Local and national news have been buzzing about the 72 million franc golden parachute for Novartis’ Daniel Vasella, the upcoming Minder referendum on limiting pay for executives and the Geneva Parliament’s vote on extending payments for the unemployed. The first and second focus on the growing inequality between the salaries of executives and workers, the third on the period of benefits for those out of work.
Is there a relationship between the three? There is, and it should be the basis of serious discussion. In “The End of History,” Francis Fukuyama predicted that democracy and capitalism had won the ideological confrontation with communism as a political system and socialism as an economic system. He said that a democratic political system with a capitalist economic system were the accepted frameworks within which all countries should and would function. Fukuyama’s prediction, which he slightly amended in a book after his 1989 article, was highly criticized for its hubris. “We won the ideological Cold War,” he seemed to trumpet as the Berlin Wall came tumbling down. Local and national news have been buzzing about the 72 million franc golden parachute for Novartis’ Daniel Vasella, the upcoming Minder referendum on limiting pay for executives and the Geneva Parliament’s vote on extending payments for the unemployed. The first and second focus on the growing inequality between the salaries of executives and workers, the third on the period of benefits for those out of work.
While most of the criticism highlighted Fukuyama’s arrogant prediction about a definitive end of ideology, there are two aspects of his article that have had less attention. First, after the 1989 euphoria at the end of the Cold War, the notion of capitalism as the ultimate system of economic organization in all societies needs serious revisiting after the subprime meltdown and the precarious economic situations in several Western countries. How can one seriously extol unfettered capitalism today with such high rates of unemployment in the “developed” world accompanied by several national economies teetering with collapse? Just because the socialist system failed in the Soviet Union does not make unregulated capitalism the answer.
The other overlooked aspect of Fukuyama’s article/book is his assumption that democracy and capitalism are intertwined. The indignation at Vasella’s parachute is not the money involved – that is an absolute figure. The problem is a relative one. What is shocking about Vasella is the relationship between his salary and that of the average worker and the small benefits given to those unemployed. The growing difference between the haves and the have-nots is morally repugnant and politically unacceptable. Unregulated capitalism has in fact led to reduced democracy.
In their recent debate in the Parliament, the PLR and the Socialists bemoaned the unemployment situation in Geneva. Both called for greater job creation. What they didn’t do, however – and this really is the nub of the matter – is describe what kind of jobs should be created. Instead of arguing how jobs can be created, they should have specified what jobs need to be created.
During the Industrial Revolution, factory jobs were the key. Better conditions for the workers including job security and benefits were the backbone of the middle class. That was what the International Labor Office, with its tripartite organization of employers, governments and workers was supposed to mediate. Today, with the technological revolution, the gap between the have and have-nots cannot be solved by better conditions in the factories or reducing executives’ pay. New technology has eliminated many traditional jobs. The middle-class is being squeezed. What to do with auto workers who have been replaced by robots? What to do with bankers or insurance salesmen when their companies are merged or moved? Job security in the fast-evolving, technological transforming economies is what the job-creation/unemployment debate should be about.
I am less worried about Mr. Vasella’s parachute and large executives’ paychecks than I am about the disappearing middle class and the unemployed who are unprepared for today’s job market. Instead of criticizing those at the top of the ladder, we should be seriously looking at ways to help those trying to climb the ladder get even halfway up.