Imagine a lawyer standing in front
of a judge, defending his client with an argument that goes like this: “Yes
judge, we admit that my client has embezzled a million dollars from the bank,
but do you know how many depositors the bank has? I'll tell you how many; the
bank has 10 million depositors. If you can do math as well as my client, you'll
find that this comes to ten measly pennies per depositor.”
The lawyer does not stop here; he
expands on the defense of his client with this: “In addition, judge, my client
is no ordinary bank robber that just came off the street. He is a husband, a
father and a respected member of the community where he lives … it is this
community, judge. And as it is known to everyone, this man is a stalwart
contributor to his church, a man who sends his children to Sunday school, one
who decorates his house on Halloween and at Christmas time.”
And the lawyer closes the argument
with this: “What this court needs to know, judge, and what this community needs
to understand is that the branch my client has embezzled is but a small one in
a large bank that contains thousands of branches across the country. Yes, my
client only works for the branch he embezzled, but he has access to information
on the entire organization. And he knew that embezzling a million dollars was
not going to affect the depositors anymore than foregoing the smoking of a
single cigarette would hurt a smoker. It might even do him some good.
Well then, what would you say the
judge should do in a case like this? If you ask the audience in the courtroom
and the community at large, the overwhelming majority will say: throw the book
at the embezzler, and throw the lawyer in the sort of institution from which no
one comes out till they are ready to ride inside a wooden box, and go to where
silence is a permanent feature of the landscape.
But why am I telling you this
story? I am telling it because it is a real story, one that unfolds everyday in
one form or another across this land and many lands around the world. The
latest example has come in the form of an article written under the title:
“About That CEO/Employee Pay Gap” and the subtitle: “The average chief
executive makes $178,400 – about five times the average worker, not the
331-to-1 commonly cited.” It was co-written by Mark J. Perry and Michael
Salsman, and published on October 13, 2014 in the Wall Street Journal.
The authors make clear at the
start of the article that the readers will judge their performance as they
plead the case of the Chief Executive Officers whom, they say, have become “an
easy target” for politicians running for re-election. They take up the case
even though no one has accused the executives of embezzling from the companies
they run. Still the reality being that the executives do embezzle inside a
legal framework that does not prosecute them, the suggestion was to create a
framework that will diminish the ability of executives to take advantage of the
system and give themselves what no one would give them.
By getting behind the CEO/Employee
Pay Fairness Act whose goal is to prevent publicly held companies from
deducting executive compensation over a million dollars unless they give all
other employees raises that offset the cost of living, and take into account
labor productivity, the politicians who spoke up, only tried to level the
playing field. They did not seek to punish the executives or anyone. Even then,
the move by politicians upset the authors-turned-lawyers so much so that they
mounted a defense to plead the case of the executives. They did so using absurd
arguments that resemble those used at the start of this presentation.
They also used all kinds of
numbers, statistics and analysis to say that the gap between the CEOs and their
workers is narrower than it was claimed by some people. But that is beside the
point because (a) it is irrelevant to this discussion and (b) you can argue the
numbers all you want without reaching a conclusion given that liars can figure
even when they quote figures that do not lie.
What is at issue here is the
nature of their defense ... which goes like this: “If the executive team were
able to redistribute 25% of their [income,] the net impact on hourly pay would
be just over a penny-per-hour raise. Even if the executive team took a 100% pay
cut and distributed the money equally to the part-timers, hourly wages would
only rise by five cents.” And they rest their case in the hope that the judge
will understand.