MINT has carried Raghuram Rajan’s article on whether taxing the top 1% would solve the problems of the US. ‘Occupy Wall Street’ represents the other 99% and that is what they claim.
While I understand where Raghu is coming from, I do not think that it is good old blame-game of the haves by the relative and absolute have-nots. The system has been gamed. That is my feeling.
He is right to point out that there are legitimate rich in the top 1%. But, the gap has become far too wide to be explained away anecdotally. It is systemic. There has been a regulatory and policy capture and the financial industry epitomises it. It is not the only villain. The backdating of stock options, the reduction in the strike prices of stock options under executive compensation plans in case spot prices fell too much making these options almost the equivalent of a fixed compensation plan happened in the technology sector.
I think what he wrote in ‘Saving Capitalism from Capitalists’ is happening and he is not fully recognising it.