Lowering CEO to average employee ratio

[randomep]

This is essentially where government needs to step in and tax.

 

A whole world of NO! Don't steal from people better off than you because you're jealous! That's extremely petty and pathetic. Take a look at yourself :(

 

Please don't tie the legs of the best swimmers. No one will try to be a good swimmer anymore. I'm a good example. I give about 60% because I don't think I'll be rewarded for doing more.

 

Disagree. CEOs are types who would go for it even with less pay just because they're narcissistic and want control and power and show that they're in the lead. So they should be taxed since the demand there isn't elastic. If there is a high tax, I'm pretty sure a lot of people would still want to be a CEO.

 

 

Bob Benmosche is a perfect example. He was negotiating with AIG which was controlled by the government, and one stickler point was his pay.  He still got around $8M (I recall). If you cut his pay by 1/2 I don't think he would've come.

 

Also here is a guy who made a different in the direction of the company. Some or most wanted to just sell the company off and return the government's money.  So he made the correct binary decision.  You can say a lot of it was luck in that it turned out well, but some can say there was a lot of skill too.

 

One point about taxes and compensation is that we live in a world of prosperity and freedom. That means a person has freedom of movement and right to private property in all the prosperous countries in the world.  If you tax a company or people too high they can move and they will. Look at what Pfizer almost did.  If you tax capital gains too much they will take their money elsewhere.  Unless you are going to take away those rights high pay and current tax rates are here to stay.

 

 

[Spekulatius]

MY suggestion:

1) Make annual vote in pay mandatory. It is already in some countries and I don't see, why the owners should not be allowed to decide on this

2) Make separation of management and board of directors mandatory. Oversight needs to be separated from execution or it's not oversight. This is already he case in many countries and I believe this will have some impact on the CEO/top management compensation as well.

3) Make is easier for shareholders to vote based on advisory groups. Allow for easier access to advisory groups and also allow for look through votes on mutual funds.

 

I think divisors groups could make a large difference. Right now, most shares are held through mutual funds and those seem to vote mostly along with management. Voting on many individual stock positions held through individual accounts is time consuming and I suspect many individual investors forfeit their rights.

[Uccmal]

This is essentially where government needs to step in and tax.

 

A whole world of NO! Don't steal from people better off than you because you're jealous! That's extremely petty and pathetic. Take a look at yourself :(

 

Please don't tie the legs of the best swimmers. No one will try to be a good swimmer anymore. I'm a good example. I give about 60% because I don't think I'll be rewarded for doing more.

 

Disagree. CEOs are types who would go for it even with less pay just because they're narcissistic and want control and power and show that they're in the lead. So they should be taxed since the demand there isn't elastic. If there is a high tax, I'm pretty sure a lot of people would still want to be a CEO.

 

 

Bob Benmosche is a perfect example. He was negotiating with AIG which was controlled by the government, and one stickler point was his pay.  He still got around $8M (I recall). If you cut his pay by 1/2 I don't think he would've come.

 

Also here is a guy who made a different in the direction of the company. Some or most wanted to just sell the company off and return the government's money.  So he made the correct binary decision.  You can say a lot of it was luck in that it turned out well, but some can say there was a lot of skill too.

 

One point about taxes and compensation is that we live in a world of prosperity and freedom. That means a person has freedom of movement and right to private property in all the prosperous countries in the world.  If you tax a company or people too high they can move and they will. Look at what Pfizer almost did.  If you tax capital gains too much they will take their money elsewhere.  Unless you are going to take away those rights high pay and current tax rates are here to stay.

 

The easy solution to whiny companies like Pfizer is to put tariffs on their products for not being produced in a local jurisdiction.  Ever Jurisdiction does this with cars, and car parts, forcing local content.  Pfizer is playing a dangerous game of brinksmanship, if you ask me. 

[DonFanucci]

The easy solution to whiny companies like Pfizer is to put tariffs on their products for not being produced in a local jurisdiction.  Ever Jurisdiction does this with cars, and car parts, forcing local content.  Pfizer is playing a dangerous game of brinksmanship, if you ask me.

 

Whiny is an odd word to describe people who protest having their property stolen. Pfizer employees/investors don't have any obligation to give away their time and effort for free. People are not slaves to one another. Pfizer already provides the world with incredibly valuable products. Is that not enough? Apart from being unjust, a tariff on non-locally produced Pfizer products would raise the price of medicine. That is bad for the customer, bad for Pfizer, and bad for the economy in general.

