Monday, September 05, 2011

On Labor Day, Think of the Problems of CEOs

In 1894, when the U.S. government decided on a holiday to celebrate working people, they picked a date in September instead of May first, the existing International Workers Day.  They did this to avoid negative associations with the Haymarket massacre which happened at a union rally on May 1, 1886.

Over the years, of course, Labor Day has come to mean the end of summer and the beginning of school.   In the business world it's the best excuse for a retail sale between the Fourth of July and Halloween.

Meanwhile labor union membership has shrunk and unions have (again) been cast as the economic villains in our society.  There's the recent fight in Wisconsin to rescind public worker union's right to bargain collectively.   A few nights ago there was a noose left at the Orange County Labor Federation.  (Someone is trying to send a message.  But, hey, if they don't like unions, let them go to work on Monday.)

So, in the context of Labor Day, I'd like to present links to several recent interesting articles about our Captains of Industry, the chief executive officers of wealthy, powerful corporations.  These people who get paid a king's ransom to not hire people for menial jobs.  In fact, these are the people who most likely celebrate the high level of unemployment in the U.S. because, if they should decide to hire some workers, they can more easily find desperate unemployed people willing to work cheap.

The four articles are:
  • Beauty Justifies Wealth
  • One in 25 business leaders may be a psychopath, study finds
  • Study: Some US firms paid more to CEOs than taxes
  • How Rich is Too Rich? and follow up: How to Lose Readers (Without Even Trying)

Beauty Justifies Wealth is an article in the Democracy in America blog of The Economist. It is credited only to W.W. (possibly someone named Will Wilkinson).  The subject is Steve Jobs, recently retired CEO of Apple, who has been canonized and beatified for giving the world computerized fetish objects and getting really wealthy doing it.  (He's number 42 on the last Forbes 400 list.)

W.W. writes:
It occurred to me that, as lovely as I find Apple's gizmos, Mr Jobs's wealth, like that of other billionaire barons of the information age, was built in no small part upon an intellectual-property regime that I and many others believe to retard progress while concentrating massive rewards upon a privileged few, generating unfair and unproductive inequality.
Most technical writers would never say such a thing.  If they did, Apple probably wouldn't send them any neat drool-inducing free products to review.  Here's a tweet which W.W. wrote:

Class-war fact: Ruthlessly competitive, patent-monopolist, multi-billionaire executives are worth fawning over, if they've got design sense.

One in 25 business leaders may be a psychopath, study finds is an article in The Guardian.  It details a psychological study which reports that some very successful people can hide their psychopathic behavior.
The survey suggests psychopaths are actually poor managerial performers but are adept at climbing the corporate ladder because they can cover up their weaknesses by subtly charming superiors and subordinates. This makes it almost impossible to distinguish between a genuinely talented team leader and a psychopath.
The study also reports that 1% of all Americans are psychopaths.

Here's a bonus article: Psychologists Explain Why Most Creative Executives Are Arrogant Jerks

Here's the definition of psychopathy from Wikipedia:
Psychopathy is a mental disorder characterized primarily by a lack of empathy and remorse, shallow emotions, egocentricity, and deceptiveness. Psychopaths are highly prone to antisocial behavior and abusive treatment of others, and are very disproportionately responsible for violent crime. Though lacking empathy and emotional depth, they often manage to pass themselves off as normal people by feigning emotions and lying about their pasts.

Study: Some US firms paid more to CEOs than taxes is a Reuters story.  Here's the opening:
Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study said Wednesday. It also found many of the companies spent more on lobbying than they did on taxes.

Remember that this is one out of 4 of highly paid executives.  Only 1 out of 25 is a psychopath.  But it stands to reason that there is at least one CEO in the top 100 who makes more salary than his company pays in taxes and is also a psychopath.

A Democratic representative wants to investigate. He wrote to the Republican chairman of his committee saying he wants  
to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today.
Good luck with that.  The chairman himself is a highly paid corporate executive. Notice that he doesn't want to investigate whether CEO compensation led to our crisis.  That's a given.  He just wonders whether the problem still exists.  (Yes it does.)

Sam Harris is an author who presents a ray of sanity and reason discussing the subjects of religion and morality.  His article How Rich Is Too Rich wondered whether the vast disparity of wealth in our country would be allowed to continue.  This is the context of Warren Buffet, the world's third richest man, who keeps telling us that he pays less percentage in taxes than his secretary. (And we, collectively, keep ignoring him.)

Sam Harris asks:
How much wealth can one person be allowed to keep? A trillion dollars? Ten trillion? (Fifty trillion is the current GDP of Earth.) Granted, there will be some limit to how fully wealth can concentrate in any society, for the richest possible person must still spend money on something, thereby spreading wealth to others. But there is nothing to prevent the ultra rich from cooking all their meals at home, using vegetables grown in their own gardens, and investing the majority of their assets in China
But the article which actually caught my eye was Harris' follow-up How to Lose Readers (Without Even Trying) in which he described some of the looney, knee-jerk responses that first post got.

In the discussion of whether taxes are theft, or not, Harris writes:
Many of my critics imagine that they have no stake in the well-being of others. How could they possibly benefit from other people getting first-rate educations? How could they be harmed if the next generation is hurled into poverty and despair? Why should anyone care about other people’s children? It amazes me that such questions require answers.
Would Steve Ballmer, CEO of Microsoft, rather have $10 billion in a country where the maximum number of people are prepared to do creative work? Or would he rather have $20 billion in a country with the wealth inequality of an African dictatorship and commensurate levels of crime? I’d wager he would pick door number #1. But if he wouldn’t, I maintain that it is only rational and decent for Uncle Sam to pick it for him.

 Let me repeat the last sentence:
But if he wouldn’t, I maintain that it is only rational and decent for Uncle Sam to pick it for him.

I doubt that the richest people in America, even if they could agree on what should be done, could solve our problems with their money.  I think that a large part of America's problems is their money, the disparity of wealth between richest and poorest.

The twenty richest American's together have about 385.5 billion dollars in wealth  (I quickly added up the figures from the Forbes list.)  Wouldn't it be better for the country to have 385.5 billionaires, each with only a single billion, than to leave all that wealth with twenty people?  (Try a little mental arithmetic to figure out how much One Billion Bucks is.  An awful lot.  Enough to retire on.)

Trust me, these people are never going to give up their money.  They are driven, possibly by dark psychological forces or maybe just by greed, to acquire more and more.  That's why it's my opinion, and a humble opinion because I know how unlikely this is, that the U.S. government should take their money away.  Not all of it.  Leave them a mere billion each, enough to survive with just one yacht and two vacation homes.

The mechanics of this are complex of course - but I'm talking fantasy, not tax code.  Our government really does have the power to redistribute wealth.  After all whoever said “No man’s life, liberty, or property are safe while the Legislature is in session” spoke the truth.

Our government won't do anything like this unless the politicians realize that doing it is the only way to get reelected.  In the era of unlimited political money that's never gonna happen.

Sorry to have bothered you with impossible ideas.  Enjoy your day off.  You get a lot less of them in the U.S. than in other rich countries.  Go back to work tomorrow.  Do your job.  Don't complain.

Other MM rants on similar subjects:

House and Wooster and Income Disparity  (It's not just a saying these days that "the rich get richer and the poor get poorer".  Today it's more like an actual law.)

Eli Broad, Masterpieces, Money and Monuments (The fact that these valuable objects of art might be culturally meaningful in some non-monetary sense, if indeed they are, doesn't seem terribly important to him.)

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