The Wall Street Journal reported last week that "Executives
and other highly compensated employees now receive more than one-third of all
pay in the US... Highly paid
employees received nearly $2.1 trillion of the $6.4 trillion in total US pay in
2007, the latest figures available."
One of the questions often asked
when the subject of CEO pay comes up is, "What could a person such as William
McGuire or Lee Raymond (the former CEOs of UnitedHealth and ExxonMobil,
respectively) possibly do to justify a $1.7 billion paycheck or a $400 million
It's an interesting question. If
there is a "free market" of labor for CEOs, then you'd think there would be a
lot of competition for the jobs. And a lot of people competing for the
positions would drive down the pay. All UnitedHealth's stockholders would have
to do to avoid paying more than $1 billion to McGuire is find somebody to do
the same CEO job for half a billion. And all they'd have to do to save even
more is find somebody to do the job for a mere $100 million. Or maybe even
somebody who'd work the necessary sixty-hour weeks for only $1 million.
So why is executive pay so high?
I've examined this with both my
psychotherapist hat on and my amateur economist hat on, and only one rational
answer presents itself: CEOs in America make as much money as they do because
there really is a shortage of people with their skill set. And it's such a
serious shortage that some companies have to pay as much as $1 million a day to
have somebody successfully do the job.
But what part of being a CEO could
be so difficult-so impossible for mere mortals-that it would mean that there
are only a few hundred individuals in the United States capable of performing
In my humble opinion, it's the
CEOs of community-based businesses
are typically responsive to their communities and decent people. But the CEOs
of most of the world's largest corporations daily make decisions that destroy
the lives of many other human beings.
Only about 1 to 3 percent of us
are sociopaths-people who don't have normal human feelings and can easily go to
sleep at night after having done horrific things. And of that 1 percent of
sociopaths, there's probably only a fraction of a percent with a college
education. And of that tiny fraction, there's an even tinier fraction that
understands how business works, particularly within any specific industry.
Thus there is such a shortage of
people who can run modern monopolistic, destructive corporations that
stockholders have to pay millions to get them to work. And being sociopaths,
they gladly take the money without any thought to its social consequences.
Today's modern transnational
corporate CEOs-who live in a private-jet-and-limousine world entirely apart
from the rest of us-are remnants from the times of kings, queens, and lords.
They reflect the dysfunctional cultural (and Calvinist/Darwinian) belief that
wealth is proof of goodness, and that that goodness then justifies taking more
of the wealth.
Democracy in the workplace is
known as a union. The most democratic workplaces are the least exploitative,
because labor has a power to balance capital and management. And looking around
the world, we can clearly see that those cultures that most embrace the largest
number of their people in an egalitarian and democratic way (in and out of the
workplace) are the ones that have the highest quality of life. Those that are
the most despotic, from the workplace to the government, are those with the
poorest quality of life.
Over time, balance and democratic oversight
will always produce the best results.
An "unregulated" marketplace is like an "unregulated" football game -
chaos. And chaos is a state
perfectly exploited by sociopaths, be they serial killers, warlords, or CEOs.
By changing the rules of the game
of business so that sociopathic business behavior is no longer rewarded (and,
indeed, is punished - as Teddy Roosevelt famously did as the "trustbuster" and
FDR did when he threatened to send "war profiteers" to jail), we can create a less
dysfunctional and more egalitarian society. And that's an important first step back from the thresholds
to environmental and economic disaster we'renow facing.
This article is
largely excerpted from Thom Hartmann's new book "Threshold: The Crisis of