ABSTRACT

This chapter argues that when executives use their power to negotiate guaranteed contracts for themselves while placing their employees' wages, health care and pensions at risk, they are violating standard norms of distributive justice. The growth in the average pay of US chief executive officers has been spectacular over the last twenty years. Of all fringe benefits, health insurance has generated the most debate recently because of its spiraling costs and a decline in the number of people covered. As conservative columnist David Brooks contends, political initiatives to defeat tax breaks for the wealthy and to combat inequality will be successful only if they can demonstrate that people achieved their success by competing unfairly. Most neoclassical economists believe that the labor market sets appropriate compensation levels. Institutionalism, which focuses on the social dynamics governing employment relations, provides a better approach to ethical analysis than concentrating on outcomes.