Liddick: High CEO pay no cause of economic pain (column) | SummitDaily.com

Liddick: High CEO pay no cause of economic pain (column)

Let the excuses continue…

One of the latest comes from Dennis Martire, vice president of the Laborers International Union of North America, an organization with a checkered past and a taste for candidates like Bernie Sanders. According to Mr. Martire, Democrats blew the election because they didn't listen to the hordes of Americans who want the government to be even more involved in the economy. In Mr. Martire's words, these voters "want jobs — not just any jobs, but jobs … with family-supporting wages and benefits." He thinks it the government's role to provide such through tax incentives — and by implication, punishments for recalcitrant capitalists.

Mr. Martire girds his argument with that shibboleth of the Left: class conflict. Since 2007, he says, "middle-class workers lost nearly $18,000 … due to escalating inequality" between workers and CEOs. What he does not mention is that for most workers with training and education appropriate to today's economy, a "living wage" is already a reality and businesses are looking for many more of them.

Like many who argue that workers are poorer because owners are richer, he ignores evidence from the new tech companies that are the darlings of the Left. For example, a software engineer at Facebook makes between $105,000 and $176,000 a year; well above the national average despite the fact that Mark Zuckerburg is a billionaire. As with many other modern and forward-looking companies, Facebook's workers are paid what it takes to acquire talent and keep it working there, because skills and accomplishments are part of a business calculation regardless of the boss' income. This is how a market economy works

Mr. Martire complains that in many cases governments use tax subsidies and other enticements to attract businesses in low-skill, low-wage sectors, without bothering to consider the impact of this on their middle- and working-class rate-payers. He has a point, a bigger one than he realizes.

Subsidies for favored businesses or economic sectors; tax incentives; regulatory relief; tariff protections; all are facets of crony capitalism, wherein large companies or industrial groups cease innovating in favor of currying favor with government to achieve a friendly playing field. We've seen this before in the "Gilded Age" of the 1880s and '90s, when railroads, oil and steel bought Congressmen by the bushel and whole state legislatures at a discount. Back then, Republicans were largely in charge of doling out favors to "Big Business." Nowadays, Democrats are — something most union bosses won't admit, but which is all too clear to their rank-and-file. Donald Trump holds rallies to thank voters in key states for their support while Hillary Clinton throws a closed-door party for her largest donors from Wall Street and Hollywood. The contrast couldn't be starker. But then or now, one thing remains the same: America's workers get the dregs.

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Mr. Martire thinks the solution is for Leftist politicians to seize control of the handout machine. He doesn't admit that, once in operation control of such a mechanism can just as easily be wrested away as achieved. There is a simpler way to fix the rotten system of disincentives to productive growth: get government out of the whole process.

In a world without artificial incentives, it would be easy to see which sort of fuel, automobile or building material is most cost-efficient. It would also be clear which businesses are well managed: those which were not, would fail. One could see which types of education or training were the most remunerative and which fields the most dynamic. The money saved from disappeared subsidies could be used to reduce debt or better, to improve education and training programs for both current and future workers and business owners.

If such economic changes were paired with relief from regulatory burdens that impose a much higher cost on small than on large firms — as much as 35 percent higher in some recent studies — we might be set for real, sustained economic growth instead of our current anemic level.

There would certainly be problems with such an America. Lacking incentives and subsidies, some industries might expand in locations that would require workers to relocate. Others might evolve in ways that required re-training — or even re-invention. But for a country whose people have always looked to the future, who have always sought new horizons and next challenges — confident in their ability not only to survive, but to succeed — that's really not so new.

Time to dismiss the nanny state and its enervating baggage. Time get on with the future.

Morgan Liddick writes a weekly column for the Summit Daily. Contact him at mcliddick@hotmail.com.