Two British think tanks are calling for a cap on the compensation that goes to corporate chiefs.
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Eric Schmidt, a top executive at Google ever since he joined the company as CEO back in 2001, is stepping down later this month. He’s leaving his latest executive slot about $14 billion richer than when he began his Google career.
Expect a digital avalanche of praise for Schmidt over the next few weeks. The breathless encomiums have indeed already begun. Wired magazine has just lauded Schmidt for his “mindboggling impact” on the world’s high-tech scene and his “brilliant” realpolitik behind Google’s closed doors.
Many observers of Corporate America simply see Schmidt as, in effect, a real-deal “very stable genius.” And they’ve thought that way for quite some time. Not many executives entered the twenty-first century more widely respected within American business circles.
Schmidt’s vita back then shouted merit on every page. He had studied electrical engineering at Princeton and Berkeley, two of the world’s most demanding educational institutions. After school, Schmidt had honed his high-tech skills at the Xerox Palo Alto Research Center in California, the legendary computer science hotbed that birthed the drop-down menu and the desktop mouse.
Schmidt had then translated his technical expertise into business success, first as chief technology officer at Sun Microsystems, later as chief executive of Novell, what had been a troubled computer networking company. Novell, under Schmidt, did an abrupt about-face, and business analysts gave Schmidt the credit.
At Google, the business press today agrees, Schmidt has “performed” at an even higher level. Google had 300 employees when Schmidt took the executive reins. Wall Street currently values the company, now renamed Alphabet, as worth somewhere around three quarters of a trillion dollars.
Only a person who lives a life can truly know all the chance moments that may have shaped it.
If anybody ever deserved to hold a personal billion-dollar fortune, many would argue, that someone has to be Eric Schmidt. No one could possibly label him “undeserving.” How could anyone dismiss as merely “lucky” the fortune accumulated by someone as dedicated and diligent as Eric Schmidt?
In one sense, of course, none of us have the right to dismiss anyone else’s personal achievement. We do not know — we cannot know — all the defining moments that shape the trajectory of an individual life.
Take Eric Schmidt’s life, for instance. He grew up in the Northern Virginia suburbs of Washington, D.C. We cannot know if a school principal’s random decision placed Eric Schmidt into the classroom of a teacher inspiring enough to turn young Eric on to technology.
We also cannot know if Schmidt, just starting out in his career, had a totally chance encounter with a colleague who just happened to mention an interesting job opening at Sun Microsystems. Nor do we have any idea if Schmidt, early in his tenure at Novell, received an insightful, unsolicited e-mail that may have helped him understand just where the struggling company had been going wrong.
Only a person who lives a life can truly know all the chance moments that may have shaped it. Wise people remember these moments as they look back on their lives. Eric Schmidt may be one of these wise people. Or at least we know he has been one of these people.
“Lots of people who are smart and work hard and play by the rules don’t have a fraction of what I have,” Schmidt told a reporter in 1999. “I realize I don’t have my wealth because I’m so brilliant. Luck has a lot to do with it.”
Now if luck truly does determine a great deal of the success of even someone as personally accomplished as Eric Schmidt, maybe all the “achievement” of the wealthy owes a significant debt to chance. And if that should be the case, then the question before us becomes rather obvious: How should society expect our indebted achievers to pay back their debts?
The conventional wisdom has a simple answer: philanthropy. Eric Schmidt, in his own life, has become an active philanthropist. But philanthropy, as we have witnessed over the years, has always been fundamentally an expression of the power that great wealth creates. Society, the philanthropic rich are announcing with their contributions, needs this and not that. Who decides what society needs? They decide.
And what gives the rich this right to decide? Their fortunes, the grand accumulations of wealth that luck has helped forge.
Societies that believe themselves democracies can do better. Historically, in the middle of the 20th century, democracies did do better. They taxed the rich progressively, at high rates, and endeavored to democratically decide how to spend the tax revenue that progressive tax rates raised.
Today in the United States, in the wake of last month’s tax cut for the super rich, we’re moving in the opposite direction. The rich have, in a sense, lucked out all over again.
Luck, to be sure, will always be with us. Grand private fortunes need not be.
Sam Pizzigati co-edits Inequality.org. Among his books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. His latest book, The Case for a Maximum Wage, will appear this spring.