The September 10 issue of BusinessWeek includes an interview with Robert Reich, the Labor Secretary under President Clinton. Economics Editor Peter Coy interviewed the Berkeley Professor for Public Policy, and posted excerpts in a one-page article on page 86, in the IdeasOutsideShot section. However inadvertently, Dr. Reich’s comments provide evidence that another Clinton Administration would be bad for America.
Coy admiringly compared Reich to Milton Friedman in places, but the comparison does not hold up to inspection. Reich admits that “Capitalism has proven itself the most successful system ever designed for allocating resources to where they’re most needed”. But Reich is unable to let go of the Socialist ideals he used to guide his decisions under Bill Clinton, and they are obvious in two key claims made by Reich in the interview. First, Reich bemoans executive compensation, claming “CEO pay diverges mammothly from the pay of average workers”. Reich also claims that job security is far too unstable in modern times, concluding that government needs to “police the border between capitalism and democracy”. The statements, as I see them, are not only dishonest on their face, but are wholly incompatible with American ideals.
Let’s start with that gripe about CEO pay. The first question to ask, is whether that claim is really true. We sure hear it a lot, how the average CEO makes a ton of money while the regular guy gets shafted. To find out, I checked with the government’s Bureau of Labor Statistics (BLS) on how many CEOs there are, and what they are paid. Using the Standard Occupational Codes (SOC), I found that there are 299,520 people coded as 11-1011, or “Chief Executives”. Sounds like a lot, until you remember that there are 300 million Americans, and the size of these businesses vary quite a bit. Anyway, those CEOs average an annual salary of $144,600, nice but not especially awesome, given the hours, responsibility, and personal risk they assume with the job. The BLS also says the Mean Annual salary for all occupations is $39,190, so the average CEO pulls down about 3.7 times what the average worker makes. And since the average CEO is either the outright owner of his company, or proved his worth to get the job through a combination of education and experience and personal ability, the range is not – despite the hype – quite as Dr. Reich claims.
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So where do Reich and a lot of other screaming meanies get the idea that CEOs are, in general, overpaid? It comes down to a very selective list; compensation for CEOs of the S&P’s top 500 public corporations is around $10.2 million a year as of 2006, which does work out to around 260 times what the average worker makes. Of course, the same factors of experience and proven results make it hard to condemn these leaders with any validity, so what Liberals like Reich do, is to smear the whole on no basis other than blaming them for success, skewing the overall picture by focusing only on the few who make great deals of money, and highlighting the very few whose dishonesty makes headlines. It should be obvious to the thinking reader, that if fraud and corruption were common among the country’s business leaders, the nation would have had many more severe economic crises than we have seen. In actual fact, most CEOs work hard, are notably honest in terms of their job performance, and demonstrate a serious desire to see the employees of their company succeed. The attacks on CEOs, in essence, proves to be no more than envy, someone who does not make a lot of money resenting someone who does, even though there is no cause for that resentment. Millions of people who make ordinary incomes spend a lot of money to see rich athletes play professional sports, yet they do not complain that these athletes make so much more money than they do. They pay outrageous prices for tickets to see celebrities in concert and shows, and do not whine about those celebrities making huge amounts of money for what they do. Is it really reasonable to make J.K. Rowling a billionaire, then complain because the CEO whose company provides safe and nutritious food to your kids makes a few million? Is it reasonable to call A-Rod a great guy just for playing baseball, but despise the CEO of the company which improves automobiles for greater safety and comfort as greedy, especially when the guy actually making something which improves your life makes less money than the jock whose actions do nothing to improve your life? Don’t misunderstand, I do not resent authors or athletes or even celebrities, but if it’s OK for them to make millions, then morally it’s more OK for people who lead companies which keep us healthy and happy with their products to be rewarded by their directors. It is, to say it plainly, a futile and Socialist ideal to blame CEOs simply because they happen to succeed in their pay.
The complaint about job security might at first seem more reasonable; what could be more reasonable than to expect your employer to respect and protect your job as well as you do your company? The reality, however, is that you have the right to quit your job at any time and take a better position, and the company has that same opportunity. The way you keep your job, is to convince your employer that it hurts them to let you leave, and it is to their advantage to keep you happy. If you are doing your job in such a way that you look replaceable, it seems to me that you have the problem, not the employer. I’m not saying that all employers are wise or reasonable, but given the unemployment rate basically since Carter was President, a competent person should be able to find work. To bring up job security in an era where Unemployment has consistently tracked below 5% nationally, seems to me to do no better than play on fear.
Envy and fear; that is the essence of Dr. Reich’s opinion on Capitalism. He seems honestly unable to recognize the ideals and ethics by which the overwhelming majority of American businesses operate, or even to understand that all corporations, every one, are made up by their employees and leaders, real people with real visions and the determination to succeed through hard work, inspiration, and optimistic courage. As for his statement regarding a “border” between Capitalism and Democracy, it shows to me yet another obstacle in Reich’s mind, that he believes the two concepts should be rivals or even opponents. At least Reich, however unconsciously, admits a connection between Democracy and Capitalism; the more pervasive a form of Socialism is practiced, the less it has to do with Democracy at all, as evidenced by the unhappy histories of the Iron Curtain countries.
So what does this have to do with the campaign of Hillary Rodham Clinton? Perhaps these quotes from the Lady Senator will illuminate her present economic theories:
“(We) can’t just let business go on as usual, and that means something has to be taken away from some people.” (06/04/07)
“We have to build a political consensus and that requires people to give up a little bit of their own turf in order to create this common ground” (06/04/07)
“I certainly think the free-market has failed” (06/04/07)
Robert Reich is not just an old party hack from the days of Bubba, but a valid barometer for the Clinton style of policy. And another Clinton Administration would simply be poison for America and her citizens.