Last week, I mentioned how, despite being incredibly profitable (especially in this economy), Caterpillar is still attempting to crush its workers and their union. Steven Pearlstein makes a similar point (boldface mine):
The first is to note that when it comes to its executives, managers and engineers, Caterpillar does not use the same criteria of paying the average market wage. In those instances, the company has seen the competitive benefit of paying above the average to attract and retain a cadre of above-average employees and give them sufficient incentive to work hard, take risks and deliver superior performance. There is no evidence to suggest that having better-than-average production workers will not have the same beneficial results. To believe or behave otherwise is nothing more than the sort of class snobbery better suited to the country-club locker room than the executive suite of a modern global corporation.
If Caterpillar were really serious about having a world-class workforce, it would be willing to negotiate wage and benefits levels 15 percent above the market. And if it were serious about insuring that all workers share in the company’s success, then it would offer production workers a profit-sharing plan that reaches at least 10 percent of base pay in good times.
I’ve also made discussed how, once a company becomes large enough, maximizing shareholder profit is incredibly destructive due its powers of governance:
In a market economy, many functions that are governance functions are determined by the private sphere. Bad decisions can lead to thousands losing their jobs, counties losing their tax bases, and dependent or downstream businesses going bust. Large companies, or companies like Bain Capital which can strongly influence large companies, provide many key functions: goods or services (obviously), employment, and often infrastructure needs (e.g., telecommunications) that affect local communities or even entire regions or economic sectors.
Given these companies’ power of governance, no society can afford to be in thrall to the Cargo Cults of Efficiency or Maximizing Shareholder Profits. That, as we have learned over the last three decades, leads to governance–and government–by and for sociopaths.
Pearlstein again (boldface mine):
Because of its size and reputation, companies like Caterpillar also need to acknowledge that they have an outsize impact on the social, political and economic environment in which markets operate. Caterpillar should not expect voters to embrace its aggressive free-trade philosophy if globalization merely gives it license to grind down the incomes of average workers. It shouldn’t expect politicians to approve more money for public works projects, or give the green light to increased coal and shale-oil production — both big generators of Caterpillar sales — if the profits from those sales won’t be shared fairly with front-line workers. And it shouldn’t expect to win the good opinion of investors or the public if its human-resource strategy is to become the recognized leader in the corporate race to the bottom.
Keep in mind, that while the Mad Biologist is a wackaloon Post-Keynesian, Pearlstein is a Very Serious Punidt. I only hope this means that shifts in the pseudo-elite discourse of our betters are going to occur–and soon.