Question of the Day
Yesterday morning, Mrs Mayweather sent out the following email to the denziens of Port Awesome:
Here’s the Big Issue I’m struggling with today. Look at these numbers and tell me you don’t want to vomit.
Here’s my question: It seems like there has to be some way to regulate CEO pay & benefits. How? I don’t think you could effectively legislate a salary cap system, and that’s not really the worst of the problem–there’s also the endless stream of signing bonuses, retirement packages, perks and platinum-grade health insurance along the way that further inflate the amount of total dollars being concentrated in too few hands. Mr. Mayweather thinks a ground-up approach might be more effective than legislation–he would advocate for educating shareholders and fomenting outrage, so that they rise up and demand the company changes its business pratices. I’m skeptical this would work.
So, seriously, help me figure this one out. I’ve already enlisted my dad as well, and I’m anxiously awaiting his 18 pt. font response. : D
I certainly lead toward Mr. Mayweather’s view. However, there is room for debate in my mind. I agree it is a bad idea to set the precedent of allowing the Federal Government to directly impose salary caps on anyone but obviously there is a problem. This is where the pure capitalism unfettered from regulation ideology crashes and burns. Bush’s bailout is simply evidence that when the chips are down they are willing to throw out capitalism for socialism without even thinking about it. We can’t fund a single-payer healthcare system but we can give welfare to a financial system that can’t manage itself? Bush lowered taxes, cut regulations, and at the end of his term is trying to hand an unthinkably huge tax burden onto the public because it turns out those regulations had some kind of crazy purpose after all.
The basic nature of the free market economy works on the premise of reward and risk. If the balance of reward and risk ceases to have meaning the economy ceases to function. It seems to me that this could describe the current problem with out economic situation and the solutions being proposed. The people who are reaping the greatest reward are assuming the least risk, and the people with no reward are bearing the rest. If parasites fatten themselves too much they can kill their host. The relationship need not be parasitic. It can be mutually beneficial. It is appropriate that the people who take the greatest risk earn the greatest rewards. A healthy economy means a healthy populace. A wealthy nation is fed, educated, and free. Poor nations are hungry, ignorant, and tyrannized. Despite what my leftist brethren believe, corporations are not inherently evil. They are tools like every other human creation and as such are morally neutral. It is their users who imbue them with meaning.
I don’t believe that progress is inevitable in the sense that it just happens. Regression happens frequently. I believe that progress is the only viable option available to us as a society and a species and that it is a choice we have to actively make. I don’t find the other choices acceptable from my personal standpoint. I don’t want to live in a declining civilization. If we were all to try and live Amish style, most of us would die. To be able to be Amish is something of a luxury in our modern world. They dwell like Hobbits in the Shire.
Where Marx and the rest of the Commies get it wrong is their basic misunderstanding of human nature and economics. Humans are not evolved to be hive creatures working mindlessly for the good of the collective beyond their own self-interest. While these kinds of totalitarian structures are nothing new and were old by the time of the Pharoahs they all fell apart in the same pattern. It is in the best interests of the tyrant to control development in all spheres of the society, but it is certainly not in the best interests of the society for this to be the case. Tyrants stifle innovation and invention; when the individual is worthless societies stagnate. Two thousand years ago in Ancient Rome all of the individual technologies and infrastructure needed to build a steam train existed. The Empire was vast and a method for moving material and men quickly across it would have changed history in a way so radical that the modern world would be an incredibly different place. But slave labor was rife and so technologies designed to make labor more efficient were developed slowly. No one saw the reward.
It is impossible to fully appreciate what free market economics means to modernity but this does not mean that everything the free market produces is beneficial. The value of the individual and the rule of law are what make the free market function properly. It is the job of the Congress to regulate interstate and international commerce, which certainly covers virtually every major corporation in existence. It is in the power of the Congress to levy taxes and tariffs. I don’t see what is wrong with laws being enacted that regressively tax CEOs. Those taxes could carry special penalties for executives that reap huge paychecks when their company is losing money or in other circumstances. The goal of this regulation should be to discourage absurd executive compensation packages, not to eliminate just compensation. If a company is healthy and successful there should be no limits placed on legitmately earned rewards. However, cash infusions to companies that mismanaged themselves are a bad idea, especially if the executives of those corporate entities continue to draw absurd salaries and benefits.