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Today's Top News
Travails of the Super-Rich
On Labor Day we customarily give a nod to America's underpaid and overworked blue- and pink-collar workers--janitors, flight attendants, forklift operators and the like. But this year let's go a step further and salute the most reviled and despised of the people who make our economy happen, the mere mention of whom causes the average forklift operator to spit on the floor. You are thinking, perhaps, of telemarketers, human traffickers and the fiends who answer the phone when you to try to make a claim on your health insurance. But I'm talking about our CEOs.
Just in time for the holiday, two liberal groups--United for a Fair Economy and the Institute for Policy Studies--have issued a gleefully malicious new attack on our CEO class. They point out that the CEOs of large companies earn an average of $10.8 million a year, which is 362 times as much as the average American worker, and retire with $10.1 million in their exclusive pension funds. The groups further point out that the compensation of US CEOs wildly exceeds that of their European counterparts, who, we are invited to believe, work equally hard.
And, in what they must think is their cleverest point of all, the UFE/IPS folks state: "The 20 highest-paid individuals at publicly traded corporations last year took home, on average, $36.4 million. That's...204 times more than the 20 highest-paid generals in the U.S. military." You know what we're supposed to think here: Wow, but generals have all that responsibility! They're responsible for national security, or at least for conducting the wars that increase the threats to our national security and thus help justify ever greater increases in our national security apparatus!
But someone has to speak up for our beleaguered CEO class, and let me begin with that spurious comparison to the top military brass. Could we put patriotic emotion aside for a moment and look at this in a hardheaded, bottom-line sort of way?
Suppose you are the general responsible for all the service people in Iraq, about 130,000, and suppose you manage to lose every single one of them in some ghastly miscalculation. With the death benefit for the family of one dead soldier running at $100,000, your mistake will cost a total of $13 billion. Sounds like a lot, I know, until you consider that a hedge fund manager or financial company CEO can lose that much in a single afternoon, without anyone even noticing. There is simply no comparison between a general and a CEO.
That's a side issue, though. The real point, which the CEOs and their usual defenders are strangely reticent to make, is that it's damn expensive to be rich, and extravagantly expensive to be super-rich. Before you start playing your air violins, consider the costs of maintaining as many as five different homes, some of them as large as 45,000 square feet, most with swimming pools, tennis courts, guest houses and wine cellars requiring constant supervision.
The poor whine about having no home at all, or maybe a two-bedroom apartment for a family of six. They should just think for one moment of the tribulations involved in running four or more mansions, each with its own full-time staff. There's the problem of getting between them, for example. A friend of mine, of very modest means himself, consults for a billionaire couple who commute between London and Los Angeles by private jet, with their dogs following in a second private jet.
But much of what we know about the extreme costs of wealth comes from Wall Street Journal columnist Robert Frank's recent book Richistan. The ultra-rich, drawn largely from the CEO class, require staffs of about forty to fifty people, including not only cooks, maids and nannies but "lifestyle managers" (to set up the entertainment schedule) and--in a throwback to the original Gilded Age--butlers. It's the butler's job, among other things, to deal with any issues that may arise from the proliferation of homes. For example, if the boss is in Palm Beach, Frank reports, "and wants to send his jet to New York to pick up a Chateau LaTour from his South Hampton cellar, the butler makes it happen, no questions asked."
Nor are the ultra-rich in a position to cut back on their expenses--by, say, running down to the supermarket for a $12 bottle of Chardonnay. If they were to do so, their friends would despise them. As Frank explains, the Richistani word "affluent," meaning someone with less than $10 million in assets, translates into English roughly as "scum."
A mean-spirited critic of the ultra-rich CEO class might grumble that the rich should simply find a new circle of friends. But who exactly might these new friends be? If you were in the $100 million-in-assets set, you could hardly consort with the class of people for whom a pittance like $10,000 might be a transformative sum, possibly allowing Granny to get her insulin and the children to have warm winter clothes. People of that class could not be trusted not to pocket the silverware or rip out the gold fixtures in your powder room. They might even make a lunge for your throat.