Pangloss is a fictional character in Voltaire’s 18th century masterpiece of satire, Candide. When describing the current state of affairs, Pangloss always refers to the status quo as “the best of all possible worlds.” His smug optimism in the face of injustice and tragedy produces much of the mordant humor of Voltaire’s novella. From the start, the reader understands that Pangloss is a suck-up to the establishment—the aristocracy and various churches, whose control over a society of a very few rich and mostly poor was weakening in 18th century Europe as ideas about science and freedom began to disseminate despite a high level of censorship.
While 21st century America enjoys a representational democracy, the economic policies of the past 40 years have re-established an aristocracy-free version of the inequitable society of 18th century Europe, one in which a very few people take an unfairly large percentage of income and wealth. The major reasons for the enormous increase in economic inequality since Ronald Reagan assumed the presidency include the destruction of labor unions, privatization of government functions, enormous tax breaks for the wealthy, large deficits financed by bond purchases by the wealthy, the erosion of the purchasing power of the minimum wage, and the shrinking of government support of education, infrastructure and the social safety net.
As the new regime of economic inequality has stabilized over the past 18 or so years—essentially since the Bush II tax cuts for the wealthy—it has had its share of Panglosses, ready to determine after so-called rigorous analysis that we are living in the best of all possible worlds, that is, as long as the world is based on an unfettered and lightly regulated free market. I think these contemporary Panglosses are okay with uniform weights and measures, but not much else in the way of government interference in the marketplace.
The University of Pangloss is George Mason University, often called Koch University, because of the millions of dollars the ultra-right wing Koch Brothers have given the institution (I hesitate to call it a “school”), virtually all of it earmarked to support development and dissemination of pamphlets and papers (notice I avoid using the word “research”) that advocate lower taxes, less regulation, a fossil-fuel economy and other positions that entrench the current elite as permanent economic and political overlords. In 2018, a lawsuit under the Freedom of Information Act revealed that the Koch Bros and their pals have direct influence over faculty hiring decisions at the university's law and economics schools. No wonder the faculty employees of George Mason (note my refusal to use the word “professors”) always put on the Panglossian happy-face for the current state of affairs and bemoan the possibility of a better way—be it a Green New Deal or an increase in the minimum wage.
If George Mason U is the University of Pangloss, then the ultimate Panglossian—the Poohbah of Pangloss, as it were—must be Tyler Cowen, Herbert L. Harris Chair of Economics at George Mason and author of a number of apologies for Reaganomics, including his recent Big Business: A Love Letter to an American Anti-Hero. Over the years I have chided Cowen for saying that growing inequality of wealth is not a problem, and that the gig economy is good for workers, Typically, Cowen’s argument reduces to looking at individual trees that are thriving while ignoring the destruction of whole forests.
The mainstream news media keeps giving Cowen a chance to embarrass himself with effusions of enthusiasm for a very grim and unfair status quo. In the past, he has had articles in the Wall Street Journal, New York Times, Foreign Affairs and elsewhere. This time, it’s Time, now a wan specter of its former self, which finds room for an opinion piece by Cowen titled “CEOs Are Not Overpaid.” He asserts that a competitive market determines the current high value of the CEO and that’s a good thing. For Cowen, CEOs of large American corporations averaging $18.9 million in salary a year is the best of all possible worlds.
First the facts. Before the Reagan revolution, American CEOs made 20 to 40 times what their average employee took home. Now, it’s 361 times what the average worker makes, which Cowen conveniently rounds down to 300 for us in the article. Like most Panglossians, Cowen always uses the happiest numbers. In comparison, CEOS in the United Kingdom currently average 22 times what their workers make. It’s 12 times for German CEOs and 15 times for the French. As it turns out, CEO salaries in the United States began to expand obscenely as Congress and corporations instituted the Reagan plan. Lower taxes gave CEOS more incentive to keep more. An inflation-eroded minimum wage and the decline of unions made the corporate pie from which to plunder an unfair piece even larger.
Cowen proclaims that contemporary CEOs must wield many more skills than their predecessors. They can’t just be good at running the business, they also need to have financial, public relations and technology expertise. But Cowen forgets that nowadays CEOs haves many more experts to guide them in their decision-making. Only the very largest corporations had full-time PR departments in the 1950s and virtually none had chief information officers. Plus, it’s hard to understand why the job of American CEOs is so much harder than that of their European counterparts.
The Pangloss Poohbah spends a lot of ink fighting the “common idea that high CEO pay is mainly ripping people off.” His reasoning is so weak as to be laughable. First he says that corporate governance has toughened, implying the new standards make it harder for the CEO to extract unfair salary and bonuses. Huh? All the tougher post-Enron standards mean is that it’s harder for corporations to commit illegal actions; it has nothing to do with how the pie is divided by executives, shareholders and employees. Cowen then states that the fact that CEOs hired from outside the company make more money than insiders proves that the CEOs deserve the extravagant pay they get. Run that by me again? Or how about this polished turd: the fact that only the salaries of CEOs have risen and not of high-tier (middle management) professionals proves CEOs are not overpaid. No, it merely shows that CEOs are screwing workers at all levels. Cowen makes so many of these dubious statements with such assurance—one after another—that the unsuspecting careless reader may buy Cowen’s hooey.
Just as Voltaire’s Pangloss obsequiously drooled out praise for whatever duke or prince was footing the bill, so Tyler Cowen elevates contemporary CEOs to a kind of rare Űbermensch, aristocrats of meritocracy so much more skilled than everyone else that they deserves everything they get, even if it means that most of their workers scrape by or lose ground.
Underneath Cowen’s specious arguments lies the fundamental assumption that the people who have more deserve more. He never contemplates why those who got bucks deserve more now than they did in the 1940’s-1970’s, or why they deserve more than they would get in Europe. Cowen never wonders why an hour running a meeting is worth so much more than an hour sweeping the floor or an hour teaching our children. He never imagines the great good luck a CEO has to be born with the exact skills desired by contemporary society and to get to go to the right schools and meet the right people, usually introduced through a family connection. Cowen never asks these questions, because like Pangloss, he is happy in “this the best of all possible worlds.”
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