On the “Executive Compensation” Sideshow: Government of Alberta Needs to Re-Evaluate Priorities & Invest in Public Goods

Yesterday, in an article asking whether “executive compensation” at Alberta’s universities is too high, Thomas Lukaszuk, Minister of Enterprise and Advanced Education declared:

I firmly believe that public-sector employees are not in the same ballpark as executives of publicly traded or privately owned companies . . . . If the CEO of Suncor is making millions with stock options, that doesn’t mean individuals of equal calibre in the public sector should be getting paid the same amount.

What kind of logic is this? Respectfully, Minister, there should be no relation between the valuations of the private sector and the public sector. The two sectors serve different ends: one, private profit; the other, the public good. With the correct valuations in place, it is those in the public sector, not the private sector, who should be more handsomely compensated for their work. Why? Because Albertans should be supporting the generation of collective social wealth over profits for private corporations. With your claim in MetroNews you lay bare the ideology driving the Government of Alberta’s decisions, an ideology in which private profit matters more than the province’s public goods. 

And here’s the irony. The situation to which the Minister objects is one that has been created as a result of adulation of the values of the private sector by the Government and its appointees to the Board of Governors. (The Board is responsible for “executive compensation.”) It is the Government and the Board that have historically decided that the University should be run by corporate-style executives and that their compensation must mirror the values of the private sector.

The University should, in fact, be run by collegial governance — that is, by the academic staff in toto, working together to imagine the University’s values, and how to distribute the University’s resources so that its academic staff may pursue the University’s academic mission to the best of its ability. By the values of collegial governance, the compensation of the University’s officers would look quite different. But over the last quarter century, the character of the University has been shaped by the Government’s preference for a corporate-style management. This has intensified across the last decade.

A vast body of scholarly work talks about the problem of corporate-style management of universities, which are not businesses. Amongst other things, the hierarchical structure of the conventional capitalist corporation when applied to universities works against collegial governance. This kind of management “consults” via committees, but decisions are taken by those whose compensation may keep them from challenging one another. Administrations of this kind come up with Plans in which they Dare their institution’s academic staff to Deliver even as they decline to rationalize their own operations to the University community. They administer cuts to the institution while talking about the institution’s Resilience. In The Fall of the Faculty, Johns Hopkins political scientist Benjamin Ginsberg pulls no punches on how administrations of this kind work against collegial governance: “Particularly aggressive administrators are prepared to confront and silence faculty resistance to their plans to establish new programs or reorganize old ones. One favourite administrative tactic is to claim that some fiscal or other emergency requires them to act with lightning speed — and without consulting the faculty — to save the university.” 

If the University were truly run by collegial governance, you can bet that the decisions being taken at this moment in the University of Alberta’s history would not be resulting in the loss of academic staff, drastic cuts to graduate programs, and the loss of programs for undergraduate students. (The last will be clear to all in the Fall of 2014.) As colleagues, the academic staff would not dream of proceeding to a situation in which academic staff may now be subject, as the Acting Provost Martin Ferguson-Pell has declared they will be, to involuntary severance. The Government of Alberta would be publicly challenged about its policies, and every last stop pulled out in the attempt to persuade it to act in the best interests of Albertans by changing its decision about the cuts to Advanced Education in its budget of 7 March 2013. The Administration needs to address, publicly and insistently, the Government’s difficulty valuing Advanced Education and the University of Alberta as public goods.

As for the question of what should happen with executive compensation at this juncture in the history of the University of Alberta: the Administration claims that to “mitigate the impact” of the Government of Alberta’s cuts it desires “transformative change” of the institution. In its pursuit of “transformative change,” it has permitted 121 academic staff members to take voluntary severance. (This announcement came earlier in the week.) In its pursuit of “transformative change,” it is also selectively cutting various aspects of the University. The funding of graduate students in the Faculty of Arts, for example, is in the process of being cut by a drastic 28–29% with the principle of “excellence” in theory so dear to the Administration thrown out the window (all departments will receive the same cut). The Administration is taking decisions, in short, that are going to result in deep and abiding damage — and it is doing so without offering a narrative rationale for each aspect of the University’s administrative operations, especially the investments in its various Vice Presidential portfolios. Amongst other things, such a rationale would put the entire University community in a better position to argue against the Government’s cuts.

All that said, let’s be clear: the principal problem here is not the President’s pay. The principal problem is the Government’s valuation of corporate profit over the public interest, and the decisions it took on 7 March 2013 as a result.

Albertans should stop permitting the wealth of its natural resources to be siphoned off into private hands. This wealth should be managed to direct oil profits into Alberta’s public coffers. These profits should then be used to support Alberta’s public sector workers. The Minister’s claim that the president of the University of Alberta does not deserve to be compensated the same as a Suncor executive is a sad sideshow in a larger drama in which the Government is devaluing Advanced Education and disinvesting in it, all based on the fiction that it has created in its own special brand of voodoo economics, and its commitment to the fiction of a certain Bubble.

The Bubble would not have been able to wreak havoc with the Government’s finances if the Government were running the province in such a way as to secure the appropriate level of royalty revenues from corporations such as Suncor.

We must not let the Government’s “executive compensation” sideshow distract attention from the real losses occurring as a result of its fiscal choices. These losses will only ever be partly visible to us. We won’t see the lost professors who are not standing at lecture podia next year. And we will not see the graduate students who do not bring their talent and imaginations to Alberta next year and the year after that and the year after that because they prefer to take them to institutional homes elsewhere in Canada, and perhaps elsewhere in the world, where they will be properly nurtured. (On this front, please see Derritt Mason’s open letter to the Premier and the Minister.) 

The Administration either needs to secure a return of the dollars cut from its budget on 7 March 2013 or set a role model for institutions across Canada by demonstrating with its choices how corporate-style administration of universities can be reshaped. And the Government needs to learn the value of faculty, graduate students, and Advanced Education, and be prepared to take the appropriate royalty revenues from corporations such as Suncor in order to support them. It is past time for investment in our common stock options — and the building of a better ballpark.

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One Response to On the “Executive Compensation” Sideshow: Government of Alberta Needs to Re-Evaluate Priorities & Invest in Public Goods

  1. Craig S says:

    Excellent article that points out some troubling aspects of the modi operandi of both our University and the current provincial government. Norway offers a good case study on how to manage resource extraction for the benefit of public revenue, and also shows that raising royalties or taxing profits will not necessarily drive companies away. An interesting series of articles illustrating this system can be found here.

    http://thetyee.ca/Series/2012/08/01/Norway-Petro-Wealth-Series/

    I found the following quote quite telling:

    “Many experts I met with repeatedly stressed that their highly successful petroleum policies could not be replicated elsewhere without also adopting their fiercely assertive Norwegian attitude to authority that dates back to the Iron Age.”

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