Your pay is going to be slashed to $500,000, you executives in financial institutions that take significant federal aid in the future. And don’t whine that this is an unconstitutional, misleading, picayunish, envy-mongering rule by President Barack Obama. It’s popular, and he won.
I have to say, some of you possibly have it coming, seeing as how you may have manipulated corporate boards to stuff millions in your pockets when business sense would have dictated your removal.
But many of you are also part of a much larger, much different story that generally escapes acknowledgment in an anti-corporate, CEO-bashing American mood exacerbated by hard times.
We’ve had a managerial revolution since the early days of this country’s history, the scholar Alfred Chandler wrote in 1977 in a Pulitzer Prize-winning book, “The Visible Hand.”
As a review reminds us, businesses grew in size to do things small businesses could not do, and out of that emerged an increasingly professional, technically able class of administrators who mastered systematizing, coordinating and supervising arts that increased efficiency and output and reduced costs.
Without this expertise at large corporations, we’d be little more than a Third World country, and, it’s been noted, you could forget personal computers, commercial aircraft, inexpensive retail outlets, TV networks, telephones, life-saving drugs, automobiles, millions of jobs and, well, let’s sum it up. You could forget the wealth that makes our lives better in tens of thousands of ways.
It is not, after all, just an accident that the United States remains the single biggest national economy in the world, outstripped only by the 27-nation European Union; that we continue to be the top manufacturing power in the world, despite a decline in jobs caused by technology; that we have made up for that loss with service jobs that typically pay much more than the manufacturing jobs, or that we have the highest productivity per worker in the world.
Obviously, it is not just managers of big businesses that gave us all this, as crucial as that factor is, but also such things as creative entrepreneurship, technological sophistication, small businesses, an exceptional work force, the stable rule of law and — very important — freedom.
Every year, the Heritage Foundation undertakes a study of the degree of economic freedom allowed in various societies and shows how the higher the degree of that freedom, the more likely the society is prosperous.
America has been retrogressing in its allowance of accomplishment, and this salary intervention by the Obama administration is one more step in that backwards direction, and from the rule of law.
As a former New Jersey judge has written in The Wall Street Journal, the salary caps are a violation of freedom of contract and are also an unconstitutional “taking” of something of value from a private citizen.
He notes as others have that the caps will limit the ability of the affected institutions to locate better talent, and could have noted that this is part of what drives CEO salaries up — the competition for managerial brilliance.
I know $500,000 still seems extravagant to most of us, and I get it that people who are hurting are more than a little angry at the partially culpable who are still rich. But as in the beheading of aristocrats in the French Revolution, the only thing achieved by the caps is to appease the vengeful.
As high as it is, executive income is economically insignificant, this step is unlikely to affect it in general, and most CEOs have surely benefited society far more than most politicians, who ought to tremble at any idea of adjusting compensation to reflect merit.
Examiner Columnist Jay Ambrose is a former Washington, D.C., opinion writer and editor of two dailies. He can be reached at [email protected]