[wachtwoord]

The easy solution to whiny companies like Pfizer is to put tariffs on their products for not being produced in a local jurisdiction.  Ever Jurisdiction does this with cars, and car parts, forcing local content.  Pfizer is playing a dangerous game of brinksmanship, if you ask me.

 

Whiny is an odd word to describe people who protest having their property stolen. Pfizer employees/investors don't have any obligation to give away their time and effort for free. People are not slaves to one another. Pfizer already provides the world with incredibly valuable products. Is that not enough? Apart from being unjust, a tariff on non-locally produced Pfizer products would raise the price of medicine. That is bad for the customer, bad for Pfizer, and bad for the economy in general.

 

Well any form of government overhead, including 'regular' taxes is bad for the economy ;)

 

Anyway, any form of protectionism is vile and counter productive in the long term. It will just artificially shelter 'local' business so the quality of these will deteriorate.

[Uccmal]

I thought I had linked this article yesterday:

 

http://www.bloomberg.com/news/articles/2016-09-01/why-luck-plays-a-big-role-in-making-you-rich

 

Without ever seeing this guys name or article before I was already calling 'super pay' CEOs lottery winners and comparing them to athletes, musicians and actors.  He hit the nail on the head. 

 

People want to believe we live in a meritocracy.  It is anything but.  Luck plays a bigger role than any alleged skills of CEOs.  And I include Jamie Dimon in this.  If he was so good he would have known about the London Whale incident, and not denied it for a month, or the Libor rigging scandal.  Or was it just bad luck?  If we are operating in a meritocracy Dimon should have refunded his pay for the years affected and said "I wasn't doing my job last year so I shouldn't be paid".  I am only picking on Dimon because he is a visible example of luck in action not because he is bad, or good, or skilled, or unskilled. 

 

A true meritocracy would work both ways!  The system we are operating with right now is a skewed system where the rewards for a select few 'lucky' ones outweigh their risks by a huge amount.  The risks are actually borne mostly by lower level workers. 

 

Finally as shareholders we carry disproportionate risks relative to CEOs.  If we make mistakes we actually pay for them! 

 

We need more Jack Bogels, Prem Watsas, and Francis Chous in the world, and fewer Carly Fiorinas. 

 

 

 

[wachtwoord]

I thought I had linked this article yesterday:

 

http://www.bloomberg.com/news/articles/2016-09-01/why-luck-plays-a-big-role-in-making-you-rich

 

Without ever seeing this guys name or article before I was already calling 'super pay' CEOs lottery winners and comparing them to athletes, musicians and actors.  He hit the nail on the head. 

 

People want to believe we live in a meritocracy.  It is anything but.  Luck plays a bigger role than any alleged skills of CEOs.  And I include Jamie Dimon in this.  If he was so good he would have known about the London Whale incident, and not denied it for a month, or the Libor rigging scandal.  Or was it just bad luck?  If we are operating in a meritocracy Dimon should have refunded his pay for the years affected and said "I wasn't doing my job last year so I shouldn't be paid".  I am only picking on Dimon because he is a visible example of luck in action not because he is bad, or good, or skilled, or unskilled. 

 

A true meritocracy would work both ways!  The system we are operating with right now is a skewed system where the rewards for a select few 'lucky' ones outweigh their risks by a huge amount.  The risks are actually borne mostly by lower level workers. 

 

Finally as shareholders we carry disproportionate risks relative to CEOs.  If we make mistakes we actually pay for them! 

 

We need more Jack Bogels, Prem Watsas, and Francis Chous in the world, and fewer Carly Fiorinas.

 

Luck plays a large role in individual cases sure. But over large enough data sets, skill will be the most important factor by far. Therefore the system of paying CEOs more is fair in the sense that if you have the most skill you also have the highest chance of being rewarded for it.

[DonFanucci]

I thought I had linked this article yesterday:

 

http://www.bloomberg.com/news/articles/2016-09-01/why-luck-plays-a-big-role-in-making-you-rich

 

Without ever seeing this guys name or article before I was already calling 'super pay' CEOs lottery winners and comparing them to athletes, musicians and actors.  He hit the nail on the head. 

 

People want to believe we live in a meritocracy.  It is anything but.  Luck plays a bigger role than any alleged skills of CEOs.  And I include Jamie Dimon in this.  If he was so good he would have known about the London Whale incident, and not denied it for a month, or the Libor rigging scandal.  Or was it just bad luck?  If we are operating in a meritocracy Dimon should have refunded his pay for the years affected and said "I wasn't doing my job last year so I shouldn't be paid".  I am only picking on Dimon because he is a visible example of luck in action not because he is bad, or good, or skilled, or unskilled. 

