Teamwork

One of the challenges of teamwork is deciding how to share the profits of joint enterprise. This is precisely why executive pay is so interesting. Why should the boss take most of the profit and leave the rest of the team to share out scraps among themselves?

For example, in 2007, the German public was shocked at the revelation that Wendelin Wiedeking, the CEO of Porsche AG, had earned approximately $90 million in the previous year. The company, however, was unapologetic because when Wiedeking’s employment contract was negotiated in the early 1990s, Porsche was in serious financial distress. Wiedeking turned the company around, and as a reward the controlling shareholders voted to give him a 0.9 percent share of the firm’s profits. While no one contemplated what that might mean in the event of record profits, the company’s current chairman said that Wiedeking is ‘worth every Euro’. This revelation could have major policy consequences because of strong worker resentment of large pay inequities within society.

Randall S. Thomas, ‘International Executive Pay’ Labor and Employment Law and Economics (2009)

Nobody wants to trigger strong worker resentment: people unhappy, productivity falling, customer boycotts – that never ends well. This is what results when CEOs are overpaid. It is not good enough to say that the overpaid CEO is ‘worth every Euro’. Not even a superstar Porsche CEO can carry the company on his own shoulders, all by himself. It’s not as if he could make all the cars single-handedly, is it. He needs workers. Hundreds, maybe even thousands of workers. 24,481 employees to be precise. It’s actually silly to say that he turned the company around, because he didn’t do it alone. He had help from 24,481 other people.

​Also, anyone else could have done it. Turning failing companies around is quite easy. It's not rocket science. And lastly, why not just reward him with a ‘Best CEO ever!’ certificate to display on his office wall? Rewards don’t have to be monetary. CEOs should do it for love of the company and be content with a simple ‘thank you’. There is no rational justification for the huge salary.
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Strong worker resentment makes sense if we’re talking about one of the 24,481 members of the team involved in Porsche being upset because the man at the top creamed off all the profit from their joint endeavour. But if you look around, you will notice that nobody ever claims to be aggrieved because they have lost out on a windfall they feel entitled to share in. No, it must always be presented as a grievance about ‘pay inequities within society’. Just the way when people are asked why they filed a lawsuit they always solemnly declare that it was ‘so that nobody else will have to go through what I went through’ or ‘so that lessons would be learned’ or ‘to give the defendant an opportunity to reflect on best practice and do better in future’. It can never be ‘so I could get some money as compensation’ or even worse ‘so I could get back at the bastard who shafted me’. In the arena of trying to shake other people down, honesty about your motives is never the best policy. To understand why our motives must always be linked to a benefit for Society, let’s think a bit more closely about the nature and concept of Society.

To understand Society better we can turn for enlightenment to Rose Wilder Lane. She travelled all around the world, so she had quite a lot to say about Society, and luckily for us she wrote rousing books about it.

A honey bee, for instance, behaves as a cell behaves in a human body. A bee apparently has no desires and makes no choices; a Will of the Masses seems to control it. [editor: Rose Wilder Lane obviously hadn’t seen Bee Movie]. A bee is ruthlessly exhausted, discarded, replaced by another to be worn out in the same changeless labor for the Swarm, just as cells are worn out and replaced. It appears that the bee has no individual life; the Swarm is the living creature.

In the human world there is no entity but the individual person. There is no force but individual energy. In actual human life the only real Society is every living person’s contact with everyone he meets.

​Rose Wilder Lane, Discovery of Freedom
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​People make contact with each other because they need help to get stuff done. It’s called division of labour. We form teams because we can’t get everything done on our own. These meetings, and interactions, the relationships forged by people working together at Porsche, matter most. The rest of us can obviously offer our opinion (free speech!) but it’s no more than an opinion and how other people divide their spoils is really none of our business. It is true that if nobody is interested in your opinions you could up the ante by purporting to issue edicts on behalf of Society, or you could try self-presenting as the representative of some Community or other, but that seems ever so slightly misleading when really you're just offering your own humble unsolicited opinion of what other people should be doing to make their relationship work and their team thrive.

To call all these relationships Society, and then discuss the progress or welfare of Society, as if it existed as a bee-swarm does, is simply to escape from reality to fairyland.

Rose Wilder Lane, Discovery of Freedom
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Since fairyland is on the whole a more beguiling place than reality, this is the space occupied by most of the complainers out there who are very unhappy about other people's pay.
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