Even Switzerland passes executive pay limits, why can’t we?

Over the weekend Swiss voters overwhelmingly supported a referendum to limit executive pay as well as the all-too-popular golden parachutes.

Before any of the usual suspects start talking about communism, Switzerland is one of the more expensive places in the world to live. It’s not exactly Hugo Chavez’s Venezuela.  You can’t go anywhere in the country without seeing signs of extreme wealth. These are people who appreciate the finger things in life.  But they simply had had enough.

After the collapse of the banking systems, the big Swiss banks Credit Suisse and UBS required a considerable amount of taxpayer assistance. What used to be part of the national pride of Switzerland, its renowned banking system, went from embarrassment to fury. The Swiss had had it, and forced the hands of the political class to implement change.

The national support for the referendum was 68%, and in the Zurich region, the home of the Swiss financial sector, support was a whopping 71%.

Rich guys 1%

Rich Guys via Shutterstock

Going into the referendum I wasn’t sure how successful this would be since this is, after all, Switzerland, the land of the rich. What sounded like a long shot passed with ease. Even better, it wasn’t just out of control executive pay that was reined in. It was the entire dysfunctional pay system that has been squeezing the middle class for decades

You really ought to read the entire article in The Guardian because it’s amazing, not to mention unthinkable in the US today.

As many already know, the US is at the far end of worker-to-CEO pay ratio, and it has been getting worse, even during the recession. Despite cutbacks to healthcare coverage, and weaker earnings for everyone else, times have never been better for the executive class in America. To make matters worse, Washington is now committed to cutting even more of the safety net for workers yet doing nothing about out-of-control executive pay.

If the Swiss can support a return to sanity, why can’t other countries do the same?

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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11 Responses to “Even Switzerland passes executive pay limits, why can’t we?”

  1. perljammer says:

    There is no mechanism at the Federal level for “allowing such a measure to be put on any ballot”, whether or not our politicians are bought and paid for. About half of the states have popular referendum processes, but not the Federal government.

  2. perljammer says:

    “Why can’t we?” is a very easy question to answer. We have no referendum or initiative process at the Federal level.

    I didn’t see anything in the linked article that would indicate that the new law imposes any kind of hard limit on executive compensation (that would be left to the shareholders, by the way; not the public at large), but it does ban the infamous “golden parachute” by which executive rake in huge bonuses when terminated, as well as bonuses for takeovers and sell-offs. I suspect that the impact of this new law upon executive SALARY will not be as significan as many here would hope.

  3. karmanot says:

    They don’t want to put food on the faces of poor folks neither!

  4. Houndentenor says:

    It would be one thing to see huge salaries and bonuses for a CEO who headed a profitable company that had brought out new products and services that had proven to be successful. Not only would that make the company profitable but create lots of jobs. We never hear that kind of CEO being blasted for outrageous compensation. It’s the audacity of an executive to demand millions in bonuses after having run the company so badly that they had to go to Washington to ask for a bailout. Or laying off 30,000 workers to pay for that bonus. Those are the sorts of actions that outrage people and rightly so. The right criticizes liberals for wanting to “punish success” but there’s no success here unless irresponsible behavior that almost bankrupts your company is now defined as “success”.

  5. Houndentenor says:

    Is a country with four official languages really culturally homogeneous?

  6. hollywoodstein says:

    Which is why Republicans are unfriendly to education.

  7. hollywoodstein says:

    I think you just need the educated and sane to make it work.

  8. BeccaM says:

    American voters would go for this in a heartbeat — which is why our bought and paid-for politicians would never, ever allow such a measure to be put on any ballot.

    Having watched this video a few days ago, I can’t stop thinking about it, and what it means in terms of the ridiculous degree of economic inequality — and inequality of opportunity — here in this country:


  9. Peter says:

    There are fewer than 8 million Swiss, and it’s a relatively culturally homogeneous country, that’s how. Also too, they’re educated and prosperous — and sane.

  10. tsuki says:

    Because our politicians and media are too busy trying to destroy Social Security to worry about CEO bonuses.

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