The movement against the 1% continues to grow in the United States, but on Wednesday we saw it come from an unlikely place, one of their own.
Abigail Disney (yes, that Disney), went on the record to absolutely slam CEO pay and the structure of taxation for those who have accumulated enormous wealth.
The Heiress was pushing the hyperbole, stating that:
“If your CEO salary is at the 700, 600, 500 times your median workers pay, there is nobody on earth, Jesus Christ himself isn’t worth 500 times his median workers pay.”
But is she right? I mean about the CEO salary claims, not about Jesus Christ’s merit quantified in a Dollar amount. That’s another conversation for another day. First of all, a free market advocate would say that a CEO is compensated what the market dictates he should be. Do a great job and lead a company to a massively profitable year, as the technical MVP you should receive the greatest windfall. The corporate structure works in theory but in practice is more complicated.
Ms. Disney walks in high circles and will spend a lot of time around the men and women who lead corporations. Abigail better than most people will know that being the face of a company is a CEO’s primary job. There are other execs and middle-managers on board to help make decisions, which allows the Chief Executive Officer to get down to the business of shaking hands and talking to Amanda Lang on Bloomberg.
I’m exaggerating a bit, but evidently, a CEO has a lot less real-life worries than one of the guys working in the factory. A lot of the time he will be recession-proof, and it is proven that market downturns are adored by those with the capital to benefit from them. Having money to invest in those circumstances is obviously a much bigger indicator of success than being shrewd. For a factory worker, a downturn means closures and lay-offs.
A strong argument for justifying CEO compensation is the leader at the helm has earned this success and, in many cases, has dragged themselves through layer after layer of corporate mud and blood to reach the top of the mountain. In a capitalist society that rewards success, those who complain about executive compensation are just “losers” as our President would like to say. But are they?
Well, the problem with taking the system at face value is it isn’t a perfect battleground. The marketplace is not the golf course, unfortunately. John Daly can’t show up in his car overnight and win the US open. Years of D.C. corruption have done more to protect the wealth of the elite than they have to encourage prosperity in the nation as a whole. Another quote from Disney illuminates this point:
“The problem is that there’s a systematic favoring of people who have accumulated an enormous amount of wealth, I think that the top rate right now is as low as it’s ever been. And if I’m paying a lower effective rate than my assistant is, something is fundamentally not right.”
Clearly, people hate seeing businesses totally failing, like Sears, and the cashier loses her livelihood and the CEO who ran the company into the ground gets a mint.
Again you rally back, “might is right”. The people earn the power and the influence and tax cuts help create wealth in the country. Trickle-down economics is an old debate in the US that has mostly been discredited. It mainly fails because there are too many holes in the tax net as you move higher.
If you have $500,000,000. firstly. you don’t keep it all in the US, you give it to your wealth manager, and he buys a flat in London, a house in Panama, a share in a luxury golf course in Dubai, etc. You do all this through a corporation, maybe anS works best, and then your legion of high priced accountants jump through hoops to show the IRS you own as little as possible and reduce your burden as much as they can.
You still aren’t convinced though because you believe in small government and it’s their right to do what they want. You’re correct, the government is probably the problem. Capitalism thrives when the market decides what’s best. Unfortunately, in 2008 we got a first-hand example of Government bail-outs perpetuating wealth in those who had failed. There was no crisis. Banks had cheated, lied and exploited their way to ill-gotten gains. When their mistakes manifested in complete failure, they asked for a do-over, which they got.
Goldman Sachs was so underhanded they started betting against the clients that they claimed to represent and they went down anyway. Then ultimately tried to hide it. Bail-outs for big corporations are clearly socialism at its worst because no-one was bailing out the working guy who had to foreclose on his apartment because of their mistakes.
The emergence of a democratic starlet, Alexandria Ocasio-Cortez has brought socialism back into the debate. It’s back because US capitalism failed in 2008 over a fake crisis. If we ever have a real emergency, it’s now a bigger problem.
Donald Trump will save you from the socialists, correct? Wrong. His tariffs are pure communism, inhibiting the free market. His actions will allow a democratic President enormous executive power in the future. If Bitcoin was a referendum on the appetite for economic freedom, then the answer was clear. Unconventional monetary policy that pumps asset prices artificially was always going to benefit a few at the cost of the many.
Abigail Disney is a real-life US Princess and well-done to her for caring about the people around her. Ultimately lobbyists and Governments corrupted the free-market. It shows most clearly when even the ultra-wealthy who benefit from it start pushing back.
“A society grows great when old men plant trees in whose shade they know they shall never sit”, a Greek proverb goes.
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Last modified: July 2, 2020 7:32 PM UTC