The Inequality Puzzle (eBook)

The Inequality Puzzle 3
Preface 5
Contents 7
Part 1: Introduction 9
Is There Too Much Inequality? 10
Part 2: Interviews 18
Josef Ackermann CEO and Chairman, Deutsche Bank 19
Bertrand Collomb Honorary Chairman, Lafarge 27
Gabriele Galateri di Genola Chairman, Telecom Italia 44
Jürgen Hambrecht Chairman, BASF 53
Maurice Lévy Chairman and CEO, Publicis 62
John Monks General Secretary, European Trade Union Confederation 72
Sir Mark Moody-Stuart Former Chairman, Anglo American Former Chairman, Shell
Poul Nyrup Rasmussen President, Party of European Socialists Former Prime Minister, Denmark
Fred Smith Chairman, President and CEO, FedEx 106
John Sweeney President Emeritus, AFL-CIO 119
William Weld Partner, McDermott Will & Emery LLP
James Wolfensohn Chairman and CEO, Wolfensohn & Co.
Jerry Yang Co-Founder and Chief Yahoo, Yahoo! 145
Part 3: Summary 153
Trends and Topics from the Interviews 154
Observations 154
Financial Crisis Draws Attention to Inequality 154
Excess, Not Inequality, Is the Concern 156
The Public, Perception, and the Media 158
Categories of Wealth (Not All Money Is Equal) 159
Causes 160
Ethics 160
Psychology, Peer Groups, and Pay 162
Pay Transparency 162
Mobility and Reduced Loyalty 162
Limitations of Financial Incentives 163
Pay Conflated with Status 163
Equal Opportunity Failings 164
Remedies 166
Ethical Reform 166
Improve Equal Opportunity 167
Mentoring 169
Corporate Equal Opportunity 169
Targeted Investment 169
Compensation Reform and Corporate Governance 170
Transparency 170
Limits on Pay Not Recommended 171
Taxation to Control Excess Compensation 172
Variable Long-Term Pay Based on Real Results 172
Shareholder Participation 173
Level Playing Field 174
Government Policy, Tax, and Regulatory Reform 174
Other Suggestions to Strengthen the Disadvantaged 175
A View from the Top 176
Is Rising Inequality a Problem? 176
What Caused the Rise in Inequality? 180
How Might Inequality Be Remedied? 184
Conclusions 187
Part 4: Commentary 189
Five Principles for Moving Forward 190
1. Inequality: General Observations 190
Statistics 190
Culture 191
Globalization and Economic Growth 192
Democracy and Fairness 194
2. What to Do: Recommendations 196
Ensure Equality of Opportunity (Equal Opportunities, Not Equality of Outcome) 196
Early Childhood Education 198
Vocational Education and Training 198
Diversity 200
Improve Social Mobility 200
Advocate Ethical Behavior 202
Rethink Compensation in Terms of Corporate Governance 203
Balance Taxation Intelligently 205
Can Inequality Be Reduced by Building Better Markets? 207
Education and Market Failure 211
Executive Pay and Market Failure 215
Conclusion 218
About the Authors 220
Partnering Institutions 221
Roland Berger Foundation 221
Stanford Center for the Study of Poverty and Inequality 221