When do we say enough is enough? Opening the local paper we were treated to yet another story about corporate CEO largess. There is nothing new in the story itself. Year after year we have been treated to occasional news stories about golden parachutes, stock options and various perk packages handed to the managers of the corporate over class.
But we are now in a financial crisis which can be blamed on the deregulation and privatization lobby of big business interests. The architects of this mess are the very CEOs and lobbying groups now sitting in congressional committees seeking taxpayer bailouts to save “our economy.”
That’s why the recent news story about CEO pay is so troubling. In the middle of this crisis, with corporate CEOs appearing before Congress, with hats off and hands out, we get a news story with the following information:
Banks receiving bailouts handed out CEO pay totaling $1.6 billion in 2007.
The average amount paid to the banks’ top executives was $2.6 million … each!
The CEO of Goldman Sachs took home $54 million. The total for the top 5 managers at the same bank was a whopping $242 million.
The “big three” automakers started their quest for public assistance by flying to Washington in their private corporate jets. It was a public relations error, which they “fixed” by carpooling to DC in their next visit seeking $25 billion in aid. To his credit, Montana U.S. Sen. Jon Tester suggested that they reduce their pay to a dollar until the companies returned to financial health. All three agreed to the pay reduction as a condition of the proposed bailout.
Compare these stories with the headlines here in Montana. Public employees across the state essentially agreed to a wage freeze (allowing a modest increase for the bottom end of the pay scale and some adjustment to health benefits). They agreed to wage concessions because they recognized that people are hurting and that state revenues are falling. Even though their pay has actually eroded over time, they recognized they have a role to play in getting the country back on the right track.
Along side public employees are Montana private sector employers and workers. Average wages in Montana remain among the lowest in the country. Montanans continue to have among the highest number of people working two jobs to make ends meet. We will have to wait and see how these folks fare in the current crisis, but we can bet it will be difficult. Announcements of curtailments, cutbacks and layoffs have already started and are very likely to continue for the next year.
In the world of economic analysis and public policy, people are “consumers.” Behavior is explained by economic incentives and penalties which, appeal to our self-interest. Of course consumers do not make sacrifices for the good of the country and their neighbors. It is a cynical and narrow view of human interaction.
The reality is that this crisis will not be resolved by “consumers.” This crisis will be solved by “citizens.” It is citizens who share a sense of common purpose and commitment to something larger than individual bank accounts. It is citizens who are willing to sacrifice their own self-interest for a greater good with a view toward the long term.
That is why we must say enough is enough to the policies and practices, which have led to the economic meltdown. There is no greater example than CEO pay practices in corporate America. The new administration faces a daunting challenge in mobilizing our national sense of common purpose. The good news is that most of us stand ready to make sacrifices. The bad news is that people won’t do it if the individuals who own and control our major corporations are not willing to join in the effort.
Ken Toole is on the Montana Public Service Commission