Furman Professor Offers Lame Defense of Capitalism Gone Wild

What can I say about this lame defense of Bob Nardelli and capitalist greed gone wild in general, except that it's absurd.

While I can appreciate Smythe's moral outrage on some level, the part that made me really angry was Smythe asking us to feel sorry for the poor CEO after he crashes and burns:

The CEO's future in the business world is rather bleak once the axe has fallen. Unlike professional sports, where the same coaches disappear and reappear with alarming regularity, CEOs are generally not rehired in any capacity by other firms. As such, compensation must be higher to encourage quality people to take on the risk.

Here's a quarter--call someone who cares.

Sure, he's not going to be getting another CEO job, but what Divine Authority decreed that the only alternative is to pay him enough so that he never has to work again if he fails? The CEO's "reward" for failing is that he and his family get to live indolent, useless lives on the mass of money they got from his CEO job? My goodness, sounds like something we should all aspire to! (Pardon the sarcasm.) Seriously, that is just so wrong, the stones should cry out.

Can't get a job in any capacity? You're telling me a failed CEO can't get a job at Wal-Mart? I would say that's exactly the right place for a failed CEO. Make him sell his fancy house. Make him sell his Bentley, and every other trapping of obscene wealth that he owns. Let his kids to go public schools, like most people's kids do. Let him remember what it's like to be a minimum-wage worker getting screwed financially while the CEO was drawing that obscene level of compensation. Remind the CEO how it feels to have to choose some months between eating and getting your car repaired. Remind him how it feels to have to split your blood pressure pills in half to make it through the month. Let him have to deal with sociopathic managers and apathetic coworkers--this time, from a position of utter powerlessness.

What is it conservatives are always telling us... "there are consequences for your actions, you have to take responsibility." Well, what is so damn special about a CEO, that he should be protected from the consequences of his actions? The rest of us lose our jobs, we end up at the Salvation Army!

There just aren't any valid reasons why someone like Nardelli should be protected from the consequences of his actions. Smythe can be morally outraged until until the cows come home, but what changes as a result? Talk is cheap. Nothing changes if people aren't willing to challenge or change the flawed assumptions that are the status quo.

Now for the good news!!

Allow me to offer in contrast the example of Jim Sinegal, the CEO of Costco. He has been called an "old school capitalist." CNN Money reports that Sinegal earns $450,000/year in basic salary and bonus. The rest of his compensation is tied to the company's performance. Costco has never reported a negative monthly same-store sales result. Sinegal has rejected bonuses when he felt the company "hadn't performed up to our standards." Costco also pays 92.5% of its employees healthcare costs--unheard of in this day and age. Sinegal believes that "if you hire good people and pay them a fair wage, then good things will happen for the company". Well said, Jim!

Here are the references for my statements and quotes above; you can of course Google "Costco Jim Sinegal" for more if you're interested:

CNN Money article

Time magazine article

New York Times article

Personally, I'm thrilled that we're getting a Costco in Greenville. Too bad it'll be on Woodruff Road, but when I want or need to do that type of shopping, I certainly want to support a more ethical capitalism than what the craven Ferengi Nardellis of this world have to offer.