One hundred and fifty years after the Communist Manifesto, another spectre is haunting capitalism. That spectre is wage labour. Two articles in the business press this month look at two sides of the ghastly coin. "Stock options are not a free lunch" is the cover article in the May 18 Forbes. "Six dangerous myths about pay" is featured in the May-June Harvard Business Review. "Nobody loves a party pooper, but hasn't anyone noticed that generous stock option plans result in an overstatement of corporate earnings and a heavy mortgage on the future?" Asks the Forbes article. The HBR article asks, "Many managers have bought into expensive fictions about compensation. Have you?" By themselves, the two articles provide a fascinating glimpse into the shadowy worlds of compensation consultants and financial accounting. Put them together and they deliver a one-two punch to the "bottom line" corporate mythology: 1. corporate executives don't have a clue about labour costs. 2. they believe that if they can conceal a cost, it doesn't exist. If information technology managers followed the same philosophy, there would have been no such thing as the millennium bug -- until it hit on January 1, 2000. The bottom line bug has been infecting the economy for a couple of decades already. Corporate and government leaders have developed a steadfast remedy: deny, deny, deny. Why do corporate managers cling to pay systems that don't make sense? In Stanford Business Professor Jeffrey Pfeffer's assessment, "people are afraid to challenge the myths about compensation. It's easier and less controversial to see what everyone else is doing and then to do the same thing." Why do "the Big Six accounting firms and much of corporate America" oppose accurate disclosure of stock option costs? "People said to me," recalls Dennis Beresford, former chairman of the Financial Accounting Standards Board, "'If we have to record a reduction in our income by 40%, our stock will go down by 40%, our options will be worthless, we won't be able to keep employees. It would destroy all American business and Western civilization.'" In 1991, Michael Milliken reported to a U.S. federal prison camp to begin serving a 10-year sentence for fraud. His crime? Thinking small. Had Milliken been brazen enough to take "all American business and Western civilization" hostage to his junk bonds, he may have become CEO of one of the Big Six accounting firms instead of going to jail. Pay fair and reasonable wages? "It's easier and less controversial to see what everyone else is doing and then do the same thing." Tell the truth about what you're paying people? "It would destroy all American business and Western civilization." The irony is that Karl Marx called for the abolition of wage labour as the precondition for emancipating the workers. The bottom line mythology calls for the abolition of wage labour as the precondition for emancipating profit from the burden of labour costs. Think about it. Regards, Tom Walker ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ #408 1035 Pacific St. Vancouver, B.C. V6E 4G7 [EMAIL PROTECTED] (604) 669-3286 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The TimeWork Web: http://www.vcn.bc.ca/timework/
