At the height of the American economic boom running from 2000 to 2008, a freshly elected senator from Virginia gave a sobering speech. He said,

"When one looks at the health of our economy, it's almost as if we are living in two different countries. The stock market is at an all-time high, and so are corporate profits. But these benefits are not being fairly shared. When I graduated from college, the average corporate CEO made 20 times what the average worker did; today, it's nearly 400 times. In other words, it takes the average worker more than a year to make the money that his or her boss makes in one day. In short, the middle class of this country, our historic backbone and our best hope for a strong society in the future, is losing its place at the table. Our workers know this, through painful experience."

1. What is the star system?

2. According to Senator Webb (and doing the math), when he was in college around 1966, a corporate CEO had to labor eighteen days to make the money the average worker earned in about a year. Now, CEOs only need a day to reach a worker's yearly total.What is vertical wealth imbalance?

3. Webb says the "middle class of this country" is disappearing. How does this claim relate to the idea of horizontal wealth imbalances?

4. Part of the reason Webb's talk lacked specifics was that, as a US senator, he doesn't want to offend any particular person or large company. (He probably wants their money for his reelection campaign, or at least he doesn't want them funding his opponent.) Others, however, who share his opinion about wage imbalances aren't similarly constrained. One notable example comes from the web page Daily Kos, a politically oriented site with a huge readership and located on the left fringe of American politics, somewhere between rowdy and rabid. On that page, the following point was added to Webb's speech:

5. As an example of this inequality, look no further than Ford Motor Company. Just this week, Ford announced a staggering $12.7 billion loss, the highest in company history. This came after a year in which the company announced that it was cutting more than 40,000 jobs (30,000 of them union jobs). So what to do in a company that's failed to deliver innovative products to the market, completely misjudged consumer trends, and managed itself into a fiscal bind? You award bonuses to the top management. ^[2]

The web page went on to explain that Ford CEO Alan Mulally would be giving performance bonuses to his top executives because, according to Mulally, "You have to keep the talented people you really need."

A. Just from the provided facts, why might someone be suspicious that CEO Mulally participates in crony capitalism? How might he respond to the charge?

B. Make the case that the bonuses are justified in ethical terms with the language of rights.