Concentrated big money is costing us--big time.

• Author: Hall, Robert
• Position: MARKETING SOLUTIONS

"Sears and J.C. Penney are two vastly different case studies of what happens when hedge fund guys control big retail chains. However, the results are the same ... they've gotten it wrong."

--From "When Wall Street Wears the Pants," Fortune, April 8, 2013

AS WEALTH HAS BECOME MORE CONCENTRATED AMONG THE FEW, the relationships of the many have become more fragmented. Together, these trends present significant risk to business, government and our personal well-being.

Big money is growing bigger. Four-fifths of the increase in income since 1980 has gone to the richest 1 percent of Americans. The Washington Post reports that 20 years ago providers of capital received 25 percent of the national income and today it has grown to 35 percent--shrinking the pie for wage earners and salary owners down to around 65 percent. The top five executives in large public companies now capture 10 percent of their companies' net profits compared to 5 percent in the early 1990s. In the last 50 years, CEO pay has jumped from 50 times average frontline worker pay to 350 times. Finally, for every dollar of increased output resulting from greater worker productivity, workers are getting about 13 cents.

Even counting the substantial charity of the wealthiest, it's the elites who harvest much of the gain. According to The Atlantic, of the 50 largest individual gifts to public charities in 2012, 34 went to educational institutions such as Harvard, Columbia and Berkeley that cater to the powerful. Not a single one went to social-service providers that principally serve the poor.

Socializing the losses

The platforms for aggregating wealth and power are proliferating. Hedge funds, private equity, investment banks, traders, sophisticated investors and celebrity CEOs surgically using the tools of high finance, sophisticated analytics and cheap capital have seized a level of power and control like monarchs of old. They are new royalty in the seats of power. With varied schemes, they have locked-in their gains while transferring risk to employees, taxpayers and other stakeholders. In the financial crisis we coined the phrase, privatizing the gain and socializing the losses. In the realm of worker pay, we might call it feeding the fat and starving the skinny.

Similarly, technology's global platform has dramatically enriched sports, entertainment and media stars. Malcolm Gladwell defines it as an extreme "tournament" model where a few winners take nearly all. The elite--Madonna...