AUBURN — I had a funny dream last night. I died and, to the astonishment of all, went to heaven. There I saw a very beautiful young woman from another age with a sad look on her face. Her curly blond hair tumbled up over her shoulder, while she held her head under her arm.

“Marie Antoinette?” I asked.

“Oui,” she replied, “I’m here, and still wondering why no one ever explained things to me. I was so sure that everyone at least had cake!”

“Oh, Marie,” I said, feeling a rush of sadness . . . and then I suddenly awakened. Was it now my duty to Marie Antoinette to explain the issue to the world?

In the June Barron’s Midyear Roundtable, Bill Gross, CEO of Pimco, talked about his concerns about the distressed middle class. “Without the consumer, capitalism can’t exist,” he said. This clearly ties in to economist Adam Smith’s description of the town with everyone competing for the benefit of the consumer.

Henry Ford understood this well, and when he built his cars, he realized that no one could buy them if he didn’t provide his workers with a strong income. He did, and Ford flourished.

Advertisement

But with average CEO pay at 100 top U.S. companies now hovering around $14 million – and CEOs at 350 S&P 500 companies making 331 times what the average worker makes (and 774 times what the average minimum-wage worker makes) – too many corporations are now dysfunctional.

Orestes Brownson, a great American philosopher of the 1800s, stated that any principle, if it is logical, may be carried to its logical extremity.

If we had perfect inequality, one person would own all the money and all the goods of the world. Since no one else had money or goods, no one could buy or sell anything, and the economy – just as Pimco’s Bill Gross said – would stop.

Perfect equality, on the other hand, obviously permits all of us to indulge some of our bad instincts, and show up late, possibly not at all, take long breaks, not focus on issues and be extremely nonproductive.

So neither perfect inequality nor perfect equality is good. Something that works for all, that keeps us functioning as a team with a common goal, trying our best with common hopes and a spirit of co-operation and fairness, is clearly the best for any organization or any society.

A top-to-bottom pay ratio of 331-to-1 – or 774-to-1 – seems destructive to both the business and society.

Advertisement

If your sister kept her room perfectly neat, was a top student, captain of the soccer team and a wonderful musician and mowed the lawn while you lay in bed in your messy room reading comics, your mom would be concerned.

Then, if your mom made brownies, she might very well thank your sister with an extra brownie or two, while telling you that you could have one as soon as you cleaned up your room. You would realize that was fair and, grudgingly or happily, move on.

But the brownie ratio would not be 331-to-1 or 774-to-1. Your mom knows that would not be good for you, your sister or the family.

In Honda’s early years during the 1960s, the top-to-bottom pay ratio was 7-to-1. Pay ratios need to be limited by some combination of revenues and the number of personnel. Perhaps it’s 30-to-1, perhaps it’s 50-to-1. But it is clearly less than either 331-to-1 or 774-to-1.

Corporations should not be able to deduct pay or a bonus above the reasonable level, and the excess income should be taxed at perhaps 80 percent to the individual.

It’s not always easy to restrain one of the seven deadly sins, but a reasonable curtailment of that destructive behavior is what Bill Gross, Adam Smith, Henry Ford, Orestes Brownson, Marie Antoinette and I all recommend for a fairer and more prosperous USA. Don’t you?

We are, after all, all in this game together, and the game must have reasonable rules. Otherwise, why should we want to play?

— Special to the Press Herald


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.