Faith, Reason and Economic Understanding

Congratulations to your staff for being willing, able, and diligent enough to report on the challenging economic circumstances that Eastern is facing.

Your article “Faith, Reason and Economic Justice” appearing in the Dec. 2, 2015 issue contained a number of facts but, generally speaking, demonstrated a lack of knowledge about why people are compensated at the levels they are. This article attempts to address that question.

The fundamental flaw in reasoning is that everyone has the same economic worth in the marketplace. That’s not true in the United States or anywhere else in the world where freedom is a part of the national culture.

Of course, everyone is of equal human value, especially at the foot of the cross. This is a simple, spiritual fact, and it’s codified temporally in our Constitution.

Nevertheless, we are not equal in economic terms. Despite Bernie Sanders’ shaking fists and Hillary Clinton’s thumping rhetoric decrying income inequality, we will never be economically equal and, simultaneously, live in a generally free society. If you want to see income equality in practice, visit North Korea.

Why aren’t we economically equal? First, we don’t apply our God-given talents with equal enthusiasm, diligence, ambition and skill. We’re not all equally intelligent, sophisticated, or savvy in our dealings with other people. Our individual goals are not of equal value in the marketplace. We’re not all blessed with the same looks or whatever else you, personally, value as an individual.

This is diversity at its best, and we’re all stronger, smarter, and better off as a country when people are free to use their individual, God-given talents and gifts to take them as far as their abilities and efforts permit.

Why does Taylor Swift earn $1 million per day on tour—a staggering $365 million in a year—by singing and dancing around a stage, recording music and endorsing a variety of products? Why does a PhD who studied longer than Ms. Swift has been alive earn $60,000 in a year? Isn’t the PhD a better intellectual and social investment in the future of those whom she teaches and the research she produces than a twentysomething crooning about adolescent angst? That’s the wrong question when it comes to assessing someone’s economic value.

The marketplace—that dynamic, highly complex culmination of everyone’s desires expressed through purchases and demands—decides who earns how much based on the application of skill, talent, strength, endurance, effort, brains, judgment, and all the other factors that go into creating or measuring economic value.

Why is a president, or, to a lesser degree, a vice president worth more economically than a professor? Presidents and vice presidents are more scarce than professors. Generally speaking, managerial, professional, and leadership skills in administrative areas are in greater demand than those of professors.

The most important point to remember about salaries is that Eastern University must compete with other colleges and universities as well as other industries in the complex marketplace for every employee. Eastern must offer market-driven compensation levels to attract a president, vice presidents, professors, and everyone else who works here. The marketplace determines compensation ranges based on elements like scarcity, demand, candidates’ education level attained, candidates’ experience, geography, Christian vs. secular institutions, reputation of the employing institutions, national economic realities, and so forth.

It’s both simplistic and economically unworkable to reduce the salaries (i.e., compensated economic value) of a president, vice presidents, etc., to fund the return of professors who were laid off. Even if you reduced the president’s and vice presidents’ salaries 35 percent, there wouldn’t be enough cash to hire back the 11 faculty who were let go.

The marketplace decides what presidents and senior administrators are worth economically. However, if you ignored that economic axiom and made that 35 percent economic salary reduction change by imperious fiat, it wouldn’t be too long before the president and vice presidents would rightly and understandably quit so they could realize their market-determined economic value elsewhere. The then-rudderless University, devoid of leadership whose positions it could not fill with below-market salary offers, would fail and dissolve. That would be inexcusable economic injustice of the worst order, because every Eastern student would suffer immeasurably.

Thank you for the opportunity to express the above. I laud “The Waltonian” for adhering to the principles of reporting that the paper’s namesake, founder Charles S. Walton, Jr., always championed during his life.

James Rogers is Vice President for Planned Giving at Eastern University.