Executive Pay

Apparently, it's up 50%.

As always, Chris Dillow has something interesting to say about this from a left-of-centre perspective.

What do I think as a Christian, and someone who leans left of centre (but not all that much to the left)? Is it immoral that folk get paid the marginal product? Nope, but then the question is whether they are being paid their marginal product, and that's something that Chris pushes at in his blog.

Your libertarian, right-leaning person (Christian or otherwise) will say that we shouldn't stand in the way of this: The market is determining the right level of remuneration for these individuals, yet is it? Is the price mechanism really at work here?

Basic economic theory says that as well as wages being determined by the marginal product of the worker, it also points to the existence of economic rents that can be exploited by either the principal (employer) or agent (employee) in any given wage situation - there is wage bargaining going on. Right-wingers of an extreme form would say that there exists no power without government, but executives certainly have some form of power to extract the kinds of rents they extract - i.e. the kind of pay they manage to get, which seems to be entirely independent of their performance (again see Chris's blog linked above).

Funnily enough though, I think the solution to the problem is to free markets a little bit more. From my limited understanding, the shareholding structures of big companies is skewed in favour of larger investors (which are usually institutional investors), and these large investors do not necessarily exert the kind of influence that might be hoped for. If instead legal structures were such that the voices of small investors were given more say, then we'd certainly see more shareholder activism, which might not be a bad thing in helping bring companies more in line with social marginal costs and benefits rather than just private marginal costs and benefits.

This Blog

I've come to notice something recently. Many people make outrageous claims about the economic and political leanings of the Bible, unsubstantiated claims. Many of these people also attempt to claim the moral high ground for their particular political party. These people are usually right wingers, and often libertarians.

I just came across a chap called Gary North who claims "The Bible mandates free market capitalism. It is anti-socialist. The proof is here: 10,000 pages of exposition, verse by verse". It's basically a libertarian interpretation of the Bible - an interpretation to support his prior political persuasions. It includes the classic characterisation of the political spectrum into two camps that right-wing folk tend to indulge in: Communism/socialism or a free market economy.

It seems there is a dearth of literature on anything but the "Christian Right", and certainly the "Christian Left" does not appear to have quite so many heavyweights listed there.

Is that it though? Is it really only possible to be a free market capitalist, believing in unfettered markets, and a Christian? When I talk about being a Christian, I mean a Bible-believing Christian, and Evangelical, or conservative Christian: Someone who takes the Bible seriously even on the issues where society disagrees.

I believe the answer is no, fundamentally no, and it irks me greatly to see people like Gary North, like Conservative/Republicans claiming the only logical position as an Evangelical Christian is to vote for that party. Hence this blog. I aim to argue using basic economics (the basic economics that all these people ignore in their defence of unfettered markets and subsequent contortion of the Bible).

I hope though not to be as confrontational as these people, as I'd hate to turn into someone who attempted to raise a political party to the higher moral ground. I don't believe Jesus would have been a right winger just as I'm not sure he would have been a leftie either. I think that question is entirely pointless and to try and venture along some kind of characterisation is to wander towards a faith+something else theology.

But simply, a Christian is saved by his belief in Jesus's death and resurrection. Not on which side of the centre ground of economics/politics he happens to stand on.