The best way to increase your chances of reaching the top is to choose the right department to join. The most powerful departments are the ones that have produced the current big-wigs (R&D in Germany, finance in America), and the ones that pay the most. But the trick is to find the department that is on the rise. Robert McNamara and his fellow whizz kids flourished in post-war America because they realised that power was shifting to finance. Zia Yusuf zoomed up the ranks of SAP, a German software company, because he offered something that the engineering-dominated company lacked: expertise in corporate strategy. Men with pay-TV backgrounds have risen in media companies like News Corporation and Time Warner—rightly so, given the importance of cable and satellite TV to those businesses. “

Non contradiction applies only when the attribute is applied to the subject “in the same way”. So it’s quite possible that, in a sense, CEOs deserve their pay, while in another sense, they do not. They difficult thing is to understand these different senses.

I expect it is a form of competitiveness where the CEO sees it as a measure of the stature of that CEO as against other CEO’s.

Perhaps they could follow the example of some of the world’s wealthiest people (such as Bill and Melinda Gates and Warren Buffet) and commit to contributing at least half to worthwhile causes.

While one can argue the merits of layoffs on a company-by-company basis, what’s striking is that the executives who are the most willing to ax workers also seem to be the least likely to tighten their own belts. Management guru Peter Drucker once noted that after CEO-to-worker pay ratios went above 25–1, major moral questions started to be raised. It will be hard to make employees believe that “we’re all in this together” when it becomes clear in public documents that company leaders have largely insulated themselves from any financial risk.

The larger issue of growing inequity in the Western world is a tough one to tackle; the forces of globalization that have led to stagnating wages aren’t going to disappear. But executive pay could be made fairer and more transparent. For starters, corporate America might take a page out of the European playbook. In countries like Germany, which boasts many of the world’s most competitive and productive companies, worker representatives often sit on corporate boards, providing a check against bloated pay packages.”

That might satisfy the public’s appetite for executive blood. But it is highly unlikely to happen. “Boards of directors feel embarrassed about removing the chief executive and it is not their money, so they tend to be generous,” says Nell Minow of the Corporate Library, a corporate-governance research firm. Failed bosses are seldom fired. Instead, they are usually allowed to resign or retire with dignity, and usually with money thrown at them. This culture of sympathy will be hard to break, not least since most board members are current or former bosses and may feel that “There, but for the grace of God, go I.”

More importantly, ruining bad bosses is a bad idea. Who would want to take a job that came with a serious risk of financial destruction? Whoever did take it would surely manage in a way that minimised the risk of catastrophic failure. That sounds peachy until you remember that capitalism depends on risk-taking. Penalise failure too harshly and “you risk creating bureaucrats,” says Ira Kay of Pay Governance, an executive-pay consultancy.”

This house believes that bosses’ pay is none of the government’s business.

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Mark Calabria
Director of Financial Regulation Studies, Cato Institute

Eliminating government guarantees should be the preferred approach, rather than creating intrusive regulatory schemes that seek to control moral hazard, especially when those regulatory schemes have at best a mixed record, if not one of outright failure.

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Wayne Guay
Yageo Professor of Accounting, Wharton School, University of Pennsylvania

Disclosures about pay, and more importantly executive incentive structures, are of great interest in understanding how a firm is governed, and lack of transparency in this regard undermines the public’s confidence in the integrity of corporate America.

Isn’t this self-contradictory? When you say that the reality of harm to others makes inequality a violation of the harm principle, you are arguing that it is problematic in its consequences, not inherently. The project, then, is the standard economic one of internalizing third party effects.

Utility isn’t the be all and end all of morality, but it also isn’t something to be ignored.

On the utility issue, I think it is entirely possible for people to have preferences that should not be satisfied, no matter how happy it would make them. How you formulate that, exactly, is tricky.

The protection of the unpopular may well be a democratic virtue, if not a necessity.