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Confronting the CEO Pay Gap

by Katrina Vanden Heuvel

The staggering gap between CEOs and workers is, at long last, getting some attention in Campaign ‘08. But there’s still more to be done to tackle the gap. If candidates really want to turn up the heat with some well-documented, explosive facts, I’d advise them to check out the invaluable report released today by the Institute for Policy Studies and United for a Fair Economy.

I’d like to hear Senator Hillary Clinton make a stink about how the top 20 private equity and hedge fund managers pocketed an average of $657.5 million–22,225 times the pay of an average worker. I’d like to see candidates tackle the gross inequities in an economy in which the 20 highest paid figures in the private equity and hedge fund industry collected 3,315 times more in average annual compensation in 2006 than the top 20 officials of the federal government’s executive branch–and that includes Bush and Cheney (when he’ll cop to being part of that branch).

And while they deploy these heart-wrenching stats, I’d like to hear all of the candidates blast Senator Chuck Schumer for betraying the best traditions of the Democratic party by refusing to increase taxes on those fabulously rich hedgers and equity guys.)

There’s much more in this terrific report. For example, overall, the 20 highest-paid executives of publicly traded corporations made, on average, 38 times more than the country’s 20 highest-paid nonprofit leaders last year. The pay gap stretches even wider between the corporate and public sector. In 2006, the top 20 highest-earning CEOs made 204 times more than our 20 highest-paid military generals, and 212 times as much as the top 20 ranking members of Congress.

The report highlights six practical proposals for change–initiatives that include eliminating perverse tax incentives for excessive pay and using government contracting dollars to encourage more reasonable compensation. Tackling the gap is going to take concerted citizen action, smart research and bold policy changes. But the times are ripe. As the report’s co-author Chuck Collins puts it, ” Meaningful change could be on the horizon, as many political leaders are finally catching up to the public outcry to rein in excessive compensation.”

Katrina Vanden Heuvel is editor of The Nation.

© 2007 The Nation

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20 Comments so far

  1. Jim Arnold August 29th, 2007 12:04 pm

    Great article and facts that demonstrate the self destruction that many businesses are visting upon their employees and the country. However, it is worth pointing out that most businesses do not operate this way. Regardless, this trend needs to be reversed dramatically or the dollars that any of us have will be as worthless as the perpetrators’ ethics.

  2. Future.me August 29th, 2007 12:04 pm

    The problem with our wealth system is that some people make SO much money that it drains from other parts of the economy. There is no way that America should want for anything when you have a person making $657million dollars. That’s just insane. Because they make Ultra Millions every year.

    I’m just wondering how we have so many programs that can’t get funded and how we have to struggle to support our children, and our soldiers. This nation generates so much food and wealth that no one should be homeless or with out food in the nation at all. It should just be impossible.

    The reason we have this problem is because someone can make $30mil for 5 years and it’s never enough. They want more and more. Even though you couldn’t spend all your money if you tried really hard.

    With Million dollar salaries and Multi Million dollar stock options, returns on investments and lack of paying fair taxes, at some point it should just be enough.

    I make a fraction of that I can’t even think of anything to buy, or do with the extra money that I have. And I don’t even make Six Figures. I’m just comfortable. The only thing that I would like to have happen is to make enough money so I didn’t have to work at all and I could just travel all the time. See the world.

    But with this Gap we 90%$ have to work twice as hard to just stop from drowning. We have to try and ration everything.

    At least make them pay fair taxes so we can all Have Health Care, or at least our children. It’s just not right. Talk about lack of Ethics. Man. USA in money we trust.

    ~Future~

  3. tj August 29th, 2007 12:48 pm

    KVH should be careful with this one. Someone could compare her wealth and income (such as income from going on TV blah-blah shows)with the pittance that the vast majority of Nation freelancers and staffers are paid.

  4. nickhart August 29th, 2007 1:44 pm

    Totally. The Nation is run by a bunch of limousine liberal jackals. They serve as a break on progressive movements and a crutch for the two-party system to which they are addicted.

    http://www.slepton.com/slepton/viewcontent.pl?id=729

  5. ezeflyer August 29th, 2007 1:57 pm

    nickhart:
    Please don’t paint us liberals with such broad strokes. “Limousine liberal” means just the opposite and plays right into conservative’s hands. The popularized term limousine liberal is really a neo-liberal which is a conservative disguised as a liberal.

  6. hellodarling August 29th, 2007 2:04 pm

    well, this all makes sense. think about it, if the majority of americans didn’t get financially shafted on a daily basis, how in the heck could the to 20 earners continue to make more money?

    i mean, they have to make more money don’t they? i’m sure they do. in fact, i think they are forced to by law.

