Die Linke, the German party also known as the Party That Dare Not Speak Its Name (or Its Antecedents . . . Sozialistische Einheitspartei Deutschlands, anyone?) has announced among its other platform planks in the coming national elections its position that managers’ pay ought to be limited — capped, in fact — to €480,000 per year. At $1.37/Euro that works out to be $657,600, which by any reasonable standard is a boat-load of money.
Yet to ask the obvious question: Who the hell are the former DDR-functionaries, fellow-travellers, and mourners for the Stasi to determine what any person’s services are worth? I freely admit that some folks have absolutely absurd compensation packages. Some folks have so far Fallen Into It that the standard of living they enjoy is utterly uncoupled from any measurable usefulness they bring to their fellow humans (which would include me, of course, and Gentle Reader as well). But what do I know about what someone else’s efforts, talent, and time are worth? What do I know about what they have or have not sacrificed to obtain their current levels of compensation? According to the Stasi Party, it doesn’t matter whether it’s Daddy’s Company and he’s hired you as his successor and you’ve got 15 employees or whether you’re CEO of Exxon or Siemens or Oracle or Mannesman, and your decisions can make or break the fortunes (by which I mean neither less nor more than their ability to make next month’s house payment, or keep their daughter in college one more semester) of tens of thousands of people: You and what you bring to the table aren’t worth more than €480,000 per year.
The assertion that any politician is sufficiently informed as to stick a maximum value on human enterprise and talent is so comically asinine as to be self-refuting. Of course, the party hacks who have cooked up this silly number most likely fall into that category of People Who Have Never Held a Goddam Job, in which respect they mirror exactly the current president of the U.S. They’ve never made payroll from their own pockets; they’ve never had to worry whether if they make a mistake and blow Decision X, their children will or will not lose the only house they’ve ever known as home; they’ve never been in the position of having to look in the eye the 30 or so people who were hired by their grandfather back when the company was itsy-bitsy, and decide which seven are going to have to be let go so that the remaining 23 can continue to have a job, any job at all (while you as the owner haven’t had a “paycheck” in nine months). There are in fact so many inputs into the answer to the (deceptively complicated) question, “What is Person X worth to this enterprise?” that there is no possible way to gather that information into one place. Even the person who actually has to make that decision and hire or not hire, at this, that or any other price, any particular person cannot know all the relevant information. The importance of the market is that it matches the risk of the incorrect answer with the reward of the correct answer. Politicized decisions, such as the communists (and Die Linke aren’t just leftists; they’re commies and don’t believe any different: the only difference is they’re ashamed to admit they’re commies) propose, sever the connection and so produce routinely and predictably incorrect decisions.
Die Linke’s position is worrisome for a bigger reason, though. Once I concede that managers’ pay ought to be capped, which is to say once I agree that politicians may determine the maximum value of any particular manager to any particular enterprise, irrespective of the size and nature of the enterprise, the challenges facing it, the opportunities it finds before it, and the consequences of the decisions this hypothetical manager will be making . . . once I do that, where is the limiting principle? If I can say that Jack Welch is worth no more than $657,600 per year to General Electric, what is there to keep me from saying that Joe Bloggs the Shelf Stocker is worth no more than $2.73 per hour to Bill’s Widgets on Main Street?
Some weeks ago there was an article — I think it was on the Puffington Host — about what a Wonderful Dude the CEO of Costco was, because with his customer base of soccer moms and yuppies, and his business model of shit stacked on pallets by forklifts, he paid his hourly drudges an average of $17.00 or so per hour, versus Wal-Mart’s whatever-it-was. OK, maybe he in fact does walk on water and part it for those who can’t. But if you admit that I can cap Costco’s CEO’s pay at $657,600 per annum in order to reduce “social injustice” (excuse me while I wipe the snot off my face from laughing), then you also necessarily admit that I can cram down all those Costco workers’ $17.00/hour pay to whatever Wal-Mart pays its people . . . and by the way, the folks working at Wal-Mart do a helluva lot more in terms of serving the store’s customers than Costco’s do.
And there you have the whole fallacy of the lefty world vision. They assume that they’re always going to be the ones in charge, and so all decisions of course will all be made according to truth, justice, and light, and the truly deserving will always be made better by what the government decides. And so forth. The market supporter, however, assumes that more often than not the guys running the show will be knaves, charlatans, and cretins. The only way you protect yourself in that situation is by chopping down (with a broadaxe, if necessary) the scope of the decisions the People in Charge are permitted to make. And you arm everyone else to make damned good and sure the People in Charge don’t get above themselves.
How about this, for capping compensation packages? Everyone holding any elective office, of any nature whatsoever, or having any non-clerical position in any political party, PAC, or affiliate of either may not receive more than, say, $35,000 annually in income from all sources. None at all. Because given what a lousy job our elected officials and political party operatives have done, I can tell you right now that’s well in excess of anything they’re worth. And in fact let’s just go ahead and cap their lifetime incomes at $35,000 per year, for as long as they live, because we have to live for generations with the consequences of their bad decisions. Unfair, you say? I have no earthly idea whereof I speak? Well coach, you’re exactly right. On all counts. But I have no less an idea about those peoples’ worth than they do about mine. In fact, given the public nature of their screw-ups, I’m going to go right ahead and say I have more of a notion of their intrinsic worthlessness than they ever can have of mine.
Sauce for the gander, anyone?