Who are these people who have their hands on the wheel of capitalism?


Maybe it’s an all-too-human condition, to think the best of people. When we think of the fabulously richly rewarded CEOs of massive corporations, notwithstanding the Enron debacle, it’s hard not to assume a level of uprightness, moral fortitude and general decency. I’m not saying we think these people are saints, but I would say we assume they are not lowlife either.

After all, they have an enormous impact of our lives, hiring and firing millions of us, looking after our savings, impacting the air that we breathe and perhaps most of all by influencing and in some instances controlling the governments we elect (mining super-profits tax anyone? Pokies reform? Cigarette packaging controls? etc).

So how can we judge these captains of industry to whom our interests are so bound? Frankly, who knows, they simply move in a different dimension, but putting together a couple of facts might provide some insight.

The first is this: they earn A LOT OF MONEY. Coles boss Ian McLeod pocketed a $15.6 million pay cheque for 2010/11. The chief executives of the big four banks, who allegedly earn some $40 million between them each year. The share of the the top 0.1 per cent of earners’  Australian household income has more than tripled since 1980….their wealth has accelerated away from 99.9% of the rest of us. And the richest 1% account for 10% of all income. This group is comparatively richer than at any time since the 50’s. What are these fine leaders amongst men doing with all this money?

Dick Smith

Recently, entrepreneur and philanthropost Dick Smith who gives away about $1m a year, wrote the the bank chiefs to suggest they consider giving away some wealth. He received one reply from the head of CBA who claims he gives away money anonymously.

According to Smith, the rich in the US, generally, donate 15 per cent of their income, while Australia’s wealthy gave less than one per cent. Warren Buffet’s Giving Pledge initiative where he has invited America’s richest to promise 50 per cent of their wealth to charity, and the list of those who have taken up the pledge includes Bill and Melinda Gates as well as Mark Zuckerberg, George Lucas, and the mayor of New York, Michael Bloomberg.

Here in famously egalitarian Australia, nobody even dreams of such generosity. Bill Ferris,  Private Equity honcho, chairman of the Garvan Institute of Medical Research Head of the Garvin instutute and recipient of an Order of Australia for services to the community commented, ”I’m not calling on corporates to do less, but I don’t think they’re likely to give more than 1 per cent of net profits. Shareholders would jump up and down, and even some customers if they saw prices being forced up. There’s a far more compelling case for directors themselves to do more.”Ferris said a reasonable benchmark for annual giving for executives aged under 40 was 2.5 per cent to 10 per cent of pre-tax annual income; and 7.5 per cent to 15 per cent for executives aged over 40.Around 2.2 million Australians are living in poverty or 11 per cent of the population. There are more than 105,000 Australians living homeless or in marginal accommodation on any given night.Ferris’ suggested 15 percent of those four bank salaries would provide $6m pa, and that would put a roof over the heads of a lot of homeless people and feed a lot of huingry children, right here in our back yard. Imagine if every CEO earning over say $5m per year gave an average of 10% away, imagine the good deeds that could be funded, imagine the impact on our country; it could be transformative.

Whats sort of people are our CEO’s? The sort of people who fail to recognise even cynically the benefit to their personal brands that philanthropy could have. The sort of people who are busy consuming or more likely simply stacking up unspendable mountains of personal wealth with no thought of how they could do something positive for the society that gave them such privileges. Shameful, immoral people? The right kind of people to entrust ourselves to?

“Fascism should more properly be called corporatism because it is the merger of state and corporate power.”  Benito Mussolini

“If a free society cannot help the many who are poor, it cannot save the few who are rich” John F Kennedy.

http://economics.com.au/?p=5387

http://www.smh.com.au/executive-style/luxury/gap-widens-for-mega-rich-20100407-rsaw.html
Read more: http://www.smh.com.au/opinion/society-and-culture/no-lies-no-inventions–poverty-in-australia-is-awfully-real-20110127-1a6yy.html#ixzz1a68ZOaHK
Read more: http://www.smh.com.au/opinion/society-and-culture/no-lies-no-inventions–poverty-in-australia-is-awfully-real-20110127-1a6yy.html#ixzz1a68NYjny
http://www.smh.com.au/executive-style/australias-richest-not-big-givers-to-charity-20100223-p0pd.html
http://www.abc.net.au/local/stories/2010/12/22/3099255.htm
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2 Responses to “Who are these people who have their hands on the wheel of capitalism?”

  1. Hmm, I think this needs discussing over beers while watching highly paid sports stars playing rugby. Hopefully they’ll be some music videos playing with highly paid popstars showing off their attributes. Couple of ads with highly paid actors extolling the vitue of coffee machines and skin-care products are always enjoyable. Oh yeah, back to tight-arse CEOs.

    I agree that many CEOs are over-paid and, even worse, are given incentives to maximise short term over long term resuts. However, it is shareholders who pay them. If they were paid less and therefore more went to shareholders via dividends, then millions of people could decide whether to keep it in their super funds, pay down debt, or give to charity, etc. New legislation has increased the power of shareholders on this issue.

    Shaming or expecting CEOs to give more to charity is not a straight-forward good. What if they use their spare cash to invest in new innovations that, say, replace carbon energy with renewables or cure cancer or increase food productivity. This would transform billions of lives. Or they could give that money to Australian opera or ballet. Which is better?

    Why is a rich elite deciding which charities to support a better model than the social welfare system of a democractically elected government?

    My proposal: inheritance tax.

  2. Tax and philanthropy are separate matters. The advantages of philanthropy over tax:

    – it’s efficient; it doesn’t take expensive governing structures to administrate it
    – it’s discretionary; yes some may choose opera, I see that as being just fine. Others will choose alternative energy development others health research. The causes that are most compelling will attract the funds… averaging effect.
    – it gives back to the giver in a way that tax doesn’t
    – it provides a positive societal model, demonstrating leadership and generosity
    – it eliminates political short-term electoral cycle oriented funding decisions

    Having said that, I agree inheritance tax for the grotesquely wealthy has an important place….it’s well and truly in place in the UK…however there is another side of the coin. Here’s what Milton Friedman has to say about the (admittedly silly) idea of a 100% inheritance tax and other ideas around wealth redistribution.

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