Social Norms and Executive Pay
July 9, 2010
Japanese CEOs do not earn that much. The chairman of Toyota makes $1.5 million, and the CEO makes less than $1.1 million a year. A new law requires the disclosure of executive pay more than $1.1 million. Only 300 people fell into this category.
Social norms matter. They used to matter in the US too, before the Reaganite restoration of laissez-faire liberalism. In his last book, Paul Krugman looks at the difference between GM in 1969 and Walmart today. Walmart’s non-supervisory employees receive about $18,000 a year, less than half (in real terms) of what GM workers earned in the earlier period. Walmart’s CEO was paid $23 million in 2005, five times more (in real terms) than GM’s CEO a quarter of a century earlier.
Hi,
As I am sure you will find in many of the works of John Paul II The Great, you cross a big moral boundary when it comes to using a government, with legal monopoly on cohesion and violence to artificially limit any human activity.
Sure you can go the route of a totalitarian state, like the former Soviet bloc that JPII helped tear down with Reagan, or the current PRC in China (or Castro’s Cuba, or Chavez’ Venusuela, DRNK…etc).
These states try to control every aspect of human life to the point where the state is your God (no exaggeration, just look it up how “tolerant” they are on religion, even less tolerant to ones like Catholicism that preach an absolute Truth).
Then on the opposite side of the spectrum you can go the way of complete Anarchy, which many Libertarians tend to lean towards. Where there is nobody to trust but yourself, because there are no temporal punishments for breaches of morality other than what each of us thinks is just in a given situation.
Both extremes fail absolutely in practice.
However, a society that sets up a government whose practice falls somewhere in between anarchy and totalitarianism, but leaning more towards anarchy, ends up respecting the inherent dignity of individuals over a collective (again read more JPII, specifically Love and Responsibility) and will reward society generation after generation with the liberty and just responsibilities of being truly free!
Why do I say all this? It’s simple: If you think your rights and limitations come from a government and not from God, you will eventually look to government (man) to set your morality and philosophy.
Taken to its logical end, if you endorse a government that can make making too much money a “crime” or liability in some way (i.e. being “too” productive) you endorse a government that can strip you of your very life when the mob deans it proper.
Who is to tell you and your loved ones what is good and proper but God? The problem with greed is society based and as such, must have its real solution IN our society.
You want to get rid of greedy multi-millionaires who use people like toys (not to mention a whole host of other systemic societal problems)?
Start in your own home, and your own parish and stop trying to kill us all with another failed totalitarian regime, the world has plenty of those.
If you like them so much, go live there. If not, become part of the solution: pray and work to increase the understanding of the wonderful morality and philosophy we receive from our Catholic faith.
typo: “coersion and violence”
Mr. Rosales, I don’t think MM said anything about using governmental coercion to reduce salaries. Indeed, I don’t think the JAPANESE have any laws limiting executive salaries; instead, it’s a matter of cultural norms.
A new law requires the disclosure of executive pay [in Japan] more than $1.1 million. Only 300 people fell into this category.
According to Forbes, 453 American CEOs had total compensation in excess of $1.1 million in 2004. Given that the population of Japan is less than half of the United States, that would make highly paid executives more prevalent there than here.
Digby,perhaps the reference in the article to “Reaganite restoration to laissez-faire liberalism” seemed to take the matter away from strictly cultural norms and into considerations of government policy. I am all for Our Faith influencing in any way possible our cultural and societal norms, but government interference in the economy will always come with a price.
Dear Mr. Rosales,
I think you have a very poor understanding of the thinking of Pope John Paul the Great.
Second, you seem to have no regard for democracy. You suggest that the acts of a democratic state and a brutal dicatorship are equivakent. I would disagree.
Randy,
5uccessful human living is all about finding reasonable and workable ways of living together. Gov’t is all about limitations and restrictions. Good gov’t is enforcing the lightest restrictions on individual activity and still achieving a fair and workable society. Ideally everyone is free to do as they please until they impinge on the freedom of others or the society in general. Of course this is always easier said than done. Human life is imperfect and always will be, but a good and healthy society should be engaged in an ongoing open and honest dialogue about how best to live together.
Gov’t of any kind will always be about limitation. Too much, too severe is totalitarian, too little brings anarchy. The job of societies is to find the Goldielocks Gov’t that can find the proper balance. Maybe no speed limit in urban areas is a bad idea and perhaps CEO’s and other executives, who have shown themselves all too often capable of running their companies into the ground, should not be able to engorge themselves.
I would point out to some on this thread that one of the overarching principles running through Catholic social teaching since Rerum Novarum is that market outcomes do not in themselves lead to just outcomes. Fair wages are not synonymous with market wages. It is incumbent on the state to step in and rectify wrongs, either directly or by empowering subsidiary mediating institutions such as trade unions. The guiding principle is not individual liberty but the common good.
“It is incumbent on the state to step in and rectify wrongs, either directly…”
And in the context of the original post, it sounds very much like you’re saying it’s a legitimate role of the state to determine how much money is “too much” for someone to make, and then take it upon itself to penalize/confiscate anything earned over that arbitrary total (and punish the person who earned said evil excess cash).
Little wonder Mr. Rosales went off about totalitarian states.
“According to Forbes, 453 American CEOs had total compensation in excess of $1.1 million in 2004. Given that the population of Japan is less than half of the United States, that would make highly paid executives more prevalent there than here.”
I wonder how Japan and the US would compare on CEO’s making over a billion.
At any rate, as any student of Rand and Friedman knows, greed is an absolute requirement for a market economy. The free market would not succeed without it. To rail against wealth and the rich, as Christ did is hoplessly naive, from an economic standpoint.
Lv, you are overly influenced by the paradigm of liberalism. in Catholic social teaching, there is no unqualified right to market rewards. In the first place, the state does not intervene directly, but facilities the twinning of solidarity and subsidiarity by embracing a corporatist approach by empowering unions and setting various norms for pay and benefits. And since Catholic social teaching regards the distribution of wealth as more important than the accumulation of wealth, then the government may legitimately use the tax and expediture system for the purposes of redistribution. If any of this sounds weird to you, it is because of the dominance of the liberal paradigm.
Black is white; War is peace; conservative is liberal.
It only confuses your point to use words such as “liberal” to mean things which the word ceased to mean a couple hundred years ago. Better to coin a new word.
Rodak
The word liberal still means that when outside American hegemony.
Then the supposed “hegemony” is bogus, no?
Rodak
Not really, America’s hegemony is not necessarily over the political ideas of other nations (though some places it includes it). It’s place as “king of the hill” does not mean other traditions and nations ignore their history of discussion. They are not into the American political labels as much as what is happening via America.
“Walmart’s CEO was paid $23 million in 2005″
so what? he also employs alot of people and pays heavy taxes. Half of that 23 million is collected by the government. You liberals have to stop wanting to confiscate rich peoples money, that is not ‘Catholic Social teaching’. Don’t be so money obsessed.
oh, and btw: thanks for giving us Obama, Sotomayor and Kagan, unborn children will be slaughtered legally for another 30 years…
Gunboat philosophy, then?
oh, and btw: thanks for giving us Obama
You are welcome. I will do my best to repeat the favor in 2012.