By John Fraser
Of course there are excesses. Company executives can and do become obscenely rich with large salaries, generous pensions and other less-transparent perks like share options.
But that is the price we pay for a fairly free labour market, where merit is rewarded.
If someone can command a high salary because his or her talents are in high demand, then so be it. This applies to high-class hookers, film stars and footballers, so why should it not also work in the less-respectable corporate world?
Well, South Africa’s communist Minister of Trade, Industry and Competition Ebrahim Patel thinks that it shouldn’t. He said as much in his recent budget vote speech to Parliament, and in an earlier media briefing.
He wants South Africa’s company law to be amended to “tackle the injustice of excessive pay”.
Now, one can understand the minister’s frustration, because when shareholders vote through salaries which give the bosses a daily rate which is close to the annual amount we peasants earn – there seems to be too little debate on whether or not this is good for the company. Whether the CEO really needs so many zeros on his pay cheque.
If the shareholders won’t do enough to curb excess, Patel believes he must mount his charger in full white-knight garb and slay the dragons of boardroom greed.
He spoke of “a new Bill will that will be finalised within 60 days (which) will require disclosure of wage differentials in companies, stronger governance on excessive director pay, and enhanced transparency on ownership and financial records.”
He argued: “if we really are all in this together, then our patterns of ownership, power and control must be transformed.”
Lenin must be chuckling in his mausoleum, delighted that although he may be dead and unburied in Red Square, the idealistic claptrap of Karl Marx is flourishing in the depressing architectural blandness of Patel’s lair – the Department of Trade, Industry and Competition’s (DTIC) Sunnyside campus.
Patel strikes me as a hard-working, incorruptible, thoughtful and caring man, but I am not sure his economic stance is realistic.
A lot of people earn a lot of money. So what?
His boss, the President, is a billionaire. Would Cyril have welcomed more government interference while he was still in the private sector, building his fortune through the distribution of McDonald’s burgers and other gastronomic delights?
One would hope he will bring a dose of reality when this issue reaches the Cabinet.
While Patel’s vision of a fairer, more equal society looks good in theory, it takes little account of reality.
Greed may not be good, noble or admirable. But it makes the world go round.
It leads to excess, but also to success. The two go together.
Remove the motive for the very talented to exercise their talents and lead our big firms, and they will go elsewhere. They can. They are mobile and in demand.
You will be forced to replace the overpaid elite with under-performers. That is not good for an economy.
So maybe this minister and former activist for South Africa’s textile workers should stick to his knitting, by helping to create the most welcoming environment possible for investment and talent.
He will not do this by bashing the bosses.
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