In the previous entry I expressed my opinion that the “best and brightest” hard worker, under a natural free market system (which we have not had in this country for at least two hundred years, if ever), would make no more than five times an “ordinary” worker. I actually think that is a high ratio, but I am willing to err on the side of giving the most talented and persevering folks more than their due.
I do not speak with an envious chip on my shoulder. Most folks who know me judge that I have ample intelligence, talents and perseverance. I have not utilized those attributes to gain much wealth simply because that was never important to me. In particular, I have this Yankee abhorence to receiving capital welfare through stock markets, lucrative retirement accounts, flipping houses, or any type of futures trading. If potential income is not due to my own economic production I’m not interested. For much of the past thirty years folks would have judged this principled philosophy as foolish, but I’m not being hurt nearly as much as most folks in the current economic crisis.
I’m sure the wealthy think the ratio of high to ordinary merit is greater than 5:1. J. P. Morgan thought the ratio of CEO compensation to the ordinary worker on the lowest rung of the corporate hierarachy should be 20:1. Even Ben & Jerry’s, an enlightened corporation if there ever was one, has a ratio of 17:1. The average ratio of CEO to ordinary worker in the same company was 25:1 in the sixties. So be it. Let us be conciliatory to the entitled corporatists flooding the air waves and policy centers with reasons why corporate markets require greater wealth disparity than one might expect. Let us accept disparity in this range for the sake of maintaining our capitalist system.
But let us concede nothing farther than a 20:1 or 25:1 ratio. Let us point to Ben & Jerry’s as not doing something admirable, but expected. Let us pour forth the total outrage that a 1000:1 compensation ratio within the same business deserves. The wealthy receive obscene amounts of capital welfare at the expense of what the productivity of actual laborers merit. We should have no qualms about taxing the bejeebers out of outrageous compensation ratios that go beyond merit or any kind of capital necessity.
If such a tax is avoided by businesses simply maintaining a more reasonable compensation ratio that should be fine by us. After all, consumers do not care how their dollars get split up. Most markets would not be affected by compensating a CEO only 25 times that of an ordinary worker. But laborers and sole proprietors would benefit from holding the line on just how far we are willing to allow a capitalist system to promote greed over merit.
Tags: Free Market Merit, Middle Class Economics, Misinformation
