Say Anything Blog

The Financial Times of London:

Most US corporate leaders believe chief executives are overpaid and do not provide value for money for their com­panies, according to a study that will embolden critics of excessive compensation.

The findings – to be published today by the National Association of Corporate Directors – are likely to strengthen calls by investors and politicians, including George W. Bush, US president, for restraint on executive pay at a time of growing income inequality in the US.

The issue is particularly sensitive because the gap between rich and poor in America has reached its widest point in more than 60 years.

Are there executives that are overpaid.  Of course some are and of course some aren’t.  The problem is that it’s nobody’s businesses except the owners of the business how much they pay the people that manage their enterprise.  Money wasted on overpaying belongs to the owners of the company and not to anyone else.  But if a CEO is able to make billions for the investors and make millions for himself they all are better off. 

But the liberals are bound to claim that this justifies them in taxing not just CEO’s who may be overpaid but anyone who has done what it takes to make a good living.  The fact is without the reward many if not most will figure it’s not worth going the extra mile to earn that money.  That hurts not just the exceptional people (who are probably doing well enough anyway).  It also hurts the owners and in fact hurts the rest of society as maybe an overseas enterprise picks up the slack.

It’s a huge fallacy that we’re doing something wrong because the gap between the rich and poor is growing.  The fact is that most of us are getting richer.  The rich, the middle class and yes the working class are doing better.  But the poor will always be with us because they won’t do anything more than eke out a subsistence.  Why hold back the successful because some people won’t show up to work on time?

At work here we once hired a maintenance guy that thought he had finally made it.  He had never had a steady job with benefits before.  Then one day he quit coming to work.  It makes no sense, but it happens every day. 

The bottom line is that the rich generally deserve to be where they are and just as often the poor deserve to be where they are.  Trying to change human nature only hurts people.  If you cut the rich you wind up with less investment and opportunity for the rest of us.  If you try to bail out poor people for their bad decisions you only lock more people into dependency at a subsistence level.