Was the Indian PM right in grumbling about high CEO salaries?

(Written in response to a newspaper contest)…

No, I don’t think the Indian PM was right in his comments about high CEO salaries.

However, the core contention why he was not right in making those comments is not because the hardworking and highly productive CEO’s deserve their high salaries, nor is it that the company owners and stockholders are helpless in this matter and that high salaries are governed by market forces. Neither is it that reducing CEO salaries would be pointless as it would have a negligent effect on bridging the rich-poor gap. And not even that giving a free hand to the corporate world is the only way to eradicate poverty and bridging the rich-poor divide, as has been eloquently proved time and again during the last century.

True as all the above points are, the core issue is simply that the PM and the government have no right in meddling with the internal affairs of private companies. Whatever salaries the owners of a company decide to give, whether wisely or foolishly, is completely their prerogative. And the government has no business advising them. If anything, the PM should have been exhorting the inefficient political babus and government administrators to learn from the effective and efficient resource management of private sector companies.

Interestingly, had the judiciary given a similar unsolicited advice to the government in the management of its internal affairs, our present government, in all likelihood, would have accused the judiciary of judicial overreach. And yet, our Honourable PM is guilty of the same violation; in this particular context, of governmental overreach.

The real, fundamental issue at the bottom of this controversy is whether we Indians, as citizens and company owners, have an absolute right to our life and property, have the moral right to exist for our own sake, or whether some of our rights need to be curtailed or sacrificed for the larger ‘good’ of society or in this case, for bridging the rich-poor divide.

Fundamental as this premise is to the unfolding drama, it will unfortunately have little bearing on its outcome, simply because we as a society have long ago, explicitly, implicitly or by default, accepted altruism as a sound moral principle. Year after year, we have seen the government use its coercive powers on some segments of individuals to achieve the larger good, whether in the form of the high taxation of the rich and corporate sectors to be channelised to the poorer sections, or the nationalization of many privately owned companies in the past.

What is then more relevant in our present context, more as an expedient than a moral principle, is to point out that the alleged goal of bridging the rich-poor gap cannot be achieved by governmental interference in business.

During the last century, in whichever country it was attempted, socialism and governmental control of the economy in practice only achieved in furthering the rich-poor gap, making it harder for the poor prospective entrepreneurs and workers with no connections to break in and rise, while strengthening the stranglehold of the privileged and rich class. Witness the dismal conditions of the erstwhile USSR’s working class while the privileged political class with connections lived in luxury. Or similar conditions in our own country, during the pre-liberalised license Raj years.

It is only in post-liberalised India, that workers now have a real chance to rise; for the first time, there is optimism in the air, salaries of the workers have been rising, merit and not pull is now counted. In fact, for the first time in Indian history, we see the chance of bridging the vast rich-poor gap, where the city workers could afford decent housing, cars and other luxuries as in other capitalistic countries.

What then is surprising and at the same time, psychologically revealing, is that given the rosier conditions of our working class, which has been brought about by deregulations and less governmental interference in business, our champions of the workers (and the poor) are not rejoicing. They should have been taking heed of what’s taking place in our cities and should have applied the same principles to our villages, by liberalizing and reforming the agrarian sector, by setting the farmers free of governmental regulation.

However, in the face of all these developments, when our Honourable PM still clings to his socialistic prescriptions, one wonders whether the socialists from whom he mistakenly takes inspiration, have really been pro-poor and not been merely anti-rich. One wonders whether their secret hope of achieving egalitarianism is not a sinister wish to see everyone reduced to the least denominator (capitalists, CEO’s and workers alike) which most erstwhile communist countries almost succeeded in doing, rather than raising the poor to the level of the rich and our present CEO’s.

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