Too Greedy for Adam Smith

"Too Greedy for Adam Smith" is about how out-of-control CEO pay is destroying free enterprise in America. If a corporate purchasing manager rented office space from a cousin or crony at twice the market rate he would be fired in a heartbeat. But "sweetheart deals" that would be unethical elsewhere in the business world are the norm in the world of CEO pay, where highly conflicted boards of directors award pay packages many times the size normal free market economics would require. "Too Greedy for Adam Smith" explains in plain English how this is more than just flawed economics. It also gives capitalism a "bad name" as voters see our corporate elite living by a different set of rules than everyone else. Beyond paying CEOs more than they deserve, this encourages corporate behavior that has little economic purpose besides enriching management and its Wall Street enablers. Excessive one-time payoffs encourage CEOs to "swing-for-the-fences," so that doing mega-deals where they can "take the money and run" trumps doing what's best for the company in the long run. We need to reject the idea that excessive pay for CEOs is just a "normal" part of capitalism in the same way we refuse to accept price fixing, embezzlement and other corrupt activity. Boards of directors should be put on notice that approving such deals is a breach of their fiduciary duty, and they should be held to account through shareholder suits, SEC actions and by the press. This issue concerns everyone - Republican, Democrat, liberal, conservative - who values free enterprise and wants to see it maintained and strengthened.
About the Author: Steven Bavaria writes about finance, economics and politics, drawing on forty-five years experience in international banking, credit, investment, human resources and journalism. Bavaria began his career at the Bank of Boston, handling a variety of international credit workouts, including a corrupt Greek shipowner, a Vatican-owned bank and troubled branches in Australia and Panama. He later ran the bank's human resources department, his first exposure to the conflicted governance process that he writes about in "Too Greedy for Adam Smith." Later he worked at Standard & Poor's, where he introduced credit ratings to the syndicated loan market. In between he was a reporter for Investment Dealers Digest, Associate Commissioner of the Massachusetts Department of Mental Health and worked briefly for Citibank. He ended his career with a stint at a smaller rating agency where his article "From Banker to Bookmaker" was deemed a bit too candid in describing the conflicted role of major investment banks. Bavaria graduated from Georgetown University and New England School of Law. He and his wife Betsy have four children and three grandchildren. He lives in Boca Raton, Florida.