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In defense of corporate America

The Economist undertakes to represent corporate America's brighter side this week, in an (alas) subscription-only opinion piece (which I will excerpt here; if you'd like me to email you a copy, let me know). American businessmen aren't just greedy, the Economist writes: "If (they) lead the world in filling their own pockets, they also lead the world in returning their wealth to the society that helped to produce it." The article continues:

For better or worse, this philanthropy has allowed America to tackle its social problems without building a European-style welfare state, and to embrace modernity without abandoning its tradition of voluntarism, decentralization and experiment. The country did a remarkable job of creating a national infrastructure before the introduction of the federal income tax in 1913. And, even as the federal government grew, boosted by war, depression and idealism, America was careful not to allow the public sector to crowd out the voluntary one.

There's a lot to be said for this (and I'm glad to have learned it). But the Economist goes a bit too far in its defense, I think; I have my doubts, for instance, that "America's philanthropic tradition owes far more to social pressure and genuine altruism than it does to tax breaks or government bullying," as our writer apparently believes.

Is there any reason to believe that so disproportionate a pay scale (in comparison to other worker salaries, at least) for corporate executives is in any way necessary to preserve a tradition of philanthropy? I suspect not. Executive compensation has in recent years been based more an corporate chieftains' power over their directors (or at least their ability to convince the directors that they are so rare and irreplacable a commodity that they're worth almost any amount) than on their actual economic value to the companies that employ them (as the Economist itself observed last week). In other words, it's been based on greed.

I don't believe greed is inherently bad, but either way it's no basis for philanthropy. Sure, the Economist names a great many fabulously wealthy businessmen turned fabulously generous philanthropists, but those men — Getty, Frick, Rockefeller, Carnegie, Gates, (Ted) Turner, (David) Geffen, (Gordon) Moore, (George) Soros — are better characterized by ambition than greed: They built things. Of course they were self-motivated, and of course they sought to maximize their personal gain from their endeavors. And you may or may not personally think what they built was all that praiseworthy. But their ambition was defined by something beyond suckering investors and padding their bank accounts.

If anything, I imagine that ambitious business people — the kind that become philanthropists — would be discouraged by their colleagues' greed and deceit, and dismayed by their collective villification on Main Street. Which is to say, the fact that corporate success has in the past bred generous and civic-minded corporate citizens is hardly a defense for recent years' "infectious greed," or for the elevation of top executives to such precious heights; rather, it's yet one more reason to condemn it.

July 23, 2002 1:01 PM

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