Having just heard the President’s State of the Union speech, and the Democratic Response I feel compelled to respond. I will address the Democratic Response as it has me enraged. With all due respect to Senator Webb I feel that the response was an insult to my intelligence.
That is a strong accusation, I realize. I will back it up as well as I can.
In the first point, Senator Webb states that the economy is being viewed unfairly. He stated that the view of the economy should be seeing from the point of view of ‘Main Street.’ The senator went on to discuss the vast discrepancy in CEO pay vs. the average worker.
I have a problem with these comments. The fact is that unemployment is at a low. Profits for corporations are up. That is important as the money corporations make benefits shareholders, and helps with corporate taxes, and allows for higher research and development funding for future innovation. It is a fact that for the average corporation to make more money more of its product, or the same products at higher prices must be bought. The consumer must have the funds to buy those goods, at either the higher price or more goods. That to me is a direct example of the health of ‘main street’ health.
The fact that CEO pay is up is a good sign. Higher pay equates, or should, to better performance of a company. You can’t pay a massive salary if the money isn’t there. And the extreme of 400x more than the employees (I believe the statement was employee and not average employee which means the comparison could be versus the lowest paid person in the company) is the reason why people own businesses. Don’t we want to be our own bosses to be able to make more money? If you have built up a company, or improved an existing one, don’t you deserve to reap the reward? And if it is too much the company will suffer, the pay will be lowered or you will be replaced. Basic law of business as far as I know. On the other side of this thought is the fact that I, as the owner of my own business, do NOT want the government telling me what is the most I can make in my business. That is the essence of what the CEO pay comparison means. Government regulation of what I deserve to make for running my business. The laws may start off with the intention of affecting the top 1% of CEO’s but they will inevitably affect ALL CEO’s.
The question of corporate profits was further questioned later, as Senator Webb mentioned how the pay has increased since his time in college. Since we are aware of Senator Webb being in Viet Nam, I assume that his college years were in the late 70’s. Considering that, is his comparison adjusted for the rate of inflation? Does it consider how much a dollar bought roughly 3 decades ago as compared to today?
And when Senator Webb mentions how President Roosevelt worked on breaking corporate profits, did the senator consider the philanthropy that CEO’s did then? Did the senator consider the extremes in CEO pay vs. employees? And is that comparison better or worse than 30 years ago, or today?
What about the philanthropy that the top CEO makes because they have such an alleged extreme in pay? The Gates Foundation would not exist id CEO pay was capped. Mr. Warren Buffett may not be able to give away his fortune if he did not make as much, or his incentive (pay and profit) were limited or removed.
Continued in part 2