Most people went to work and financed their lives with their salaries, without accruing significant savings (if they accumulated any assets it tended to be because their house increased in value). They often accrued less, in fact, because pension plans became less generous.
They went to work side-by-side with an ever-growing group of people who were rewarded with unimaginable riches. Generational wealth. These people who were neither founders, nor creators, nor inventors, people who were not unique in any way, people who took no risks at all, became the super rich.
This disparity colored American cultural life and this illogic became a tenet of American business life.
The financial crisis that came to a head a year ago seemed to offer an opportunity to reestablish a logic to compensation, and, hence, a more sober business sensibility, and even a new equilibrium in American life. The Obama administration even appointed a tenacious and, seemingly, parsimonious paymaster, Kenneth Feinberg, to discipline these outsized pay deals.
Yesterday, the White House released details of the Feinberg plan. In essence, the plan is to cut the salaries of as few people as possible as little as possible
. The plan covers only those companies which continue to have a significant outstanding debt to the government, exempting those companies that, even though they relied on government bailouts for their survival, have now paid their loans back. The government, in other words, decided not to use its extraordinary life-or-death leverage.
The plan appears to be in keeping with what more and more is clearly the Obama goal for the recovery, to get us back to as close to where we were when the meltdown began.
There is, it seems clear, some bedrock philosophy in the Obama White House about how, in the midst of great turmoil, to manage change: Minimize it; when you can, punt.
In addition, it would probably be naïve not to figure that the Obama people, seeing themselves as top people, are ambivalent about a radical realignment of compensation levels.
Anyway, yesterday, the opportunity to reestablish some finer value of a dollar, to propound some basic tests of reasonability, to come to terms with the economic, management, and social ills of such inexplicable extremes, to make everybody a little less crazy, was relinquished.
More of Newser founder Michael Wolff's articles and commentary can be found at VanityFair.com, where he writes a regular column. He can be emailed at email@example.com. You can also follow him on Twitter: www.twitter.com/NewserColumns.
One of the big changes that took place in America over the last 25 years was that people at the top came to be paid so much more than the average person in their companies. It was an exponential increase. Where not long ago the top guy made 20 or 30 or 40 times more than the average salary in his company, his pay packages skyrocketed to as much as 1,000 times the average. The relationship between the average and the extreme became impossible to explain.