Monday, February 13, 2006

The Limits of Libertarianism

I don't know for sure, but I'd consider Ben Stein to be a libertarian type conservative, believing in the virtues of free markets and less government. But current events strain his convictions, as witness yesterday's column in the Times:New Front: Protecting America's Investors.
He writes on executive compensation in Delphi and United Airlines, cites his father-in-law's war medals, then segues to this--
"But my favorite communication, the one that made me stay up nights, was from a United States Army sergeant who has done two combat tours in Iraq and two more in Afghanistan, and is now home in Georgia training others to serve in those wars. I have been pals with this man for a couple of years now, and we talk on the phone. He has been following my articles online, and he simply asked, 'Was this what I was fighting for in Iraq?'

The question haunts me, not only because of UAL and Delphi, but also because there is something deeply broken about the corporate system in America. Long ago, my pop was pals with Harlow H. Curtice, the president of General Motors in its glory days in the 1950's. Mr. Curtice presided over a spectacularly powerful and profitable G.M.

For that, in his peak year as I recall from my youth, he was paid about $400,000 plus a special superbonus of $400,000, which made him one of the highest-paid executives in America. At that time, a line worker with overtime might have made $10,000 a year. In those days, that differential was considered very large — very roughly 40 times the assembly line worker's pay, without bonus; very roughly 80 times with bonus. A differential of more like 10 to 20 times was more the norm.

Now C.E.O.'s routinely take home hundreds of times what the average worker is paid, whether or not the company is doing well. The graph for the pay of C.E.O.'s is a vertical line in the last five years. The graph for workers' pay is a flat line — in every sense.

Now, my fellow free-market fans may well say: 'Hey, stop your whining. This is the free market at work.' Only it isn't the free market at work. It's a kleptocracy at work. (I am indebted to another of my correspondents for the word.) What's happening here is that the governance system for many — by no means all — corporations has simply stopped working."
He concludes with a message from another soldier, making the same point, that the America of Kenny Boy and Tyco isn't an America she feels comfortable fighting for.

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