Ceos Should Mind Their Own Business
It’s hard to recall the last time, if ever, that the heads of the nation’s largest corporations took out ads in national newspapers to influence the president and Congress - and the rest of us, as well - on national policy. Normally, these men (a word here used advisedly) have more direct and less public ways of gaining the respectful attention of government.
But there they were last week - about 100 of them, from the chairmen of Ford, Time Warner and IBM, to the CEOs of Boeing, Delta, Eastman Kodak, Goldman, Sachs, Alcoa and K mart - buying a pair of New York Times ads urging Bill Clinton, Bob Dole, Newt Gingrich and their colleagues to adopt “a credible plan to balance the budget.”
As “leaders of institutions keenly sensitive to interest rates and the short- and long-term outlook for the U.S. economy,” they said, they are “convinced that the health of our economy rests on your ability” to achieve such a plan. America, they said, “must learn to live within its means.”
Coming from such men, the call on the nation to live within its means is an inspiration. Among the signers we have Louis V. Gerstner of IBM; in 1994, the last year for which there is data, he made $12.5 million. Then there’s Hugh McColl of NationsBank, who earned a reported $13.7 million; Alex Trotman of Ford - he took home a paltry $8.1 million; Robert Eaton of Chrysler, $6.2 million; and Jack Smith of General Motors, $6.1 million.
All of them, struggling to live within their means. (According to Forbes magazine, if one counts the stock options that they exercised, the top 25 chief executives of American corporations made a total of $1.5 billion in 1994).
Maybe they all earned it. But if one takes their collective presumptions seriously, the prospect is scary. For even as their collective pay shot toward the skies, as their companies’ earnings boomed, and as the gap between their pay and those of the average worker widened further, these would-be statesmen of national prosperity were laying off hundreds of thousands of employees: nearly 70,000 sacked by Jack Smith’s GM since the beginning of 1993; 38,000 cut by Louis Gerstner’s IBM; 31,000 by Frank Shrontz’s Boeing; 28,000 by Charles Lee’s GTE; 12,000 by George Fisher’s Eastman Kodak.
No one should presume those decisions were made for anything other than the best of business reasons.
Nor should it be thought that the ads in the Times were placed in anything but the height of civic-mindedness.
But that’s precisely what’s so worrisome: that these men really believe that getting a balanced federal budget within seven years is not just the crux of a “healthy economy,” but also a matter of such importance that it justifies their decision to speak out in this (for them) extraordinary fashion.
Few of them could run their businesses if their books - including borrowing in the form of bonds and other corporate debt - had to be balanced every year in the way they want government to operate. Among them, indeed, are some of Wall Street’s biggest engineers of corporate debt, managers of junk bonds and manipulators of credit.
The fat federal subsidies many of these corporations receive remain untouched in the new budget proposals.
Government spending for highways, schools, research laboratories, air traffic control equipment and all the rest is just as much an investment justifying institutional debt as borrowing for a new machine in a manufacturing plant.
These men seem genuinely to believe that nothing is more urgent or important than this, including the seven-year timetable. They pay lip service to the inclusion of “entitlement programs” in the menu of cuts, but don’t specify that unless there are substantive changes in Social Security, a matter assiduously avoided by all parties in this dance, no long-term balanced budget can be achieved without crippling public investment in education, research and the host of other programs on which so much of the economic future rides.
And of course, they make no mention of the growing and increasingly dangerous gap in income and economic expectations in which they and their “institutions” are so deeply implicated. All the low interest rates in the world will not produce a healthy economy, much less a healthy society, if that gap continues to grow, if more and more jobs are exported overseas, and if half of our workers - and perhaps many more - can look forward to nothing but a shrinking share of the nation’s productive growth.
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