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But if this is true, there's good reason to question their claim to outsized compensation when times are good. Surely the end of the cold war, the globalization of trade and capital markets, the rise of personal computers and the internet, and a host of other factors help explain the success of the financial industry during it run in the 1990s and in the early years of the twenty-first century.
In 2007, CEOs at major U.S. corporations were paid 344 times the pay of the average worker. On what grounds, if any, do executives deserve to make that much more than their employees? Most of them work hard and bring talent to their work. But consider this: in 1980, CEOs earned only 42times what their workers did. Were executives less talented and hardworking in 1980 than they are today? Or do pay differentials reflect contingencies unrelated to talents and skills?
Or compare the level of executive compensation in the United States with that in other countries. CEOs at top U.S companies earn an average of $13.3 million per year (uisng 2004-2006 data), compared to $6.6million for European chief executives and $1.5million for CEOs in japan. Are American executive twice as deserving as their Europen counterparts, and nine times as deserving as japanese CEOs? Or do these difference also reflect factor unrelated to the effort and talent that executives bring to their jobs?
The bailout outrage that gripped the United States in early 2009 expressed the widely held view that people who wreck the companies they run with risky investments don't deserve to be rewarded with millions of dollars in bonuses. But the argument over the bonuses raises questions about who deserves what when times are good. Do the successful deserve the bounty that markets bestow upon them or doe that bounty depend on factors beyound their control? And what are the implications for the mutual obligations of citizens -- in good times and hard times? Whether the financial crisis will prompt public debate on these broader questions remains to be seen.