Special report: Greed became good! PART 1—A CHANGE IN THE CULTURE (permalink): Gordon Gekko told no lies. Over the course of the past fifty years, greed really did become good. On the front page of Sunday’s Washington Post, Peter Whoriskey described the wages of that change in our American culture. What occurred when greed became good? As he started, Whoriskey described the life of a little-known CEO in the 1970s:

WHORISKEY (6/19/11): It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.

Say what? Douglas “sometimes turned down raises?” Later, Whoriskey offers more recollections from the age when CEOs would reject pay hikes. But first, he described the life of Douglas’ present-day counterpart as CEO of Dean Foods.

CEO Douglas had it good back in the 1970s. He was paid the equivalent of $1 million per year. (We’ll let Whoriskey use the word “earned.”) He drove a Cadillac when we went to the club; he lived in an upscale Chicago suburb. But Douglas was living the life of Ralph Kramden as compared to the lucky ducky who holds his post today:

WHORISKEY (continuing directly): Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time—two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.

The evolution of executive grandeur—from very comfortable to jet-setting—reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening.

Even after adjusting for inflation, CEO Engles is paid ten times as much as his predecessor. He lives in a $6 million Dallas crib—unless he has jetted to Vail.

For the record, Whoriskey describes no instance in which Engles ever turned down a raise.

CEO life-style has soared at Dean Foods in the past forty years. Before long, Whoriskey describes what has happened to the pay of the company’s workers—and he quotes the son of the former CEO, commenting on the change in the corporate culture:

WHORISKEY: Other recent research, moreover, indicates that executive compensation at the nation’s largest firms has roughly quadrupled in real terms since the 1970s, even as pay for 90 percent of America has stalled.

This trend held at Dean Foods. Over the period from the ’70s until today, while pay for Dean Foods chief executives was rising 10 times over, wages for the unionized workers actually declined slightly. The hourly wage rate for the people who process, pasteurize and package the milk at the company’s dairies declined by 9 percent in real terms, according to union contract records. It is now about $23 an hour.

“Do people bitch because Engles makes so much? Yeah. But there’s nothing you can do about it,” said Bob Goad, 61, a burly former high school wrestler who is a pasteurizer at a Dean Foods plant in Harvard, Ill., and runs an auction business on the side to supplement his income. “These companies have the idea that the only people that matter to the company are those at the top.”

[…]

[C]ritics question why so much of the growth in income should go to the wealthiest. Douglas, the Dean Foods chief from the ’70s, died in 2007. But his son, Andrew Douglas, said his father viewed wages in part as a moral issue.

If his father had seen how much executives were making today, Andrew Douglas said, he’d be “spinning in his grave. My dad just believed that after a while, what else would you need the money for?”

The late CEO Douglas can’t speak for himself; his son thinks he would have disapproved of this change in the corporate culture. But in that passage, Whoriskey describes a national trend that is captured in the anecdotes from Dean Foods:

After adjusting for inflation, executive compensation has roughly quadrupled “even as pay for 90 percent of America has stalled.”

Whoriskey’s long, detailed report is built upon research by three economists (Bakija, Cole and Heim). Whoriskey isn’t the first journalist to describe the results of that research—but his report is quite clear, and it appeared on the front page of a major Sunday newspaper. Whoriskey is describing a change in American culture. This change took place in the past fifty years, during which time greed became good.

That change in our American culture has affected the whole business world; almost surely, it has lessened the pay of most people who work within it. But a culture of massive over-compensation affects the world of journalism too. This helps explain the tons of crap currently getting shoveled to liberals—to liberals who may not see the way they’re played by the hustlers of the earth.

Has greed become good in the journalistic world too? Even among fiery liberals?

Tomorrow: A photograph of a large house