Tuesday, February 15, 2011
Problems in American Executive Compensation: The Ethical Dimension
0 comments Posted by Find Insurance Online at 4:10 AMThe New York Post reports that 66% of the income growth in the United States between 2001 and 2007 went to the top 1% of all Americans. In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. By the year 2000, that ratio had exploded to between 300 to 500 to one. Because American executives tend to be paid more in total compensation than do their European colleagues, the ratios are lower in in the E.U. Hence one might ask what is behind the trajectory in the United States. Does a shift from manufacturing to knowledge-based industries occasion a widening economic gulf? Even as late as 2010, the United States still had the largest manufacturing sector in the world. I suspect that the change is not so much tied to the number or even proportion of factory workers as it is to changes in executive compensation. Specifically, in the 1990s stock options took off as a part of such compensation because boards wanted to tie executives' compensation to long term firm performance. Even if the alignment of incentives was strengthened, a side effect was an explosion in the overall level of a given executive's compensation. In other words, if an executive's company did well, so too did his or her total compensation package. This byproduct in turn raised the ethical issue of fairness. Specifically, is a CEO's work really worth tens of millions in a given year to a firm or to society at large? Is a CEO's effort really so much more than that of a mid-level manager or an employee in operations? To obviate any ethical violations of fairness, which human beings seem able to detect innately, boards could reduce the overall compensation packages of executive managers even as the proportion in stock options is increased. Lest it be argued that the market demands the higher amounts, it could be argued that that market is an oligarchy rather than being competitive. If so, there might be a legitimate role for the U.S. Government as an umpire establishing and protecting competitive markets. Otherwise, an oligarchy can become a self-perpetuating club that functions primarily in the interest of its members, which occasions the ethical objection of fairness.
Source: http://www.nypost.com/p/news/opinion/opedcolumnists/so_long_middle_class_GoGvE3xMnYXzZpS2OMGZsI
Saturday, February 12, 2011
Smokers Need Not Apply: Questioning the Broader System
0 comments Posted by Find Insurance Online at 3:07 AMHospitals in Florida, Georgia, Massachusetts, Missouri, Ohio, Pennsylvania, Tennessee and Texas, among others, stopped hiring smokers in 2010 and more were openly considering the option. Paul Terpeluk, a director at the Cleveland Clinic, said, “The trend line is getting pretty steep, and I’d guess that in the next few years you’d see a lot of major hospitals go this way.” I contend that various factors impact any comprehensive evaluation of the hospitals' policy against hiring smokers. Rather than rushing to reduce them to a definitive stance, my approach here is to rationcinate or reflect on the various factors, each of which is worthy of notice. An implication from my approach is that it is more difficult than one might suppose to weigh disparate factors to arrive at a position on whether more organizations should exclude job applicants who smoke.
According to The New York Times, one out of five Americans were smokers in 2010. Smoking remained the leading cause of preventable deaths. Employees who smoked each cost, on average, $3,391 more a year for health care and lost productivity, according the the U.S. Government. In terms of health insurance premiums through work, hospital administrations barring smokers argue that it is unfair for employees who maintain healthy lifestyles to subsidize those who do not. However, why then stop at smoking? “There is nothing unique about smoking,” said Lewis Maltby, president of the Workrights Institute, who has lobbied vigorously against the practice. “The number of things that we all do privately that have negative impact on our health is endless. If it’s not smoking, it’s beer. If it’s not beer, it’s cheeseburgers. And what about your sex life?” Maltby is essentially pointing to the increased control that employers would have over their employees in their private lives away from work. Another example of this is Walmart's policy wherein employees are fired if they smoke pot in their own homes (I'm assuming no impact on them at work here). Should contracting one's labor give the other party the right to dictate what one does apart from one's labor? One might counter that a person is not forced to work for Walmart (and smokers are not forced to apply to work at hospitals). However, if the trend-line is as steep as Paul Terpeluk avers, the issue could rather quickly become whether smokers are able to find work at all. In such a scenerio, if being employed is essential for one's survival, smokers really would be forced to give up smoking (or die). Of course, continuing to smoke could also result in death.
So in the early 1990s, after large companies like Alaska Airlines, Union Pacific, and Turner Broadcasting excluded smokers from applying, 29 states and the District of Columbia passed laws, with the strong backing of the tobacco lobby and the American Civil Liberties Union, that prohibit discrimination against smokers or those who use 'lawful products.' Some of those states, like Missouri, make an exception for health care organizations. The "lawful products" mention intimates that employers should not be able to discriminate against the use of products that are legal. Walmart would still be able to tell potential and current employees that they can not smoke pot even when there is no trace-effects at work. The involvement of the American Civil Liberties Union suggests that the issue involves liberty. For what benefit is political liberty if economic powers in society can exterpate the liberties of citizens off work?
One means of grabbling with this complex ethical, economic and political topic is to widen the scope in order to raise the employer-centered system of health insurance as suspect. If there were one huge pool of insured, such as all inhabitants of the United States, then the pooling would essentially reduce the impact of unhealthy lifestyles because a greater variety of lifestyles would be pooled (hence reducing the overall risk). Of course, doing something unhealthy on a regular basis could justify higher premiums even within the larger pool so there is even less subsidizing. My point is that relying on employers to exclude, while having salubrious public health aims, could hold survival ransom by withholding employability. A similar exclusion would be involved if apartments could only be found if one did not smoke (even smoking outside being too much).
In short, I contend that where a complex problem involves several disparate factors, widening the considerations--taking less of the overall system as given--can point to a solution that essentially relegates or eliminates the problem. In the present case, involving employers in the health insurance system may be problematic. In other words, threatening one's survival (via employability) goes too far, even if the goal is good. Still another way to widen the discussion in a way that possibly solves the problem might be to bring in the question of what is keeping medicine from making more progress in curing addictions such as that to nicotine. Governmental funding for research, for instance, could be prioritized differently. Broader still, governmental money spent on "corporate welfare" or foreign aid could be redirected into research. In general terms, the factors involved in whether private employers should be allowed to exclude smokers are societal, being of liberty, rights and the public good, rather than appropriate at the business firm level. In any society, the interests of subunits (esp. to exclude) are not identical, even if the subunits are combined, to the public good.
Source: http://www.nytimes.com/2011/02/11/us/11smoking.html?_r=1&ref=todayspaper