Saturday Morning Links

Assorted content for your weekend reading.

- Stefan Stern writes that our current corporate culture needs to be changed in ways going far beyond reining in excessive executive compensation:

Wage inequality is also a symbol of something more fundamentally wrong in the business world. Too many corporations are competing to achieve the wrong results in the wrong way, led astray by perverse incentives that produce bad outcomes. And the excessive rewards for those at the top are a prize for the people who play this game best.
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This text was a compromise and a (weary) triumph of drafting. It was an attempt to acknowledge, in law, that business should consider its impact on many stakeholders. But it has not changed the world. It has served, in practice, to enshrine “shareholder primacy”, that is, the idea that businesses should worry about their shareholders first and above all, before thinking about anything else. This is a bad idea with bad consequences. And it has proven hard to shake off.

This is where the link to excessive CEO pay comes in. These complicated pay packages are structured to produce huge bonuses if share price targets are hit. The majority of shareholders are pretty impatient with businesses that do not deliver regular and repeated earnings increases over the short and medium term. The sort of long-term investment that might raise company performance many years from now, boosting productivity and wages for ordinary workers, is harder to push through. This in part explains why corporate Britain is notoriously sitting on a “cash pile” estimated to be as large as £700bn.

 

Instead of investing, what do corporate leaders do with all this cash? They pay “special dividends” to their shareholders, or buy back their own shares, thus boosting the share price and ensuring that their bonuses (so-called long-term incentive plans) will trigger a bonanza in two or three years’ time. That’s right: “long-term” is no more than five years away. 

- And in Canada's own example of corporate privilege running amok, Kevin Carmichael notes that "small business" lobbyists are leading the charge to try to preserve artificial tax loopholes based on incorporation. 

- Andrea Germanos discusses Donald Trump's unilateral cuts to the anticipated pay of U.S. civilian public workers.

- Canada Without Poverty weighs in on how disasters produce disproportionate damage for people already facing poverty.

- Elizabeth Raymer examines the effect of mandatory minimum sentences, finding that they increase incarceration rates without doing anything to deter crime. But Stephen Quinn's interview with Andrew Scheer makes clear that the Cons won't be changing their practice of ignoring all available evidence as to the effects of their policies.

- Finally, John Ivison points out how Justin Trudeau's idea of an accountable national security apparatus is to personally select representatives from other parties to receive secret access to whatever information he deigns to provide.