I hope we have the courage to take the bottle from Uncle Bob and tell him that we are doing it for his, and our, long-run health.Dave Kusnet, a former Clinton speechwriter, offers some thoughts on private-jet-gate, the minor squall about the big three executives coming to DC to beg for money in their private jets rather than on commercial flights. I think Kusnet is correct to emphasize the importance of CEOs and other executives paying attention to the messages they send and, more broadly, to the corporate culture they create. Many executives are remarkably tone deaf on this score, to the detriment of their firms and shareholders. At the same time, it is important to recognize that there is a market for CEOs that spans industries; thus, it does not make a lot of sense to demand low CEO pay in the auto industry given that doing so would only mean that auto companies would be handicapped in the market for CEOs and so likely end up with low quality ones (keeping in mind, of course, that even with high salaries they have a long history of bad management).
Kusnets reference to Boeing is insightful in a way he does not note. Boeing can get away with having strong unions covering basically all its workers because it is essentially a monopolist. It's only real competitor is in France, which faces even more onerous labor market restrictions than a strong US union can provide. It is the rise of competition in the decades after WW2 that made strong unions untenable for the Big Three US auto makers, which enjoyed a comfortable oligopoly after the WW2 destroyed the capital stock in pretty much every other developed country.
As an aside, Lynne Kiesling played a role in pushing me into blogging by offering me a guest spot on Knowledge Problem when we met at a mutual friend's wedding. I didn't take up the offer because I didn't feel like I would fit that well with the usual topics at KP, but the offer lingered in my mind and helped push me to create this blog.
