On Executive Compensation

As noted in the Wall Street Journal, “The U.S. Treasury and the Federal Reserve unveiled Thursday a set of curbs and rules for executive compensation at banks, marking a watershed moment for government intervention in the private sector.” As one might expect, the right is spinning the pay curbs as an assault on free markets and capitalism, and the left as a long overdue step to end the looting of corporate America by CEO’s in collusion with the Boards of Directors who decide their compensation.

Wikipedia has a pretty good summary of how the system currently works, and a more detailed, albeit somewhat dated, scholarly paper on the subject may be found here. I tend to lean to the left on this one, and am more or less in agreement with Mark Green’s take at Huffpo. In short, I suspect the claim that CEO compensation decisions are comparable to those for other highly paid individuals such as the top tier in major league sports, movie stars, pop singers, etc., is poppycock. I have little faith in the integrity of the system, and suspect that, in effect; CEO’s are not only cutting the cake, but are deciding who will get the first piece. I do not agree that such legitimized thievery is an essential aspect of free market capitalism.

According to the arguments on the right, summarized, for example, here and here, the Administration’s attempt to regulate executive pay won’t work. We are told that the services of these highly talented individuals are in great demand, and, if we refuse to cross their palms with silver, they’ll simply jump ship and move to more lucrative posts, or, according to a rather more fanciful argument, will start successful new private businesses of their own. To all this I can only say, I doubt it. I suspect people are standing in line to take these jobs, and that many of those in the line are not only more capable than the current incumbents, but are also willing to work for a much more reasonable level of compensation. Who is right? We are in the process of conducting an experiment to find out.

The right has made some very specific predictions about what will happen if the Administration follows through on its policies. I propose that we carefully monitor the future careers of the executives affected by the cuts. If they actually do “go Galt,” and no comparable talents can be found to replace them, I will cheerfully eat crow. If, on the other hand, it turns out that the services of these individuals were not really as critical or as indispensible as advertised, and the dire degradations in the performance of management at the affected firms predicted by the right fail to materialize, then perhaps they might consider adjusting their paradigm of what constitutes “free market capitalism” accordingly.

David Remnick’s “Lenin’s Tomb,”; Vignettes of the Fall

In general, I avoid histories written by journalists. They are usually bowdlerized accounts in which the facts are pruned to fit a narrative portrayed in black and white. Great care is usually taken to describe individuals in a way that can leave no doubt in the mind of the reader about whether they are “good guys” or “bad guys.” David Remnick’s “Lenin’s Tomb” is no different in this regard. Here, for example, are typical descriptions of Communist party officials;

Kunayev unfolded himself from the backseat. He was enormous, silver-haired, and dressed in a chalk-striped suit. He wore dark glasses and carried the sort of walking stick that gave Mobuto his authority. He had a fantastic smile, all bravado and condescension, the smile of a king.

…the most flamboyand mafia figure in the country was Akhmadzhan Adylov, a “Hero of Socialist Labor” who ran for twenty years the Party organization in the rich Fergana Valley region of Uzbekistan. Adylov was known as the Godfather and lived on a vast estate with peacocks, lions, thoroughbred horses, concubines, and a slave labor force of thousands of men… He locked his foes in a secret underground prison and tortured them when necessary. His favorite technique was borrowed from the Nazis. In subzero temperatures, he would tie a man to a stake and spray him with cold water until he froze to death.

Perm-35 was a tiny place, five hundred yards square, a few barracks, guard towers and razor wire everywhere. Osin (who ran the camp) was there to greet us, and he was much a Shcharansky had described him, enormously fat with dull, pitiless eyes… Osin had a broad desk and a well-padded armchair, and he affected the pose of a contented chief executive officer… He was, to use the Stalinist accolade, an exemplary “cog in the wheel.” He did what he was told, “and all the prisoners were the same to me.” Equal under lawlessness.

You get the idea. Nevertheless, “Lenin’s Tomb” is an exception to the rule. It is well worth reading. Remnick was an eyewitness to events in the years leading up to and immediately following the collapse of the Soviet Union. He was also an excellent reporter who went out and “got the story,” seeking out and talking to people all over the country in all walks of life. Beyond that, he had a profound knowledge of Russian history in general and the history of the Soviet Union in particular that gave him an exceptional ability to portray events and individuals in their historical context. As a result, the collection of vignettes he has captured for us in “Lenin’s Tomb” provides rare insight into what it was like to live in the Soviet Union in the years leading up to its collapse, and the sort of thoughts that were going through people’s minds in all walks of life. In the process it sheds a great deal of light on a stunning and unprecedented historical event, the magnitude and implications of which we are still far from grasping. I recommend it to anyone who suspects that the sudden demise of the Bolshevik’s great experiment was not entirely explainable as the inevitable effect of Reagan’s increase in defense spending.

The Silence of the Legacy Media

Today I visited the home pages of CNN, USAToday, ABC, AP, CBS, and MSNBC and, as I have done for the last several days, searched for the word “Fox.” The result hasn’t changed. No such word was found. Apparently the editors have decided that the American people should be kept in ignorance of the fact that the White House has launched an effort to delegitimize one of the nation’s major news organizations. Not long ago they also decided that it was in the interests of the American people to remain unaware of the controversial remarks of the likes of prominent White House appointees Van Jones, Cass Sunstein, and Anita Dunn. One can spin these stories any number of different ways. One cannot, however, claim that they are insignificant, or at least not while claiming to be sane at the same time.

How are we to understand this studied indifference to stories of such significance? To all appearances, the legacy media have gone beyond the organizational bias we have long been familiar with and are now starting to show symptoms of becoming, in effect, organs of the current Administration. Perhaps it is best understood as a transient phenomenon, likely to disappear as soon as the legacy media gets over its infatuation with Obama. It is worrisome nonetheless. I, for one, would prefer to live in a world in which such gatekeepers do not control my access to information. For that reason, I will do what I can to defend the independence and freedom from state coercion of alternative voices such as Fox, not to mention talk radio and those on both the left and the right in the blogosphere who have not yet been “Gleichgeschaltet” to conform to the official narrative.