With his deliberate and consistent use of Lincoln's lexicon, President-Elect Obama sets out a vision of what it means to be a nation:  it is to have a common purpose. When this theme is deployed in discussions about the economic crisis, the common purpose is the interest of "the middle class."  Obama's "middle class" I think is pretty broad:  it includes not just a set of citizens with incomes within a certain bracket, but it is also aspirational; middle class is almost the ideal state of the nation, and the American dream and promise, in part, is that anyone who applies himself or herself can be part of that group, and can be invested in our civic life.  Cleverly, when talking about Wall Street bailouts, the President-Elect has used a Lincolnian trope of recognizing division even as he sees (or aspires) past it:  the interests of Wall Street, he says, and Main Street, are intertwined (though the accent of his favor is admittedly with the latter).

This political vocabulary is so rich, it should yield us new ways of approaching old problems.

Which brings me to the issue of compensation standards for corporate executives. 

Even as failing private enterprises receive subsidies from the federal government, corporate boards and the executives that nominally report to them do not appear chastened, and it does not seem to occur to them that their compensation practices should change.  Practices that in boom times may have seemed merely outlandish or boorish now start to have a taint of criminality--particularly when the funds utilized are those of the general public, who, notwithstanding having representatives in Congress who appropriate those funds, seem to be even less likely than shareholders to be effective watchdogs over misappropriations.  If we simply draw the battlelines of class warfare--Main Street versus Wall Street--then the next step from the public side would seem to be to pass legislation to cap executive pay.  We could then enter into the quagmire of setting and enforcing regulations for determining when a cap should and should not apply, whether it should be adjusted for inflation, how misbegotten compensation might be recouped, etc.

But if we imagine instead that our goal should be to widen the gates so as to include more than have been included before, if our purpose is not to bring down the privileged, or even so much to guard the public purse, but instead to incrementally raise the standing of the middle class--again, that common purpose that may define us as a people--maybe the savvier solution is to continue to allow private companies to spend whatever capital they choose on compensation (whether that capital is borrowed from private sources or begged and stolen from gullible congressmen), so long as they spend their compensation outlays proportionately across their employee and contractor base.

The way it might work is this:  Private Company A may, in the wisdom of its board, and subject to whatever shareholder recourse may be currently in place, spend whatever it wills on incentivizing its CEO.  But as that CEO's interest, and the Company's interests, are necessarily intertwined with the interests of all of the Company's workers, it shall be a given that at no time will (a) the lowest paid worker in or for the Company earn less than 1/25th of what the CEO earns, and (b) the median salary in a company be less than 10% of what the CEO earns.  The mechanism for enforcement of this standard might be tax policy:  companies that meet these norms would be permitted to take deductions for all compensation expenses; those that fail would be denied deductions for any compensation expense whatsoever, and shareholders might have a cause of action for breach of fiduciary duty against those board directors who are negligent in permitting companies to fail to qualify for such deductions. (Another variation might be to permit deductions in excess of 100% of compensation expenses, to the extent, say, a particular company closed the gap on compensation disparity even tighter than the national goal.)

I did some googling earlier today and learned that bills have been introduced in Congress before that would have the general effect of what I am proposing above.  See for example the Income Equity Act of 2007, HR 3876 IH, which I found at http://www.thomas.gov/cgi-bin/query/D?c110:1:./temp/~c110ertaBD:: This latter proposed legislation, however, still reeks of resentment and a suspicion of capitalism.  The right solution should embrace the free market, and re-make our definition of capitalism so that we look back and see executive compensation practices of the present and the recent past for the robber baron-like externalities that they probably really are. The right solution will wear a Reagan-like faith that government has no business in telling private enterprise how to spend any money it can earn, borrow or otherwise wrangle, before reckoning with its shareholders--those are private matters.  The only public matter in all of this is patriotism:  no self-respecting board would permit its executive team to take (what we could come to see as) kick-backs from rank and file middle class employees when the Company is facing hardship. And in good times, of course, the sky would be the limit on what everyone could be paid.