The weekend before Valentines Day, CNN business reporters showed
their infatuation with class warfare as they courted a critic of
corporate pay scales. None of the In the Money panelists, however,
saved room on the dance card for a defender of corporate pay, which
is set by market forces.
Introducing Vanguard Group founder and mutual fund
legend John Bogle for an interview segment on the February 11
program, In the Money co-host Jennifer Westhoven began by
prompting Bogle to attack executive pay: John, I want to ask you
first about big CEO pay since the 1980s. This has skyrocketed. A CEO
can now make something like 240 times what the average worker can
make. Thats mind-boggling.
Bogle agreed with Westhoven, replying, It's not only
mind-boggling but its disgraceful. Neither Westhoven nor her
co-hosts, Fortune editor Andy Serwer or Jack Cafferty, questioned
Bogles characterization. Later, Westhoven plugged the money
managers book, The Battle for the Soul of Capitalism. Commenting
on the title, the former Reuters reporter remarked, We all hope
that we all win it, right?
What Westhoven was missing and plenty of economists
and business leaders would argue is that the soul of capitalism is
the free market, which drives wages and prices paid by private
businesses. While some observers may feel corporate executives are
paid too much, ultimately the market decides wages and prices as
consumers and shareholders vote with their wallets. One such market
force in particular governs covering the labor cost of executives:
economic rent,
which is essentially is the cost of retaining unique talent apart
from the cost of compensating that talented person for his/her
labor. Its the reason, essentially, why Westhoven
is paid to report for CNN when a 22-year-old fresh from journalism
school could perform the same task for much less pay.
The Business & Media Institute has previously written on the
media engendering class warfare via the issue of
executive pay,
including In the Money contributor Andy Serwers
January 19 swipe at highly paid executives and media
underreporting on
corporate generosity
following Hurricane Katrina.
CNNs In the Money Continues Love Affair with Class Warfare
February 13th, 2006 2:00 PM
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