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CrazyEyeJoe


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CrazyEyeJoe  ·  140 days ago  ·  link  ·    ·  parent  ·  post: No one should be a billionaire

Um... So if I understand you correctly, you're saying that the problem isn't that CEOs are paid too much, but rather that they're asked to do the wrong thing.

First of all, I don't really think the CEO is the problem either, per se. The deeper problem is the way companies are structured, and how the profit motive is seen as the only reason for a company's existence. In the US, it's even part of the law that a company must maximise shareholder profit, which I think it's absolute lunacy. On this point it sounds like we agree.

However, if CEOs continue to receive their outlandish salaries at the expense of the remaining employees of the company, how is that not a problem? It get the impression that you don't think there's any correlation between top executive salaries and those of the remaining employees, but I don't see how you can think that. Within a corporation, the amount of profit quite clearly IS a pie, out of which salaries must be divided.

You used the example of McDonald's earning several billions, while "only" paying their CEO $21m. This is indeed the case for McDonald's, but clearly a certain amount of their budget is allocated to salaries, and if CEOs receive a disproportionate amount of that budget, it has a real effect on their other employees' wages. Furthermore the CEO is NOT the only executive receiving a much higher wage than the lower employees. The average McDonald's executive compensation is $235,641 a year. Accepting ludicrous salaries for executives as a fact of life merely propagates this inequality.

Of course it would be better if companies spontaneously decided to make a better world, and stop focusing exclusively on profits, but what makes you think there's any chance that would ever happen all on its own? And don't you think people in power (i.e. in part CEOs) have any influence on whether or not that happens?

Maybe, for example, limiting executive pay to a certain multiple of the salary of their lowest paid employees is an imperfect solution, and certainly it does nothing to fix the deeper problem of company structure, but it would probably have the effect of raising the lowest salaries. How is this not important in its own right?

You don't like the solutions proposed in this article, I take it. So far, I don't think I've seen any proposed solutions coming from you, so what would you prefer?

I think you're also missing a rather important point of the article; that billionaires also end up with POLITICAL power due to their massive wealth. I personally think that's the most important aspect; these people have enormous power and influence, which is completely democratically illegitimate.

CrazyEyeJoe  ·  143 days ago  ·  link  ·    ·  parent  ·  post: No one should be a billionaire

Personally, I broadly agree with this article. I don't have any particular comments on it. However, I have comments on a few things you guys have said in the comments. I'll reply to multiple people in this single post.

First of all, I guess I should disclose that I'm European, so many of your American views are very foreign to me, and many (most?) other Europeans. A lot of the things you guys take for granted we view as patently false. You probably will feel similarly alienated by many of the things I will say. Therefore, I hope you can try to give my points the benefit of the doubt, rather than dismiss them out of hand simply because they don't agree with your established worldview.

Now, to the specific points:

    This system just works. If it didn't, they wouldn't receive the pay they do.

katakowsj

On this point, I almost could not disagree more. People are not paid solely according to how useful they are. If they were, scientific researchers would be paid more than stock brokers, not to mention nurses or teachers.

A major determinant of someone's salary is POWER. CEOs have a lot of power, and they know powerful people. They run in circles with people who can give them high paying jobs, and they can heavily influence how much their salary will be, simply by being in the right position.

I'm not saying that someone's performance isn't linked to their salary, of course it is. But nobody performs 300 times better than an average person.

    Committees are not efficient or effective forms of leadership for many types of organizations.

mk

Maybe so. But I would argue the opposite in many, many cases. The fact is that a single person cannot possibly understand everything that's going on in a large organisation. Therefore, they can easily end up making poor decisions simply because they have imperfect information. Beyond purely business decisions, they can easily overlook their employees wellbeing because nobody from the lower rung has any possibility to give any feedback to anybody in power. This is not only bad for the employees, it's bad for business. Having unhappy employees will obviously lead them to being less productive.

I'm an engineer. Over my career I have seen ABSOLUTELY TERRIBLE decisions be made by top executives. In some cases, the reason is that they just don't understand what we're doing at a deep enough level (nor could any human being presiding over a large enough organisation), and they don't understand what we need to more effectively do our work. To better deal with such problems, I truly believe it would be better to have more executive power be distributed across the organisation, rather than have a pyramidal hierarchical structure as most companies have now.

    Second, Apple has 132,000 employees. Is it worth $1/month to each of them to have their job? Yes? Ok, then Tim Cook is worth at least $1.5m/year.

goobster

Do you think Apple's employees are being given money as a charitable act by Tim Cook? Apple is making FAR more out of their employees' work than they are paying back to their employees. If they weren't they wouldn't be one of the richest companies in the world.

This is the case with pretty much all salaried work in the private sector. People are hired because the company believes that it can earn more money for itself by hiring that person. Not as a favour (except, I would point out, in high paying cushy jobs, where powerful people sometimes hire their powerful friends because they believe they can get something out of it later, maybe a favour back).

    It's not pie; if the CEO gets more, the entry-level clerk does not get less.

This is clearly false. Compare these graphs.

Source: http://www.hamiltonproject.org/charts/the_share_of_economic_output_that_workers_receive_has_fallen

Source: http://fortune.com/2017/07/20/ceo-pay-ratio-2016/

CEO pay correlates negatively with employees' share of the companies' profits. I think this is a bit too obvious to be a coincidence.

   

To quote an Englishman, whom I think reflects the views of many a European;

'[Some say] the cream cannot help but always rise up to the top. Well I say, "Shit floats" '

- Jarvis Cocker