08 January, 2007

Imploding Robin Hood Capitalists

Last week I read a very interesting article on Barbara Ehrenreich blog, Barbara’s Blog. The article is called “15 Steps Toward a Happier, Healthier American in 07”.

Some of the items on her list are not surprising (e.g. getting the troops out of Iraq, or fighting global warming). The others are all very interesting and, one in particular…

“Raise the minimum wage to $10 an hour and establish a maximum wage of, say – generously speaking -- $5 million a year.”

… was wonderfully surprising, as well as provocative. I don’t know if this idea has been talked about in any serious political arena, but why not. Does any human being “need” more than 5 million dollars a year in salary? What noble and important deeds can any one person achieve in one year’s time, which warrants compensation greater than this?

This reminds me of an article Gretchen Morgenson (here, needs a subscription) wrote for the New York Times (here) in December 2005 about Ethan Berman, founder and chief executive of RiskMetrics. Mr. Berman requested that he receive no increase in salary, no stock options, a smaller bonus than the year before, as well as refused a sum of the company's profit-sharing equal to that received by all employees.

His reasoning was, amongst other things, that as a top executive he does not need monetary compensation to feel more of an owner, or increase his commitment to the company. The money he would receive would be better distributed to those people in the company whose engagement and performance have shown them to lead other employees by example and not by mandate.

I like to think of Mr. Berman as a bizarre modern imploded Robin Hood capitalist. Instead of stealing from the rich and giving to the poor, he was stealing from the rich (himself) and giving to the (relatively) rich (in terms of leadership abilities).

Now, I am not sure that Mr. Berman yearly earnings lie under Ms. Ehrenreich’s maximum salary. Maybe Ms. Ehrenreich should invite Mr. Berman over for a cup of coffee and invite Ms. Morgenson along as well, and the three of them could discuss just how they could propagate such a novel notion to the masses. And, even more importantly, maybe they could come up with a plan to propose such a practice to new possible imploding Robin Hood capitalist in large corporations. Wouldn’t that be a lark?

5 comments:

  1. Anonymous3:19 am

    There is a growing difference between the rich and poor. If it continues it is likely that at some point there will be rebellion of some sort..
    Her suggestion sounds good to me..

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  2. It all comes down to wants and needs.

    We dont need 99.99% of the stuff. But we want it.


    as for the minimum wage being raised to 10$, I am all for it. I doubt it will adversely affect any businesses. Or instill that business hire illegal immigrants.
    Capping the salaray at 5 million, isn't the greatest idea. It will drive some of the best managers/CEO's away from your country. This (cappign salary) scenario would only work, when in a Utopian world, every country implemented such a move.

    To counter measure this, you just got to tax the higher income earners more, then to be giving them tax subsidies year after year.

    Personally I agree with you, 5 million ought to be enough for everyone. But then again, that would seriously dent the ferrarri /crib in malibu/20 karrat de beers market.

    We need more people like Mr. Berman, but moreso we need more people who have the courage to do something that benefits their societies immensely.
    Example: Mike Lazaridis of Waterloo Ontario and how he setup the perimeter institute

    If rich people wont invest in projects that "drive innovation", provide education, provide basic healthcare to your citizens, eventually the whole nation will suffer

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  3. Anonymous11:47 am

    Adeel,

    Thank you for your comments. I agree that stipulating a maximum yearly salary is too idealistic. In principle though, I would hope that some people, who are earning such sums and more, would rethink what humanitarian responsibilities are connected with their income: very much like Mr. Lazaridis does.

    P.S. University of Waterloo is my alma mater.

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  4. Not a problem!

    I am adding your blog to my bookmarks, as I keep coming back to it.

    Well we cannot expect individuals and corporations to act a certain way in our "free societies".

    But that being said, I personally think our time is calling for a new way of percieving things. A remodelling of our lives emanating on an individual scale that is based off voluntary cooperation.
    But I am afraid our time is running our very rapidly.

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  5. Waterloo is a beautiful city. But once you've lived in the GTA areas for a coupla yrs, it's hard to adjust to life in KW.

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