  7. Vern August 29th, 2007 2:12 pm

    Let’s call it like it is.
    Nickhart is right about “The Nation”
    They talk the talk to sell papers to a targeted audience, but they UNDERMINE those who actually walk the walk in the world. Read Katrina’s latest patroning desperate attempt at fixing the Cindy Sheehan mis-step(up on “The Nation” site today).

    Talking the talk is safe, but when leading progressive publications like “The Nation” serve to underscore the mindset that public figures such as Nader or Sheehan are somehow overstepping their bounds, then they are more dangerous than the Right’s own brand of marginalizing the Left.

  8. PaulMagillSmith August 29th, 2007 3:01 pm

    When a country makes nothing its citizens make nothing. One writer above hit the nail on the head…outsourcing.

    Unfortunately, the US does make and export something, however it is not something useful, and while it might sustain a few companies & fat cats, it is not enough to sustain the economic health of our entire country. The product? Bombs, bullets, and military might. The myth about, “Oh, war is good for the economy” is just that…myth.

    Let’s look at just one 500 pound bomb. First we borrow the money to buy it (this Iraq travesty has us borrowing $2 billion A DAY from mostly China & Japan). Then we use vital fuel to transport it to somewhere far away (the US military consumes more fuel than many whole countries in the world). What happens next? We blow it up. All that human labor, mined metal, fuel to transort with, etc, gets scattered across the countryside. To add insult to injury we still end up having to rebuild or pay compensation for the stuff we blew up. What a waste of time, resources, & money, not to mention the non-renewable resource of the lives of people involved.

    If we trade our dollars to say Japan, for something like a washer/dryer, at least in the end we have a useful hunk of mined processed metal sitting within our borders, and that (if required) can even be re-cycled into other useful things. What do we get when that 500 pound bomb falls to earth from a very expensive airplane delivering it…nada, but a repayment in fear, misery, and hatred. All that precious mined metal is scattered in small pieces around a foreign country (we don’t fight wars in OUR backyard, now do we?), fuel is wasted, and the end product is destruction or a big hole in the ground.

    You know, there are a lot of similarities between the drug trade and the defense/offense industry and the two have even been linked further in instances of covertly trading with each other.

    We’ve seen how exporting bombs accomplishes little except to fatten the already fat cats, and it does little to improve the lot of the common working man except make him/her have to work even harder, because they are the ones who ultimately get stuck paying the tab. In both cases the balance of trade deficit is expanded because both industries leave nothing on the balance sheet of value actually in this country. Drugs come in the country, money goes out, and the ‘products’ go up in smoke or up someones nose. Bombs (and precious natural resources) go out of the country, debt comes in, and the ‘products’ go up in smoke except with a loud bang instead of a whoosh from inhaling. Either way they make a big sucking sound on our economy. The opportunity costs associated with both are frightening.

    One reason I’m dealing with this concept of ‘trade deficit’ is because this is the underlying fundamental about why we are facing an economic meltdown. If we hadn’t accumulated so much debt we would be in much better shape. The US is large enough, and with enough resources (or the capacity to create them) that it could be self-sustaining except for a few rare items.

    The drug & military industries represent ‘outgo’ without anything to be considered ‘income’ on the balance sheet. One difference is while the $120+ billion Americans spend yearly on imported recreational drugs is an estimate, the $100 billion or so we are spending on our military outside of this country is a matter of public record. Or is it? We really don’t even know because a good portion of our military budget is now ‘undisclosed because of security reasons’. Hey, what the hell? It’s our money, and one of the reasons why people’s houses could get foreclosed, so don’t you think we have a right to know what is being spent, and what for…and to whom?

    Naturally, I understand there are some items that must be kept secret for legitimate national security reasons, but do we really trust our reps in congress to be our watchdogs?

    Perhaps I’m a bit of an idealist, but who ever claimed idealism and logic were incompatible? When I go to the doctor claiming, “Hey doc, it hurts when I do this”, I am there because ideally I’d like to live as healthily as possible. When he replies with, “Well, just stop doing that”, the logic is irrefutable. Whether the search for the ‘ideal’ or the ‘logical’ reply my problem is resolved.

    Idealism leads me to say war is wasteful, and should not happen. Logic dictates that if even our military has said there is no military solution to our current war, and it is causing a financial crisis in our country by waging it, then the smart thing to do is, “Well, just don’t do that.”

    That solves part of the balance of trade problem, but we can do better than that.

