Friday, May 01, 2009

Is CEO Pay Irrelevant?

There are several things to consider in this AP article discussing the impact of the economic crisis on CEO pay.

1. The "cry me a river" cheap shot, of course, is warranted, but still pretty cheap as shots go. The fact is that there is not only still a layer of fat cats sending their kids to $5,000 camps this summer or jetting off to Bermuda; that layer of people, some of whom include CEOs, are well-insulated.

2. Corporate boards are going out of their way to protect their CEO's financially and to keep paying them as much as possible. To many people, this seems irrational. Of course, it is systemically irrational, but it makes perfect sense in the worldview and logic of capital--the competitive generation of surplus value, the competitive generation of profit. The CEO functions like a celebrity-head coach-quarterback-star forward-religious-authority. Writing for Capitalism Magazine, objectivist Elan Journo says "successful CEOs are as indispensable to their companies as Super Bowl-winning quarterbacks are to their teams." Quarterbacks control strategy; their sense of that strategy needs to be quick, close to instinctual, that sort of thing.

3. The moves toward limiting executive pay for companies that receive federal bailout money are largely symbolic. The article doesn't overclaim their significance. But one should also point out that Obama's economic team places a great deal of value on the symbolic. They seem to believe that language and perception, and the resulting public confidence or lack thereof, is the key to recovery...or doom. In that sense, what Bush and Co. were to international relations, Obama and Co. are to the economy: sophistic relativists hoping to reconstruct reality through repetition, image-generation, and half-truths.

4. And #3 kind of sums up my thinking this morning on the question of CEO pay itself. It's useful, to an extent, as an example of how absurd the system is, but it's not a key component of the system; the consequences of this crisis on CEO pay are largely inconsequential, and targeting CEOs generates rhetorical capital (and can be entertaining) but makes for ineffective reformism and doesn't even begin to approach revolutionary politics.

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