Switzerland's Ideals Put America to Shame

In America, the average CEO is paid more than 230 times an average worker's salary. In Switzerland, CEOs are paid 43 times more than the average worker. That figure is so shocking to the Swiss that they want to radically rein it in.

The Gini index is a measurement of income inequality in a given nation. An index of 0 would mean perfect equality, and an index of 100 would mean perfect inequality. As of 2007, the United States' rating was 45.0. Switzerland's was 29.6, as of 2010. Which is to say that Switzerland suffers from far less income inequality than the US does.

Here, the SEC is currently considering a rule that would require large companies simply to disclose the ratio of their CEO pay to that of an average worker. This rule would have no power to change any of those numbers; it's meant simply to shame. For context, the ratio of CEO pay to worker pay in America has gone from about 20-1 to well over 230-1 in the past half century. Still, even this proposed bit of disclosure has prompted an angry backlash from corporate lobbyists.

We suggested mandating 100-1 as the maximum legal ratio between CEO pay and worker pay. And even we realize that passing a law to hold inequality to this enormous gap is a socialist pipe dream. Many Americans—even lower class Americans who will never, ever be the CEO of anything—get righteously indignant over any suggestion that pay should somehow be capped by law.

Now, let's compare what's happening here to what's happening in Switzerland, "a peaceful, prosperous, and modern market economy with low unemployment, a highly skilled labor force, and a per capita GDP among the highest in the world." Later this month, Swiss voters will vote on a proposal that would limit CEO pay to 12 times that of the lowest paid worker at a company. The proposal arose after widespread dismay among Swiss citizens at levels of economic inequality that would represent great steps of progress if they occurred in the United States. The Wall Street Journal reports that the Swiss CEO pay proposal comes after voters there already passed, earlier this year, "a set of measures that gives shareholders broad control over corporate pay, including binding votes on compensation and bans on many types of bonuses." Despite the wonderfully radical socialist nature of the Swiss CEO pay cap proposal, it has the support of close to 40% of voters in the latest poll, and could still plausibly become law.

So, a society with far less economic inequality than us, and with a CEO-worker pay gap that is many times less than ours, is so alarmed by economic inequality that they may in fact pass a CEO pay law that is ten times stricter than the one that we proposed here, on our crazy liberal website, in a flight of fancy (which we understood full well would never become a reality in our current political climate).

Little old Switzerland should be America's role model.

[Photo: Flickr]