    Idealism dictates I take the attitude that people have a right to make up their own minds about what to put into their own bodies. Realism tells me some people need a bit of assistance controlling their intake of substances. Logic indicates that if the experiment of prohibition failed after a trial from 1919 until the early 1930’s, producing only lawlessness & gangsterism, then the ‘experiment’ showed it is not a workable solution to the supposed (or created) problem.

    Move ahead a few years and we see the same methodology applied to other substances than alcohol. Has the new prohibition proved an utter failure…definitely!

    Ok, we’re talking from a balance of trade standpoint here, not a legal, moral, or religious one…got that? To keep that estimated $120+ billion from going out of the country, creating a negative balance of trade, why not regulate & tax our own production & distribution within this country? In 12 states marijhuana is already the number one cash crop, and rather than the government & the populace receiving a benefit from taxation, reducing the balance of trade deficit & decreasing lawlessness, we spend even more tens of billions of taxpayer dollars on interdiction, law enforcement, prosecution, & incarceration. This doesn’t seem logical, now does it?

    So what would you rather have, a continual state of war draining our precious resources and causing a balance of trade deficit that could force our economy into a depression; or how about a trade-off between some guy at the end of your street smoking a little government regulated & taxed (which would likely also lower your overall tax burden as well) pot? This could even reduce the balance of trade deficit, allowing you to keep your own home, rather than face foreclosure. Radical people & situations got us into our current financial mess, but somewhat different, though logical, solutions can get us out. Take your pick.

  9. coffeelover August 29th, 2007 3:02 pm

    No worrries! They are all listed on the TRAITOR LIST

  10. nickhart August 29th, 2007 3:56 pm

    ezeflyer: I work for a limousine liberal. He is worth half a billion dollars. He and his buddy George Soros give loads of cash to nice, respectable charities that don’t really do anything to rectify the grave injustices of the world. He gives money to his Democrat friends–who also make sure that the status quo remains intact, the H1B visas keep rolling in and that working people keep getting screwed. Like the folks at the Nation he’s got some disparaging words for how badly the Republicans are screwing things up, but woe betide the person who tries to challenge the Democrats for their complicity in this sorry state of affairs. Limousine liberals cry crocodile tears for the poor, believe that Democrats are entitled to their votes, then turn around and give us cuts in social services and war without end. They support “humanitarian” wars like the US-led bombing and ethnic cleansing of Kosovo. They don’t put up much resistance to the Iraq war but then complain about how it’s being mishandled.

    In short, limousine liberals are real and they are a threat to building a strong, fighting left that is independent of the Democrats and has the organized power to win real progress. They want us to get out of the streets, stop complaining and get with the party program. When we do that, we lose (and they continue to reap their profits at our expense).

  11. Dr. Zimmerman Robert August 29th, 2007 5:42 pm

    SAD FOR THE NATION

    Dear Katrina and all,

    The Nation had me on the cover of its magazine in March 2005 as one of the new faces of the antiwar movement. At the end of 2005, John Nichols of The Nation named me “Progressive of the Year” and has since said that I am a true “Jeffersonian Democrat.” The Nation also invited me to its foundation dinner in NYC at the end of 2005, presumably to exploit my popularity to sell tickets.

    The Nation’s editorial staff and other staff also invited me to talk with them about not supporting “pro-war” Democrats in any elections anymore, and the editors wrote an editorial stating that. Tom Hayden was also instrumental in formulating that policy.

    Now they are supporting a “pro-war” Speaker of the House, who says she is against the occupation with her mouth but gives George more money to wage the war with her actions. They support a Speaker who has made a mockery of the Constitution as much as BushCo has.

    The Nation just joins a long line of orgs, entities and persons who supported me while I challenged Bush and the Rethugs, but now that I recognize that it is the two-party system that is inherently corrupt and ruining our nation and the world, they are not just abandoning me but trying to undermine me and my candidacy. I believe in doing this, The Nation is also supporting the status quo of continuing war, death and the destruction of our middle class and way of life here in America.

    I am not sad for myself, but sad for The Nation and our nation.

    Maybe Katha Pollitt et al. should go to the Middle East and view the carnage that this Administration has caused with the complicity of the Democratic Party, which she so stridently defends.

    Peace and Justice,

    CINDY SHEEHAN

  12. Earthian August 29th, 2007 6:15 pm

    Here is the link to The Nation on Cindy, with a letter from Cindy and a response from KVH.

    http://www.thenation.com/doc/20070910/kvh_sheehan

    I noted that Cindy, whom I support completely in her race against Pelosi, said that The Nation supported Pelosi and her stances regarding Iraq policy. She wrote:

    “Now they are supporting a “pro-war” Speaker of the House, who says she is against the occupation with her mouth but gives George more money to wage the war with her actions. They support a Speaker who has made a mockery of the Constitution as much as BushCo has.”

