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February 24, 2014 at 12:00 pm
James K. Galbraith was pretty unequivocal about this seven years ago in “The Predator State.” He spent some time explaining how the exaggerated compensation for CEOs in the US became detrimental and it most focuses on the lean toward sociopathy and fraud. The amount of money is so fantastic one thinks of oneself as being totally unique and deserved which created a class of “managers” who view themselves as a special class. This became reflected in CEO hiring. Between US corporations it no longer mattered if a CEO had no partiuclar experience in any specific corporation’s business, it only mattered that they be chosen from the same pay class of CEOs. When this happened, he wrote, it was only a small step for the CEO class to think of corporations as their property, for their service, and hence to looting and criminal activity. He mentions a few, most specifically the man who ran Tyco and was eventually sent to jail. Paradoxically, he said, this was started by CEO pay packages in the tech industry, which were excessive. The rest of corporate America imitated. At one point he dryly comments the goal and pattern of CEOs at tech start-ups was to be granted riches simply talking to other rich people about your idea, well before your company even made money. In one of last week’s LA Times business stories there was a similar comment, but not as a critical observation, about what Facebook paid out to the two owners of WhatsApp, 19 billion. And, of course, the SnapChat owners were offered a billion and turned it down. Now, money to buy a company isn’t the same as a pay package to the CEO but the huge amounts to firms with such small rosters of employees has created a similar warping. When one is paid that kind of stupid money it is not hard to imagine you begin to believe yourself to be an especially gifted master-of-the-world.
February 24, 2014 at 11:45 pm
Sociopaths all.