Yesterday’s New York Times had a column by Ben Stein entitled New Front: Protecting America’s investors. He expresses outrage that some (not all by any means, but all too many) corporate CEOs and executives are looting their companies under the noses of compliant, or at least delinquent and toothless, boards of directors. He calls it looting. To me, it seems more like these folks are mining our economy instead of cultivating, growing, and harvesting our economy as they should be. Regardless, Mr. Stein’s complaint brings to mind the old Woody Guthrie line from the Story of Pretty Boy Floyd:
Yes, as through this world I’ve wandered
I’ve seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
That this sentiment is coming from dyed-in-the-wool conservative Ben Stein is indicative of something. I’m not sure what, but I think it’s significant. Mr. Stein writes:
there is something deeply broken about the corporate system in America. Long ago, my pop was pals with Harlow H. Curtice, the president of General Motors in its glory days in the 1950’s. Mr. Curtice presided over a spectacularly powerful and profitable G.M.
For that, in his peak year as I recall from my youth, he was paid about $400,000 plus a special superbonus of $400,000, which made him one of the highest-paid executives in America. At that time, a line worker with overtime might have made $10,000 a year. In those days, that differential was considered very large — very roughly 40 times the assembly line worker’s pay, without bonus; very roughly 80 times with bonus. A differential of more like 10 to 20 times was more the norm.
Now C.E.O.’s routinely take home hundreds of times what the average worker is paid, whether or not the company is doing well. The graph for the pay of C.E.O.’s is a vertical line in the last five years. The graph for workers’ pay is a flat line — in every sense.
Now, my fellow free-market fans may well say: “Hey, stop your whining. This is the free market at work.” Only it isn’t the free market at work. It’s a kleptocracy at work. (I am indebted to another of my correspondents for the word.) What’s happening here is that the governance system for many — by no means all — corporations has simply stopped working.
He then asks what this unlovely vision of corporate America means to the soldiers and Iraq and the vision of America for which they are fighting.
Now, we are engaged in a war. More than 100,000 Americans are fighting far from home. Many don’t come back. Many come home crippled. They are fighting for a vision of a just and decent society back home in glorious, shining, blessed America. And back home, meanwhile, the looters are running wild, taking the meaning out of that vision of America, taking some — by no means all — of the beauty out of America as a land of justice and fairness.
ONE of my correspondents wrote that she, a flight attendant at United Airlines, had played by the rules, believed what her bosses told her, trusted that the laws would protect her, believed that fairness would triumph in the end because it’s America. “I guess that makes me a fool in today’s world,” she said, because now she is broke, with no job, barely any pension and no faith. While the soldiers are fighting to protect us from the terrorists with bombs, too few are at home protecting us from the terrorists with briefcases. There aren’t a lot of such terrorists, but they do a lot of damage.
Surely this is not what Colonel Denman won his medals for.
Bringing the soldiers into his column seems a bit incongruous to me. Americans who work hard and play by the rules should prosper, be they military or civilian. But if it’s the tarnished dreams of soldiers that are needed to bring conservatives like Mr. Stein on board, so be it. Perhaps it is frequently the debt obviously owed to ordinary soldiers that bolsters the middle class from generation to generation. I think social programs like the GI Bill that gave substantial subsidies to returning soldiers swelled the ranks of the middle class after World War II. Shame largely prevents us from ignoring veterans who put their lives and health on the line to do their job and allowing them to sink into a disgraceful poverty even if it does not prevent us from ignoring a coal miner that puts his life and health on the line to do his job.
Mr. Stein has a dry sense of humor, so I’ll assume he is joking when he says:
[I]f President Bush is searching for an issue, I might suggest this: common decency for the workers and the savers and investors of this country, and an end to the hideous breaches of trust that build great mansions in the Hamptons and wreck a free society.
Through my jaundiced eye, Mr. Bush has done everything in his power to ensure that decency is anything but common, to facilitate hideous breaches of trust, to increase the numbers of mansions in the Hamptons (or at least the size of the existing ones), and to sap the strength of our free society by dramatically concentrating wealth in the hands of a few.
It does seem that if you business plan is to cut wages in half or export your labor force to China getting paid tens of millions of dollars for your insights is as bit excessive – I expect we could find thousands of recent MBAs who woud jump at the opportunity to do the job for $250K a year.
Now, somebody who can find a way to *avoid* doing these things – that would be worth paying the big bucks for.
Funny how nobody gets their panties in a wad over the entertainers and professional athletes who make far more than most CEOs. At least CEOs provide jobs for millions of Americans to make a living, which seems far more virtuous.
If you want to talk about looting and mining our economy, how about an honest discussion of the litigation explosion which, by a recent estimate cited in the Wall Street Journal, now sucks around $245 BILLION out of our economy per year (roughly $830 per man, woman, and child in the country), and drives up the cost of insurance, products and services for everyone. And perversely, around half of that goes to the lawyers.