The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- Last weekend, 700 people were arrested on the Brooklyn Bridge for protesting greedy corporations. Greedy corporations? What does that even mean? It reminds me of graduate school where my professors would continually warn about the evils of corporate America and preach of the true goodness of all things academic. I used to wonder if those professors owned the outputs of such evil -- like a bed or a PC. America's standard of living is among the highest in the world. One wonders if the Brooklyn Bridge leaders understand why they are able to protest in designer jeans and Nikes. It's because America's CEOs consistently produce big profits. Profits are good. The primary lever for continued profitability is productivity. Every country's standard of living depends on national productivity. Collectively, America's CEOs have created the world's third most productive country. America should be proud of its CEOs and grateful for their contributions. Here are a few of the most prominent contributions. CEOs create jobs and people with jobs pay taxes. Jobs are created by CEOs who continually take risks that their business can sell something for more than its production costs. No risks, no rewards. Sometimes risks succeed; sometimes they fail. But tolerance for errors is particularly low for CEOs. This is why their average tenure is just 4.5 years. Economically, it's a dangerous job.
|General Electric CEO Jeff Immelt|
What is a CEO worth?Rationally speaking, CEOs are grossly underpaid given the value they produce. For example, FedEx ships 1.26 billion packages per year. Fred Smith is paid $2.04M. Thus, Smith's pay increases the cost of a FedEx package by $.0016. Does that seem excessive? Jeffrey Immelt of GE is paid $7.69 million per year or .0052% of profits. Greedy? Would GE customers be thrilled if they could eliminate Immelt's cost by passing on a discount of five one-thousands of one percent? The positive impact of a CEO is simply enormous. The cost of a CEO is relatively miniscule. CEOs, on the whole, are underpaid for the value they produce. They live in an unforgiving, high stress world. They too, are working men and women. So, why such hatred? It's envy, pure and simple. Ironically, as the Brooklyn Bridge crowd accused corporations of greed -- Sin #3 on the Seven Deadly Sins, they commit Sin #7 -- envy. He who is without sin, let him cast the first stone.
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