Social Norms and Executive Pay
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.