Hardened Hearts

Strikes, the free market, and one-day obsolescence

In 1965, the average American CEO earned 20 times the salary taken home by the average US worker. By 2021, that figure had risen to 399. It’s worth repeating: the average CEO today earns almost 400 times the salary of the average worker.

I’ve worked with many CEOs during my career, and I can say without hesitation that most do not deserve anywhere near that level of compensation. In general, they are as flawed, incompetent, and clueless as the rest of us.

Disney CEO Bob Iger has recently made headlines for saying actors and writers are not being realistic in their expectations about pay and conditions. Bob Iger is paid $27 million per year, while one of the stars of Orange is the New Black shared her dismay at receiving a residual payment of $27. Whose expectations are unrealistic?

Greed is good.

As a child of the eighties, I heard that mantra everywhere. We were told the free market is the best mechanism for solving all our problems. The genuinely free market is a myth. It doesn’t exist. Can a small family business afford the legal and accounting fees involved in domiciling itself in a low tax regime? A multi-national corporation can. Can a local company afford lobbyists to schmooze and, in some cases, pay politicians to change business regulations to its advantage? A Fortune 500 corporation can. Does the free market price in the cost of future environmental harm caused by polluters? When cigarette smoking was popular, did tobacco companies underwrite the healthcare costs of their products? When AI puts millions out of work, who will pick up the tab for retraining or supporting all those people?

The free market is a myth peddled by those with power and resources to conceal the fact they have shaped the world in their favour, and the general principles are to shape it to have as little government interference but as much government support as possible. In the late 1990s, banks lobbied to change the rules that prevented them from making risky investments, but they didn’t accept the consequences of that change and gladly took billions in government bailouts when the change backfired in exactly the way some had predicted. There is no free market, there is only a rigged market, and it tends to be gamed by people with money and power.

Greed is good is a lie.

Greed is greed.

As a motivator, it compels people to enrich themselves, and this often comes at a cost to others. Growing their relative salaries by 20 times since 1965 means CEOs have taken money out their businesses that might have gone to their workers. Since the remuneration committees of most large corporations feature senior executives from other businesses, no one is going to complain too much about the hogfest that sees their peers taking a larger portion of the pie.

Greed also encourages people to focus on the short-term. The average CEO tenure is 4.9 years to 7 years, depending on sector and size of company, so few leaders are around to cash in on long-term bets or clean up their own messes. What’s happened with Thames Water in the UK is a salutary lesson in the destructive power of greed.

But how can a CEO sleep at night, knowing they are living in luxury while their employees might be struggling to pay their rent or mortgage or feed their kids? The same way governments can close their borders to refugees, or people can dismiss the hundreds of people still dying every week from COVID-19 as old and weak, or people can rationalize long-haul travel while the planet burns – they harden their hearts.

Greed requires it. You must care a little less about your fellow citizens. A little less about the planet. A little less about those not quite so fortunate as you. You have to rationalize your achievements as special and tell yourself you deserve it. CEOs tend to come from backgrounds of privilege and have often had handouts from family to give them the education and comfort they would deny others. They have to tell themselves they deserve their treats while cutting jobs or making hardnosed decisions to diminish the incomes or rights of their workers. It’s just the free market at work, they’ll say, but it’s not. It’s the protection of their slice of the pie, their shareholders’ slice of the pie – and it comes at the expense of workers and their families.

The sad thing is the hardened heart is contagious. As the workers’ slice of the pie shrinks and there is less to go round, they themselves must adopt a harsher attitude to the world, turning on people who might threaten what little they have – the migrant worker, the unemployed scrounger, the left-wing government that wants to tax more to pay for social programmes – and we see a gradual drift to harder, more self-interested politics. I’ve written about this process and its more radical elements in Black 13, a book I started researching in 2016. It’s sad to see this process continuing.

The hardening is likely to get worse over the coming years as we face three enormous challenges. The first is AI and automation, which if left unregulated, will likely lead to the destruction of millions of jobs. This will shrink the pie for all of us and, under the current economic system, lead to a massive concentration of wealth in the hands of those who own the AI and robotics technology. CEOs, whose jobs are essentially about strategy, operations, resource allocation and communication, should realize AI can also replace them, and better align their interests with their workers. Everyone needs to understand there comes a point at which technology will undermine the common good.

In the most recent negotiations with the actors’ union SAG-AFTRA, the AMPTP, representing the Hollywood employers, tried to insert a term that would involve background actors signing away their likeness rights for a single day’s pay, giving studios the right to use AI to recreate them in future productions. Who will be able to afford to go to the movies if they have been rendered obsolete for one day’s pay?

My novel Pendulum asked questions about the role of technology and how we define whose interests it serves. In the age of AI, we need to answer these questions urgently. I believe technology should serve the interests of the many, not the few, but it will not do so without government intervention and regulation.

Climate change will see more and more migrants move from the global south, which is being hardest hit by the extreme effects. Rich countries and their citizens will face a choice between either hardening their hearts and implementing callous schemes to try to deter immigration or sharing more of their pie with poorer people and countries, either by accepting migrants or paying reparations for the harms caused by their own affluent and polluting lifestyles.

With the ongoing circulation of COVID-19 and the estimates that hundreds of millions of people around the world will be affected by the long-term impacts of infection, there will be a greater burden on the economy, social security, and healthcare that will require either a hardening of hearts towards those who have been unlucky, or increased taxes to cope with the rising costs of care.

When a CEO who makes more in a day than the average writer makes in a year can publicly declare without irony that writers aren’t being realistic in their expectations it points to a lack of empathy in the corridors of power. When faced with common challenges of the scale of the ones currently confronting us, we need empathy now more than ever. Yet a greed is good mindset, the rigged market, and leaders who, research suggests, might have a greater than average chance of expressing psychopathic tendencies, are not going to solve these problems in the common interest.

We need to foster ways of encouraging long-term thinking, empathetic approaches to life and decision-making for the common good, not just narrow self-interest. This will involve a rejection of the greed is good, free market lie we’ve been sold. It will require us to see through the media manipulation and power structures of those who’ve perpetuated that myth, and demand something better.

Something that doesn’t involved hardening our hearts to the plight of the 8 billion or so people with whom we share this planet.