Wayne Sheridan has offered some thoughts, among which I have interpolated some comments.
I too am concerned about CEO’s making 400 times the average wage in their corporations on average versus 40 times some years ago. My concern is less about the CEO’s earnings, than it is about the employee’s. What is holding down those wages? And what can be done about it? If we simply limit the amount that a CEO can earn, will that necessarily help the average worker? Of course not.
Part of what is holding down the wages is the very disproportionality of what is paid at the top. The main thing however is ruthlessness. Instead of treating employees as neighbors, businesses treat them as consumables to be purchased at the lowest possible price, used roughly, and then thrown away. In most corporations there is no concern for employee quality of life or for paying a living wage. These are moral issues repeatedly raised in the social encyclicals and repeatedly treated by "capitalists" as undesirable Catholic cafeteria offerings.
I propose that inventors and business founders, real entrepeneurs, excluded, no employee should be paid more than 100 times anyone else working directly or indirectly for the same business. This does not limit the maximum amount anyone can earn, but does require some proportionality within a business, all the way down to the floor mopper.
One answer is better education and training for all workers. I do not know Tom’s position on education reform, so forgive me if this does not apply; but, people who argue for limiting the wages of CEO’s are often the same people who argue against educational reforms, such as charter schools, vouchers, financial aid for teaching non-religious subjects in religious schools, etc., all of which would increase the educational level of the average worker, and his or her earnings power.
I do not know of anyone who proposes limiting wages, much less any linkage of such with opposition to education reform. Personally, I have supported all the reforms you mention.
However, more education is not a very complete answer. It does not help the majority of the people for whom higher education is not appropriate, when all the jobs they could handle have been moved out of the country. Some answer other than education is needed for many people, some types of employment is needed for those not in the educational elite.
I see Tom’s other objections to the “free market” approach more as observations of the dangers, most of which I agree with. I am not in favor of a totally unregulated, free market, capitalist economic system. There is need for reasonable regulation. Markets cannot be free if consumers are ignorant; so there is need for a better educated consumer. (How about, at least in this country, the Bishop’s insisting on a good economic education for every graduate of a Catholic school, beginning in the earliest grades?)
Monopolies must be combatted, including monopolies of capital in too few hands. (I don’t see limits on salaries or profits as effective ways to do this. They would actually be detrimental. However, I am in favor of reasonable wealth taxes, to avoid the danger of plutocracy.)
Right, wage controls are no more likely to work than price controls.
What do you mean by "reasonable wealth taxes"?
As Tom has stated, repeatedly, Finn’s two questions he seems to be asking the Church to address are:
- What are the criteria for a moral assertion of self-interest?
In particular, we need to teach, very explicitly, that economic activity is not exempt from moral choices, that there is no such thing as "just business" where ruthlessness is permissible instead of treating everyone as neighbor.
- Where should one draw the line between immoral excess and moral profit-seeking?
The second question at least approaches specificity, which might be addressed. But it is a bit of a “loaded question,” making the assumption that there is a level of profit that is immoral in itself. If the question were phrased, “what actions are moral and what immoral in the pursuit of profits?” that seems to be a reasonable for the Church to address. Although, I assert, that in its teachings, the Church has already done so.
I do not think that the question implies that there is a level of profit which is immoral. What is immoral is seeking profits ruthlessly, as if the only responsibility was to maximize profit without limits. Those limits include not taking undo advantage of leverage due to size, legal resources, access to information, even financial advantages. There is a great disproportionality in most modern market transactions. The business knows more about the customer, the product, the alternatives than the do the customers.
Profits can be extreme and moral in some circumstances. What is immoral is to work as if every business should be pushed to reach such high profits, regardless of all associated harm to the community, regardless of offering products which are inferior to reasonable customer expectations, such as built in obsolescence, in addition to such things as environmental harm and the social costs of paying less than a living wage.
On another list, someone is trying to tell me about the inherent justice required by open markets. What he misses is that the theory of markets assumes that all have access to all the relevant information. In modern business, there is a disproportionality of information, influence, legal resources, financial resources which put most consumers and employees at a disadvantage. Making greater profit through ruthless use of those advantages is wholly acceptable to the market, but it is immoral treatment of other human beings.
The market is not the only test of whether a business practice is moral. The market will allow all kinds of immoral treatment of others, especially if the others are not aware of all that is involved, of all the possibilities.
The immoral excess is seeking profit without moral limits to the means, without considering anything other than what the market will bear.