    But I didn’t see any facts about that yet. (If someone has seen how The Nation supports the Iraq policies of Nancy Pelosi, please post it here.)

    Attacks and negative labels on KVH for her supposed income by commentors above are unethical unless those doing the attacking have facts about what she actually makes and how she actually spends it. Unsupported attacks and labels are just smears–unfortunate swiftboating one of our own good progressives.

    I’m proud of Cindy Sheehan and Katrina Vanden Heuvel as wonderful leaders in our progressive community.

  13. Dr. Zimmerman Robert August 29th, 2007 7:50 pm

    “Attacks and negative labels on KVH for her supposed income by commentors above are unethical unless those doing the attacking have facts about what she actually makes and how she actually spends it. Unsupported attacks and labels are just smears–unfortunate swiftboating one of our own good progressives.”

    This comment above is just one more distraction.

    It’s the war. End the war now. Stop the killing now.

  14. ezeflyer August 29th, 2007 9:58 pm

    nickhart said:

    “In short, limousine liberals are real and they are a threat to building a strong, fighting left that is independent of the Democrats and has the organized power to win real progress.”

    Your limo liberal Soros really is a liberal. The strong fighting left you want is the conservative left. Liberals are non-violent. Violence is strictly a conservative trait.

  15. dcbeltway August 29th, 2007 11:13 pm

    The problem is welfare for the rich its gotta be stopped. Everything is outsourced and privatized these days in America. The middle class is really becoming the underclass as we are all in debt up to our eyeballs in student loans, car payements, credit cards, and mortgages not to mention healthcare and childcare costs. Everyone is too busy killing themselves at work and other duties to make ends meet to even pay attention as the rich steal away our very lives and souls for pennies on the dollar. These CEO’s are immoral. The old business leaders did have some fair minded values. Henry Ford felt that his workers should be paid well enough to purchase the cars they make off of the assembly line. Today we import our goods from China and the Wal Mart store clerk who sells them cannot even afford to purchase them as he doesn’t make enough of a wage per hour to do so. I forget how much the Wal Mart owners, the Walton family are now making but its probably disgusting and outrageous. The wealthy aren’t happy with being simply wealthy no these people want to gilded age back. Something has gone terribly wrong in this country and greed is good is the official mantra of so many.

  16. Kernel August 30th, 2007 12:12 am

    dcbeltway___ I agree with your take on the problems facing the country and the middle class who will soon join the poor. One cannot help but wonder how long our “leadership”?? will watch more and more people become homeless and hungry while still supporting the rich, the corporations, and throwing our wealth (if there is any of it left) away on a criminal occupation. In many other countries, there has been a point where the people have nothing to lose, so they risk everything to pull the greedy criminals out of control. Could it happen in the USA?
    One hopes it never has to happen but what evidence is there that things will turn around and save our Nation from ruin.

  17. hodger99 August 30th, 2007 1:49 am

    When the opposition is voted in - then does absolutely nothing
    By the time the people figure it out

    Its way too late—

    They will pass their ‘No Protesting’ laws by Misconstruing the vocabulary-

    They’ll say that protesting attracts terror elements

    Then ‘POOF’

    no way out of their grasp-

  18. Vern August 30th, 2007 7:33 am

    Earthian:

    The exchange between Cindy and Sheehan was as a result of a series of recent columns by Katha Pollitt, where she advised Sheehan not to challenge Pelosi.

  19. Vern August 30th, 2007 10:48 am
  20. PaulMagillSmith August 30th, 2007 11:50 am

    RE: Vern August 30th, 2007 10:48 am
    “Ha!
    Good one”

    On the article you just posted from the link above:

    “Liberals Standing in the Way of Change”

    I find I am mostly in agreement. This is why the “progressives” are so important for the world right now. We don’t buy the Hillary Clinton ‘Bush-lite’ bullshit as we equally don’t buy the Bushies’.

    Since the article started with the name Bill O’Rielly I almost didn’t read any farther. I don’t know how the man can get off calling anyone else a hate-monger toward the opposition. Rather than being one part of the solution he represents numerous parts of our problems.

    That being said I think the article fails to point out many of the items listed as positive legislations were not the actions of ‘liberals’, but the progressives of their times, even if labeled by other names at the time. The liberals & conservatives are reactive with each other, and it is left up to the sensible logical progressives to propose solutions to problems, often by thinking outside the box of ‘business as usual’ Washington insiders.

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