CNNs In the Money Continues Love Affair with Class Warfare

     The weekend before Valentines Day, CNN business reporters showed their infatuation with class warfare as they courted a critic of corporate pay scales. None of the In the Money panelists, however, saved room on the dance card for a defender of corporate pay, which is set by market forces.

     Introducing Vanguard Group founder and mutual fund legend John Bogle for an interview segment on the February 11 program, In the Money co-host Jennifer Westhoven began by prompting Bogle to attack executive pay: John, I want to ask you first about big CEO pay since the 1980s. This has skyrocketed. A CEO can now make something like 240 times what the average worker can make. Thats mind-boggling.

     Bogle agreed with Westhoven, replying, It's not only mind-boggling but its disgraceful. Neither Westhoven nor her co-hosts, Fortune editor Andy Serwer or Jack Cafferty, questioned Bogles characterization. Later, Westhoven plugged the money managers book, The Battle for the Soul of Capitalism. Commenting on the title, the former Reuters reporter remarked, We all hope that we all win it, right?

     What Westhoven was missing and plenty of economists and business leaders would argue is that the soul of capitalism is the free market, which drives wages and prices paid by private businesses. While some observers may feel corporate executives are paid too much, ultimately the market decides wages and prices as consumers and shareholders vote with their wallets. One such market force in particular governs covering the labor cost of executives: economic rent, which is essentially is the cost of retaining unique talent apart from the cost of compensating that talented person for his/her labor. Its the reason, essentially, why Westhoven is paid to report for CNN when a 22-year-old fresh from journalism school could perform the same task for much less pay.

     The Business & Media Institute has previously written on the media engendering class warfare via the issue of executive pay, including In the Money contributor Andy Serwers January 19 swipe at highly paid executives and media underreporting on corporate generosity following Hurricane Katrina.