When it comes to basic economics, the editors of the St. Louis Post-Dispatch are weapons grade stupid.
Today they published an editorial that is one economic fallacy after another and typical leftist blather.
Starting off with this gem:
By almost any measure, one of the least-successful movements of the past decade has been the effort to rein in executive pay. “Say on pay” laws haven’t worked. Tax reforms haven’t worked. Shame hasn’t worked.
What should these people be ashamed of? Being successful? Earning money?
These executives lead some of the largest corporations in the world. Can any of the editors of the Post-Dispatch do that? Hardly.
What the executives of these corporations have is a very elite skill set that now competes on the global scale. In other words, what they are selling, their abilities, is in short supply.
And for the editors of the Post-Dispatch, when something is in short supply, but the demand for it is high, what is the result?
It’s worth more. Hence, the salaries you statists want to restrain.
So, these people should be ashamed that they worked hard, studied, learned, applied what they learned and then entered into a voluntary agreement with an organization where they agreed to pay X amount of dollars for their work?
Why? Because a bunch of class-warfare mercenaries posing as newspapermen thinks it to be unfair?
Shame of the editors of the Post-Dispatch. They want people of skill and ability to feel guilty for using their skill and ability to make their own lives better.
(And that what just the first paragraph. It gets worse.)
If there’s any good news, it’s that the CEOs in the Equilar-AP study earned a mere 205 times the average worker’s wage. Average wages have risen slightly, so the number is down from 257 in 2013, the AP calculated. The AFL-CIO says the 2013 ratio was considerably higher, on the order of 331 times the average worker’s.
Whether it’s 205 times or 331, it’s markedly higher than the 30-to-1 ratio in effect in 1978. CEO pay rose 937 percent between 1978 and 2013, reports the Economic Policy Institute.
This nicely tracked the rise in income inequality. American workers have less because the bosses, and the shareholders they slavishly serve (the wealthiest 5 percent of Americans own 70 percent of stocks), have more.
The finite pie myth. The fallacy that economics is a zero-sum game is one of the more persistent fallacies out there, and I believe deliberately so. It’s effective to the ignorant, which I would assume readers of the Post-Dispatch editorial page generally are.
This fallacy boils down to the belief that if one person has more, than another has less. Because the CEO pay is higher, it’s not possible for American workers to get more. Or worse, when one CEO gets more, workers get less.
The problem is, it’s not true:
So we have a choice: either the editors of the Post-Dispatch didn’t know this, throwing their credibility on economic matters into question, or the did and just want to print propaganda, throwing their integrity into question.
I honestly know know which it could be.
But I do know the ignorance didn’t stop with the above:
The Dodd-Frank Reform Act of 2010 contained provisions giving shareholders a “say on pay.” At least once every three years, shareholders get to vote on financial compensation packages for executives. For the most part shareholders have blithely endorsed the decisions of compensation committees and boards of directors.
And why not! What’s tens of millions of dollars in siphoned-off earnings among friends? If a top executive’s pay is tied to share price, then his interests are closely aligned with shareholders (most of whom are in and out of a stock in four months or less). Unless an executive drives the company into a ditch, they’re going to give him a raise.
Look at this. They got exactly what they wanted in Dodd-Frank, and now they are complaining because the investors in a company aren’t doing what they wanted. Instead, they are actually rewarding an employee with a raise when they do their job.
Consider that in 1955, Thomas J. Watson, who had had built IBM into a juggernaut that was only getting more powerful, was paid the equivalent of $3 million in today’s dollars.
That’s a healthy number that sounds about right for a top-tier executive. America needs an IBM rule: Anyone who gets more than $3 million ought to have to prove he’s better than Thomas Watson was.
This isn’t a dictatorship. This isn’t a country where a group of people can limit what a person earns because they think it’s unfair for him or her to earn more.
This entire editorial exposes a contempt for individual rights. The board genuinely believes that no one person should be allowed to earn whatever they can. They believe there should be limits. Something should be done to keep people from making as much money as these CEOs are today, because greed, or something. They base their entire opinion of fallacies and emotion.
America’s mixed economy has been sliding away from capitalism and more towards statism ever year, accelerating away from freedom in the last decade. More controls and more force isn’t going to do anything for the “American worker.”
The solution to creating jobs, raising wages and improving the lives of all Americans lies not in more government action. It certainly doesn’t lie in poorly thought out editorials written by puffed up pseudo-intellectuals.
It lies in a respect for individual rights. It lies in government removing itself from the market.
It lies in capitalism.