Instead, advocates of redistribution cavalierly diminish the importance of incentives. They claim the success of America’s 1% stems from rising cronyism despite overwhelming evidence that the status quo has grown less entrenched. Seventy percent of the wealth of the top 0.1% is owned by self-employed business owners who bested competitors to satisfy customers, not cronies, to earn their success. Today, the Forbes 400 richest Americans are “less likely to have inherited their wealth or to have grown up wealthy” and “more likely to have started their businesses.” Similarly, average CEO tenures have shortened. Public company CEO pay has not risen faster than private company pay where owners, not cronies, control boards. Nor has CEO pay risen faster than the value of the companies they manage. Instead, the rise in CEO pay comes almost entirely from the formation of new companies with high employee pay rather than from increased CEO pay relative to their employees.
(H/T: Cafe Hayek)
