The President, the Pope and the People: The idea that honest work should pay an honest wage is part of the American social contract – and one that is in danger of disintegrating

December 4, 2013

The President, the Pope and the People


On Wednesday, while delivering a speech largely about income inequality and economic mobility, a populist president invoked a populist pope. After rattling off a laundry list of dire statistics, President Obama cited Pope Francis:“Since 1979, when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than 8 percent. Since 1979, our economy has more than doubled in size, but most of that growth has flowed to a fortunate few. The top 10 percent no longer takes in one-third of our income — it now takes half. Whereas in the past, the average C.E.O. made about 20 to 30 times the income of the average worker, today’s C.E.O. now makes 273 times more. And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country. So the basic bargain at the heart of our economy has frayed. In fact, this trend towards growing inequality is not unique to America’s market economy. Across the developed world, inequality has increased. Some of you may have seen just last week, the pope himself spoke about this at eloquent length. ‘How can it be,’ he wrote, ‘that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?’”

This is a worldwide problem, as the pope made clear, but in this country it’s particularly pernicious.

A study released last month by the World Economic Forum surveyed nearly 1,600 world leaders from academia, business, government and the nonprofit sector and found that of the top 10 trends facing the world in 2014, income inequality was second on the list. (According to the report, the top concern was “rising societal tensions in the Middle East and North Africa.”)

And although in America 51 percent of all income earned went to the wealthiest fifth of the population while only 3 percent went to the poorest fifth of the population, Americans were among the least likely to view inequality as a serious problem in the spring 2013 Pew Global Attitudes Project Survey.

And yet, it looms as a central problem in this country, but one that is often invisible from ground level. We remain ensconced in our enclaves of sameness: subdivisions planned by price point and urban oases of affluence set amid vast deserts of urban poverty.

We are not likely to recognize the ravages of inequity because of our isolation from one another, but they are there.

In addition, there is less economic mobility in America than in many other wealthy countries.

As the president pointed out:

“The problem is, that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years. A child born in the top 20 percent has about a two in three chance of staying at or near the top. A child born into the bottom 20 percent has a less than one in 20 shot at making it to the top. He’s 10 times likelier to stay where he is.”

The Economic Policy Institute’s “State of Working American, 12th Edition,” released last year, echoed that sentiment, finding that “U.S. mobility is among the lowest of major industrialized economies.”

And that mobility gap is compounded by a gender gap. According to a 2008 Brookings Institution report, “Close to half (47 percent) of low-income girls compared to 35 percent of low-income boys end up in the bottom fifth upon adulthood.”

And NPR reported last month that, according to the Bureau of Labor Statistics, women’s share of minimum wage workers is nearly twice that of men.

That is why it was important for the president to use his speech to support raising the minimum wage, saying, “It’s well past the time to raise a minimum wage that, in real terms right now, is below where it was when Harry Truman was in office.”

Arguments against addressing income inequality often focus on the possibility of undermining incentives for those at the top. But what happens if and when inequality begins to undermine incentives for those in the middle and at the bottom? Honest work should pay an honest wage. That idea is part of the American social contract and one in danger of disintegrating.

We must ensure that our society rewards innovation, ideas and initiative while also ensuring equal access to opportunity and more equitable pay for workers. The American identity depends on it.

This is not an us-versus-them argument, but an all-of-us one.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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