Overpaid, and loving it.

On November 9, 2011, in Analysis, Commentary, Uncategorized, by mkennedy

By Michael Kennedy

greedy ceo

The world is stagnating after the Global Financial Crisis of 2008.  The cowboy bandits of Wall Street, the architects of the GFC, perhaps the only accomplishment outside of growing their own portfolio, got off basically scott free.  Many are expecting Global Financial Crisis Mark II.  As every cloud comes with a proverbial silver lining, the silver lining around the clouds of the financial storm is the increased awareness of people that something is wrong, and something needs to be done.  Discussion about the flaws of our financial system are propelled by the sense of urgency and despair.  The “Occupy” movement is gaining traction and gaining support.  They may not understand the issues and have much of an idea of the cause of financial catastrophes, and some may be there purely to try and promote an even worse alternative, but they at least understand that morality has a place in economics.  That’s a start, a good start.

The mood has certainly shifted.  Misplaced optimism about a never ending housing bubble is all but gone and something else is happening which is even more foreboding.  The media is now openly stating that the boom is finished, and that things may well be on their way down.

An article in The Age1 by the economics writer for the Sydney Morning Herald titled “Top Bosses’ riches are undeserved”1 doesn’t just call into question whether our top CEO’s are overpaid, but openly states they aren’t.  A bold move, for a mainstream publication.

Her argument is that in Australia, we have many Oligopolies, and that making a profit in an Oligopoly isn’t that hard.  Corner the market, and you have your customers hostage.

Our greatest period of economic growth and prosperity, a period when the standard of living was on the increase, rather than the current trend downwards, was during a period when high incomes were taxed quite thoroughly, and where CEO remuneration where closer to that of average worker than today.  Arguments that we NEED to pay our CEO’s exorbitant ransoms fall flat as soon as one realises that our current economy is in a miserable state.  The large quantities of money that CEO’s rake in and pull from our economy seems inversely proportional to the health of our economy.  Given the sick state of Western economies, we are clearly paying big amounts for nothing, yet CEO’s, like snotty school children stamp their feet down and demand more and more, lest they leave.

They know where the door is.

The arguments that they, Free Market ideologues, ‘too much Ayn Rand’ Capitalists and their assorted lick spittles put forward as justifications are nonsensical at best.

One argument is risk.  CEO’s deserve a Kings ransom because of risk.  Given that they shed jobs at an astounding rate, it can be hardly argued that they get paid because they ‘risk’ losing our jobs.  If the share price of the stock of the company can increase through out sourcing, off to India those jobs go. Also, during a bull market, making a profit and increasing your share price is a given, no risk there. The only personal risk is their career, their job.  But when the WORST case scenario is that you leave with hundreds of thousands, or more likely, millions of dollars, it can hardly be considered a risk. Many Australians would jump at the chance to take a risk, where the losing position is making enough money to be set for life.  Risk, hardly.  A CEO can run a company into the ground, lose hundreds or thousands of jobs and even commit fraud, and come out better off.  Ralph Norris has little to worry about.  A $16 million per-annum pay packet, and a taxpayer guarantee to back up the banks in case they fail.  He has risk, but it is the government which ultimately is stopping the banks from failing, through regulating them, and underwriting them with tax payers money.

Another popular argument is the importance of their job.  Well, when neurosurgeons, ambulance drivers and pilots get paid millions, I’ll take this argument seriously.

The fact is, our corporations, our businesses have been hijacked by a boys club, an inner circle of parasites who are merely using the economic instruments that others have built as a vehicle for bleeding our country dry.  We don’t live in an ideal free market economy, or even a Capitalist one.  We live in a plutocracy, where corporate interests have bought our politicians, and our supposed “free market” has been usurped for the benefit of a few crony sociopaths who masquerade as entrepreneurs and have suckered many others into believing that they are anything other than socialist crooks.

To go against this excess greed is not advocating socialism, or a desire to be like North Korea.  In fact, if anything, our corporations are replicating that philosophy here.  It is highly unlikely that North Korea’s leaders choose to be paid marginally more than their workers.  They no doubt do well for themselves, because they too, of course, deserve it, or so they would argue.  North Korea’s boys club is just as busy convincing their populace that their austere lifestyle is necessary, while they horde the excess for ourselves.  Sound familiar?  Profits are privatised and losses are socialised.

Why are there huge remunerations, and why aren’t ordinary Australians, who are supposedly now Howards “mum and dad” shareholders simply exercising their right to vote against this excess in companies they part own?  All working people are supposedly shareholders through their superannuation, and we are constantly reminded that we must have a strong share market and not interfere with super profits as it is in our interests.  But why don’t we do anything about it?  When you look at who actually owns the shares of these companies, it is generally large financial companies.  You may own parts of Australian businesses through your super, but it is your super fund which votes.   Quite simply, because shares are owned by similar large companies, they are the ones who exercise power, and they would benefit from voting for larger and larger remunerations, as it sets the industry standard which will apply to them.  If you are a high level executive of CEO of a company which owns shares in other companies, then voting for a pay increase in the companies you own, means an increase for you as well.

There are people who are worthy of being wealthy.  People who are truly entrepreneurs, who actually create a business and enhance the nation.  Australians are not succumbing to “tall poppy syndrome”, but are rightfully outraged at what is essentially hoarding through unproductive means wealth.  They are outraged that our nation, our livelihoods and futures are being stripped so someone who knows where their next thousand hot meals are coming from, and has already a lifestyle better than pretty much any human who ever lived, can get even more.

True entrepreneurs are people like Dick Smith, who has added to our business sphere, who has supported the nation which game him such opportunity.  Even now Dick Smith is still supporting the nation, arguing against our unsustainable population growth and supporting Australian made products by offering Australian made and owned varieties of popular foreign owned goods. Dick Smith is an example of the type of wealthy person we could use more of, people who’s personal wealth represents the wealth that that person adds to our nation.


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