CEO pay and the free market...

Found an interesting post over at Winning Argument that is relevant to recent discussion on this blog...

"... CEOs are paid 300 times the average worker. While the average worker earned $517 per week in 2003, the average CEO for a large company earned $155,769 a week. In 1982 CEOs made just 42 times the average worker. (Business Week)"

"Some argue that because CEO pay is determined in the free marketplace it is fair. The problem with this argument is that it naively assumes a perfect market. But such a market doens't exist. There are few long-term performance measures used to evaluate CEO pay. And CEO salaries are not set by disimpassioned economists but by close associates who have a personal and professional interest in seeing CEO pay rise no matter how the company performs. (Ivey Business Journal)"

It may be true that salaries are determined by the free market, but that doesn't mean there isn't something wrong when the largest amounts of wealth end up in the hands of 5-10% of the world's population...