If you live in the Bay Area, you know this sign well. Since 1999, it decorated I-80 as you made your way to the Bay Bridge from the west. It was iconic. As a Bay Area nerd, I always felt a bit of pride seeing it. Yes: we were in Silicon Valley. Or close enough. But over the years, it came to seem a bit sad. Even when it was built, Google was on its way to ruling the world. It was put up when Excite passed up the offer to buy Google for just $750,000. And it was two years before Google turned down Yahoo!’s billion dollar offer to buy the search engine giant. But by the time the sign was taken down in 2011, it was more a cruel reminder of how the mighty could fall.
Back in 2008, Microsoft tried to take over Yahoo! with a $45 billion bid. Failing at that was probably the best business move in Microsoft’s long history. At the time, I was very ill — near death. My heart wasn’t functioning well and my brain was not getting enough oxygen. But even in that state, I could see that it was a terrible deal. Yahoo! was dying and there was nothing that was going to change that. Paying that amount of money for Yahoo! would have been on par to Excite’s decision that Google wasn’t worth three-quarter million dollars in 1999.
Marissa Mayer Cannot Fall
Yes, mighty companies like Yahoo! fall and disappear. Look at Excite: if you can find it. While the mighty companies fall, the mighty CEOs who run them into the ground do not fall. The current Yahoo! CEO, Marissa Mayer, will walk away with $55 million once she is finally thrown out of the company. But that’s not to say that she hasn’t suffered. Because of Yahoo!’s poor performance, she only made $25 million in 2014. And then last year, her compensation pancaked to a mere $14 million. How she’s surviving is anyone’s guess.
I want to be fair, however. She isn’t responsible for the failure of Yahoo! In general, I think the company has been reasonably managed. For example, the acquisition of Overture in 2001 was a smart move. But it was also an obvious move. I’m no good at business, so when a company does something that I think is smart, it can’t have taken a brilliant business mind to come up with it. So by 2001, the Yahoo! management team saw the future as clearly as I did. Yippy! (Note: Yippy.com is much more popular than Excite.com.)
Why Are CEOs So Important?
But it makes me wonder. By American standards, I’m roughly in the middle class. Yet we have people like Marissa Mayer (net worth: $430 million) and Terry Semel (net worth: $300 million). They never fall. They aren’t allowed to. But what is it that makes them worth so much? Semel ran the company from 2001 to 2007. And the company did about as well as you would expect. So why not just hire me? Or a trained monkey?
I suspect that it really is all a matter of appearances. The idea of a multi-billion dollar company being headed by someone who makes just a million dollars a year would look odd. And it would be seen as unfair to make a CEO’s pay truly dependent upon how well the company did. For example: imagine if instead of Marissa Mayer getting a pay cut of 44% in 2015, she had been required to pay Yahoo! $10 million dollars. Why not?! We hear so much about people being rewarded for taking risks. Getting your yearly pay cut from 10 times the average worker’s lifetime pay to five times it doesn’t seem like much of a risk to me.
Once a person reaches a certain level of success they become a kind of community charity. We all weep at the thought of them going without. In fact, I’ve heard much the same thing said on Fox News: it’s so much worse to go from rich to poor than to simply have been poor your whole life. To a normal person, such talk is rubbish, but it sounds quite reasonable to some people.
Companies Represent Nameless People
But there’s something much more nefarious in this. Marissa Mayer is a real person. The thousands of people who lose their jobs and pensions are nameless and faceless. They are allowed to suffer in their anonymity. They are but statistics. “Are there no prisons?” There must be something: some kind of system to take care of the nameless and faceless. But what would become of Marissa Mayer if not for her $55 million severance package? There are no government programs for her! No prisons to make sure she is kept fed.
Thus the once mighty Yahoo! is allowed to fall, because it only represents the destruction of the lives of the nameless masses. We would be monsters to allow real humans to suffer — the ones with names — the ones like Marissa Mayer. But as long as she and her ilk are taken care of, then Yahoo! can die because it won’t harm any real humans.
I’m semiliterate, so I majored in math. From reading your blog I get the impression you’re highly literate, so it’s with some embarrassment that I tell you that after about two months of reading so far, I’m only about 2/3 through War and Peace. Anyway, War and Peace is basically Downton Abbey in book form. What both of those stories taught me is that in a feudal society the phrase “an officer and a gentleman” has a very specific meaning, as it absolutely means officer as opposed to enlisted soldier, and absolutely means gentleman as opposed to commoner.
“it’s so much worse to go from rich to poor than to simply have been poor your whole life”
I assume that’s also why “white collar criminals” don’t go to the same slammer as, um, blue collar criminals? Because they obviously wouldn’t last a day there. Hence the existence of Club Fed or Camp Cupcake or whatever they call it these days.
