectors because of two main reasons: they are annually approved by shareholders and that it is a representation of social mobility that is better than winning high value lotteries. Hensher sums it all by saying we should challenge ourselves and try to find opportunities. This essay explores the different tones in Hensher’s article by observing the arguments of the main issues covered by the author.

Hensher poses that poverty is the British economy persists because the low-income earners and the population in general does not believe in equal opportunities for all. The author challenges the people to be considerate when criticizing the existence of wage differences by identifying opportunities that that can make then rise in the social ladder. However, the author is unaware of the other cultural perspectives that explain why poverty persists in the society. Poverty should be understood not in the Hensher’s thought of a reluctant society but in the three cultural perspectives: culture as capital, culture as an institution, and culture as a frame.  Culture is depicted in the society as an institution. The setting up of institutional reforms and policies are dominated by the rich who are either leaders or powerful in the political front. As a result, the policies that govern our institutions are framed to benefit the rich at the expense of the low class. The institutionalization of culture not only affects policymaking but also influences cultural practices on with regard to what community values and practices. The agitation for the New World Order, (NWO) where few super rich individuals control economy best sums institutionalized culture. The concept of cultural frame is a normative concept that gives attention to how individuals evaluate good or bad values. Cognitive individuals are concerned by how to perceive something as real. Thus, sociologists say that individuals’ perception of the world is not based on the reality on ground but on cultural frames that hide what is bad and focuses on the good. Poverty has been linked to racial abuse in both Canada and the US. Lin and Harris, (2008) note that kaleidoscope factors have widened the racial gaps and discrimination. Wallis and Kwok (2008) who says social inequities (racism among others) are responsible for poverty among the poor in Canada support this observation.

Hensher is right in the justifying some of the earnings by the CEOs and the reasons why they earn those salaries. It is because of the organizational management that they initiate in the corporations. The CEOs work hard to ensure that the firms make good profit to remain competitive in the business world. They pay hefty taxes to the national regimes and these earnings drive the government. The more corporations earn the more tax government receive. Shareholders also approve the CEOs earnings because they believe they delivered and added value to shares. Citing the case of Tesco, the external environment business factors like threats and opportunities has made the firm to devise ways of beating other market leaders such as Tesco, Sainsbury, and ASDA in UK. Tesco’s wide extension strategy seems to work against Sainsbury and as Hitt et al., (2011) note, “Tesco’s sales increases occurred through increases in total square footage with the opening of new stores, including new formats such as Metro and Express,” (p. 379). This explains why the firm made record-breaking profit. The person behind such an achievement is the company’s CEO and it is worthy rewarding a performer who brings real benefits.

Another issue that Hensher identifies in the article is wage disparity. The point of blaming the rich for it is pointless. This is because the free economy dictates how much a company earns and how much CEOs should earn. However, for an amicable solution to wage disparities, there are a number of strategies that people can adopt. One is the establishment of unions to fight for the workers right in case there is lack of the private sector to respond to the falling real earnings of the workers against rising performance of corporate organizations. Freeman, (1997) proposes that regardless of people’s earning, through progressive taxation, “there is s strong case for taxing income that comes in the form of social benefits at least as high as income that comes in the form of earnings.” The rise in top CEOs salaries as Hensher, (2011) notes is only 3% for real earnings; however, bonuses and long-term incentive packages that the progressive taxation targets is the 46% (49% - 3%). Other mechanisms to reduce wage disparity include asset-based redistribution, starting-gate equality among other possible measures that address national wage disparity.

Conclusion

As much as the there is wage disparities in the society, there is a big misconception among the people that inequity should be blamed on increasing salaries of the CEOs. The people need to change their perspective on the view of the matter given the there are more complex determinants. As Hensher suggest, the population needs to identify opportunities that can help an individual rise in the social ladder. The authors view however, fails to analyze the various cultural perspectives on poverty before making such an assumption. The issue of poverty is more multifaceted than Hensher thinks. On the other hand, the author has given real account of the superiority of a free economy and the justification of the top CEOs earnings. A number of other analyses that apply in the real business environment support the evidence. Therefore, Hensher’s article is relevant in giving an insight on the reasons for the high salary incomes amid poverty.