Time to limit CEO pay

Edward Rubin, Dean of the Vanderbilt University Law School,. wrote an excellent op-ed column which appeared in Wednesday's Atlanta Journal-Consitution. Rubin makes an excellent case for limits on executive compensation and redistributive tax policies. http://tinyurl.com/l63jw

"Income disparities are an increasingly serious problem in this country. At present, the top fifth of the population receives more than 50 percent of the nation's annual income, while the bottom fifth receives around 3.5 percent. In addition, the percent of total national income has declined over the past quarter-century for the bottom 80 percent — while the share of the top 20 percent has steadily increased. As a result, we are approaching the income disparity levels of a Third World country."

"The theme that should be sounded is that the present distribution of income is simply unfair. Most of the adults in those lower four-fifths, even the ones in the lowest, work for a living, and most work as hard as the people in the top fifth. Our system is tilted against them."

"The reason for our income disparity is not that the people in the top fifth deserve so much more money, but that we have a regressive tax system, excessive tax loopholes for the wealthy, unmonitored corporate compensation and a defective public educational system that limits social mobility and the ability of people who can't afford private school to develop their talents. The image of the lazy, unmotivated poor is largely a myth, and certainly doesn't apply to four-fifths of our population."

"So how can we deal with this in a progressive manner? To begin, raising the minimum wage is probably a good approach, but lowering the maximum wage may be an even better one."

"Executive compensation has reached stratospheric levels in the United States, largely because of stock options and other incentive-related payments. This sounded like a wonderful idea at the time it was first conceived — pay the top executives better if the firm makes higher profits — but it has spiraled out of control. The problem is that the corporate board members who approve these payments are spending the firm's money, not their own; they don't benefit from the firm's profit levels or suffer if the firm squanders its resources on excessive executive salaries."

"Unfortunately, the only way to limit executive compensation is through national regulation, and there does not seem to be much taste for solutions of this sort."

"The other way to redistribute income is through the tax system. One would imagine that a redistributive tax system would garner widespread popular support. But it is a somewhat weird feature of the American mentality that so many people in this country think they have a chance of becoming wealthy, and often identify more closely with the interests of an increasingly remote elite than with their own interests. This is amplified by the continuing reverberations of frontier individualism, the belief that people deserve to keep "their" money, and should not have it taxed away for public purposes."

"For both these problems — excessive corporate compensation and a regressive tax system — I think we need a new political discourse. People need to understand that everyone's money comes from the economic system to which we all contribute."

We need to return to progressive taxation and create disincentives for corporations to provide such outlandish salaries and benefit packages for CEO's

* CAN GOVERNMENT DO ANYTHING RIGHT ?

I disagree with those who maintain that government is inherently wasteful and ineffective. The public sector certainly can be both just as the private sector often provides poor quality workmanship and customer service.

Democrats are often better at governing than Republicans as they have a more positive attitude toward government activism. Government agencies can become more innovative and customer friendly with the right leadership and values. There is no reason for example that government offices cannot be open more flexible hours (like evenings and weekends) to offer better service to the public. Like big corporations, public bureaucracies can encourage a drone-like attitude among employees or promote an organizational culture of innovation.

Government can be as efficient in delivering services as the private sector. I think our military has done a great job considering the demands and limited resources that they must work with. Our police and firefighters show courage every day to protect and save lives. I can't imagine rent a cops and private firefighters showing the same dedication. The postal service ? Well, that could use a lot of improvement but much of the decline in service quality can be traced to the replacement of career civil service workers with the temp-like "casuals" who don't always have the same dedication to their duties.

Jacksonville,FL has a city-owned electric authority (JEA) which does an excellent job of providing power to the Duval County area. The rates are actually lower than profit-making private power companies such as Florida Power & Light and Tampa Electric.

I am not suggesting at all that every enterprise should be run by the government but rather that government can do and actuallty does some things better or as well as the private sector. And there are areas like education that have traditionally been a public-private partnership like education. I'm all in favor of public education and some of our public schools excel at educating and training their students. Of course, some students fare better in a private or church-related school environment. Private and parochial schools have always educated a significant minority of our children. I see no conflict between experimenting with voucher programs to assist low to moderate income parents who wish to send their kids to a private school with supporting and further improving the public school system.

Likewise, I don't think it is always a bad idea for government to outsource certain functions to the private sector if a business can be made that they do the job more efficiently without compromising the quality of service. A lot of services in our society can be potentially be a private-public partnership. There is nothing wrong with workers in the public sector competing with those in the private sector as long as both are given the necessary tools to do their job.

The answer isn't always creating or making a government agency bigger or mindlessly just declaring government bad and contracting all functions out to the private sector. In privatization mad Florida under the leadership of Jeb Bush, we've seen examples of how private companies often performed less efficiently than government agencies. Governing sometimes requires a little common sense and removing the ideological blinders - right or left.