The right makes an art form out of getting as much use out of the word “entitlement” as is possible. They’re light years ahead of us in the methods of message discipline in general, of course, but their studied emphasis on the word “entitlement” is especially telling, for me. In feudal or pre-republican society, basically in all of western society before the American Revolution, the terms entitled class and nobility (as well as gentry, or gentlemen) were more or less interchangeable. So with the Enlightenment we got an emphatic (and welcome, I sorta think) rejection of that model, so we got things like “negative liberty” (mostly a good thing, I think, even though right wingers love it), as well as constitutional provisions such as “No Title of Nobility shall be granted by the United States.” (Note that “title” is the root word of “entitlement” (and also of course “land title”)). This is the right idea, although the failure of members of the CEO class to fail so spectacularly as to experience poverty would suggest that this removal of entitlement from the social order is a de jure but not a de facto accomplishment. But the conservative use of the e-word today is in reference mainly to the poor, not the rich or privileged. The conservative message discipline requires one never to miss an opportunity to substitute “entitlement” for “safety net.” Part of me thinks the Entitlement agenda, instead of abolition of entitlement, should have been abolition of non-entitlement. Perhaps the Gross Planetary Product at the time was too low for that to be realistic and we should honor the founders of liberalism’s original form should be admired for being ahead of their time. It’s in that spirit, I assume, that we mostly admire someone like Thomas Jefferson. Rising expectations mean we don’t judge figures of the past by standards of the present. But what of the situation today? There are these people who spent their highly protected youth studying Machiavelli (or something along similar lines) who as a result apparently have the wealth creation talent of a thousand or more mere mortals, and we extend them a sort of community charity that makes failure largely an “on paper” phenomenon. Sure, you lost your employer tens of billions of dollars, but it’s not like the punishment for that should be having to eat out of a garbage can. Would it actually strain the productive capacity of today’s economy to the breaking point to stash the population at large under this umbrella of protection? Would it, do you think?
I’m only literate through extreme effort. Math is more my thing. Of course, what I call math is not what most people recognize as math. People mistake math for the words and symbols we use to talk about it. Math is closer to mysticism than anything else. Where else can one literally create independent universes?
“Entitlement” was originally used as a positive term, as far as I know. Social Security was an entitlement because it was something you were entitled to. There is no word that the conservatives can’t turn negative. Look at “liberal.” Regardless, as much progress as we make, I still see humans as animals with all the baggage that goes along with that. We may not have the titles of Queen and Duke, but we still have them. Humans are like a pack of dogs.
Good luck with War and Peace. I haven’t read it. I’m not that keen on Russian literature. Of course, I don’t get much time to read novels these days anymore.
Well, making it even that far through “War And Peace” is an accomplishment! There’s a zillion characters, and they all have these strange Russian names with familiar/formal forms that look completely different in translation. I almost wish translators would use Katherine/Kate, Michael/Mike and such. It’s hard to keep track of. Good story, though.
(Not that I’m knocking Russian! I’m sure getting “Peggy” from “Margaret” makes almost no sense outside of English.)
That’s a really interesting observation about “entitlement.” It fits the conservative profile; turn a powerful criticism (in this case, criticism of “titles” and inherited privilege) back on the critics. Conservatives do it all the time. If you are against a handful of rich people determining what your city needs, you’re accused of “social engineering.” If you call out harmful stereotypes, you’re “politically correct” and attacking “free speech.” Argue that fundamentalist Protestants not be allowed to establish a state religion, you’re “persecuting Christians.” Etc., etc. I’d never thought of “entitlements that way, but it really fits.
That “W & P,” “Downton” theme about a dying aristocracy was a big theme for a long time. Many critics of democracy came at it from a very sensible position; feudal lords were obligated by social custom not to overly mistreat their serfs. If you destroy aristocracy, you will replace it with new lords not bound by social custom to show any concern for the weak. I think there was (and is!) a great deal of truth in that criticism. I also think the concern feudal lords showed for serfs was largely mythologized.
Consider the nicknames peasants gave kings. If a king showed the slightest decency towards peasants, he was nicknamed “Olaf The Wise” or “Good King Vladimir,” and songs/legends grew up around him. Most had nicknames like “The Butcher” or “The Usurper” or “The Half-Wit.” So I strongly doubt feudal lords had any real sense of obligation towards serfs besides keeping up appearances — like Gilded Age robber barons donating to libraries or zoos. Of course, since Reagan the rich often don’t even feel like they need to bother with appearing charitable anymore!