Capitalism Is Not A Numbers Game

Monday, January 21st, 2013 and is filed under Blog, Issues, News

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Meg Whitman presides over a company, Hewlett-Packard, that in 2012 had two $8B write-offs, a decline in year over year revenue for every business unit, a massive 29,000 employee layoff, and accusations of fraudulent accounting. Short of winning the Tour de France loaded with EPO and dedicating the victory to a fake, dead girlfriend Meg Whitman could not have had a worse year. And the prospects for 2013, according to industry experts, are not much better.

For her George Custer-like leadership Hewlett-Packard paid Ms. Whitman $15,400,000.

Conservatives should denounce that pay out  for what is: obscene.

No matter that it is “only” 70 percent of her income targets because of the company’s poor performance. Any argument that includes the formulation “the board is okay with it so that makes it okay” should be discarded and never used again in this context. Lavishly rewarding failure is not a conservative principle. A free market so free that it is free of any sense of propriety or shame is not the free market conservatives (should) defend.

In his vital 2012 book, Coming Apart, Charles Murray wrote of unseemliness. The Left has a blind spot for the bloated unseemliness of the federal government and the Right has a matching vision problem for the private sector. The compensation packages for CEOs of large corporations are certainly legal and they may even be economically justifiable but are they fitting? Are they decent and becoming? Are they boons or blights on the social fabric?

The average compensation for a CEO in 1970 was $1M. In 1987 it was $2M. 1992 $4M. 1998 $8M. 2006 $16M. Plot that on a graph and it would show a definite trend. Plot it next to the wages of the average American worker over that time period and the question of unseemliness would be hard to avoid.

Conservatives aren’t Bolsheviks or radicals and we don’t want a government that levels income or achievement. We simply need to rely upon a clear-eyed, traditional understanding that cronyism, whether in government or in the boardroom (where an elite coterie of current and former CEOs hand out planetary sized checks to one another like they were door prizes), corrupts free societies. Plain even-handedness demands that conservatives not only fire hot rhetoric at the pork pimps in the Capitol but also rhetorically warm the backsides of the back scratchers in the boardrooms.

The average Joe may be a low information voter but he can spot a rigged game. He understands his payroll tax jumped 2%  and that will at least offset if not outpace any cost of living raise he receives while a powerful CEO can soften the blow of tax increases by taking $1 in salary as Ms. Whitman did.

A practical way to engage this issue without descending into the sewer of class warfare is through tax reform.  Republicans in Congress are always assuring us that the next budget fight is the fight where they will have leverage enough to win.  It is time for Speaker Boehner and Senator McConnell to make good. The debt ceiling, sequestration and the 2013 CR present prime opportunities for the GOP to make the case that spending and the tax code are not just financial issues — they are issues of morality. We can’t continue to spend money we don’t have and we can’t have a tax code that can be effectively circumvented by the connected. That is an easily understood conservative message. All it needs is a good bill to give it flesh. If the GOP cannot deliver even that much then #firemcconnell needs to take its place next to #fireboehner.

On the media/policy/messaging side of the fight it is high time conservatives ended our timid silence about the rapacious actions of corporate barons. We are not cheap populists who uphold the right to do wrong. That is the other team’s gig. They are the party of if it feels good do it.

What we classical liberals conserve in this nation are the ideals that inspired our founding documents – the Declaration, the Constitution and the notion that our liberties are a gift from a Sovereign who expects us to use them not only for our benefit but for the benefit of all his creation. We understand the pursuit of happiness is not summarized by the feel of crisp hundred dollar bills in your grip.

Hewlett-Packard has a right to pay Meg Whitman a Superdome full of cash and she has a right to barbecue ribs over a stack of fifties. Neither party has the right to uncouple success from reward. And conservatives have a duty to speak up for the traditional American understanding of work. Of honesty. Of industry. Of what is unfashionably right.

The long hoped for revival of American values and social cohesion won’t begin if we can’t disentangle capitalism from a high rent numbers game.

Author Wendell Talley