 

A true meritocracy would work both ways!  The system we are operating with right now is a skewed system where the rewards for a select few 'lucky' ones outweigh their risks by a huge amount.  The risks are actually borne mostly by lower level workers. 

 

Finally as shareholders we carry disproportionate risks relative to CEOs.  If we make mistakes we actually pay for them! 

 

We need more Jack Bogels, Prem Watsas, and Francis Chous in the world, and fewer Carly Fiorinas.

 

As I said before, these arguments are necessary to justify envy and theft. If you can show that the rich don't deserve their money then a personal desire for the rich to lose their money is just. Warren/Obama tried this with the 'you didn't build that' speech. This is all a corruption of what responsibility means and what it means to merit something. Look at the professor's own example of people with skill and what happens when you introduce luck. But the skill itself can be the result of luck. Some people are simply born with great skill. Buffett was lucky that he was born in the right century etc. Gates was lucky to have been born with a great mind. He was also lucky to have access to a computer during high school.

 

You say luck plays a bigger role than skill but the issue isn't whether skill or luck plays the larger role. The issue that is completely left out of that article is CHOICE. The choices people make are what creates their responsibility for the results of their choices. The standard of merit and responsibility cannot be total control over every aspect of reality. If that's the standard of evaluation for merit, no one merits anything. There is ALWAYS luck involved. The only pertinent issue is what choices you made given the luck- good or bad. The standard of merit is not skill either. Plenty of skilled people don't make use of their capacities and consequently don't deserve anything.

 

The econ professor himself says he is only alive because of luck. That means that everything subsequent to his car accident would not have happened if he were not lucky. Does that mean that luck is responsible for everything in his life subsequent? No way. Post accident, the fact is that he survived and now the issue of responsibility pertains to what choices he made given his survival. He deserves everything he achieves post accident even though everything he achieved post accident was contingent on a lucky break.

 

Regarding the importance of the impact of luck on final outcomes, the professor makes bald assertions regarding the increased importance of luck and backs it up with a ridiculous 'simulation'. The only conclusion you can draw from that is that luck plays a role in outcomes. Anyone with two eyes can tell you luck exists and affects people. And as far as Jamie Dimon is concerned, I have no idea about his merit but I do know that they way you've presented it is not a valid way of thinking about his merit. Evaluating a person requires looking at the full context of their actions which means including both their mistakes and their good decisions, and then using a proper standard against which to evaluate them. For example, is it possible for ANYONE to know all of the risks a large bank is exposed to? Is this total knowledge a valid standard to evaluate him against? This is what's frightening about investing in banks, but as far as the analysis of Dimon is concerned, you can't ignore the facts of his situation. And then you can't ignore all of the good decisions he's made. You could apply the same method of thought to make Warren Buffett look bad. 'If Buffett were so good he would have known not to invest in Dexter Shoes.' That analysis would be ignoring all of his good decisions and evaluating him against a false standard of a 100% investment hit rate.

 

This issue is about a lot more than politics, it's about the soul of Americans. Historically Americans believed that people were self-made. They were ultimately responsible for their own lives. Now the regressive left is pushing ideas and arguments that attempt to strip Americans of this sense. If people think life is just a bunch of luck, they can justify hatred for the successful. They can also justify their own lack of success. As even the professor acknowledges, this false idea undercuts motivation to get yourself out of bad situations. Why bother? It's all luck anyway.

[Uccmal]

Don, your making alot of assumptions about what I have written.  The title of the thread is "Lowering CEO to average employee ratio".  My argument is that this is not unreasonable.  CEO pay is out of whack with anything resembling reasonableness 'in my world' and I am hardly a leftist freak. 

 

Right now, many CEOs are getting paid 100x or 150x or 200 x, or more than the average worker in their organizations.  None of them got these positions purely on merit.  Luck played a big role.  My other argument is that CEOs making all-star paychecks should feel the pain when the company underperforms to the same porportion as their shareholders and employees.  Right now they dont.  Brian Moynihan has collected obscene bonuses for what: Giving away 100 B in BACs capital to the regulators. 

 

CEO pay needs to be right sized.  Dont ask me how.  I dont think it will happen until shareholders get so annoyed with returns that they start demanding votes on pay.  To get to that point returns need to be suboptimal for a few years.  That may well be happening anyway due to deflation and a lower return environment. 

 

This discussion has become like flogging a dead horse so I wont be posting again. 

[DonFanucci]

Don, your making alot of assumptions about what I have written.  The title of the thread is "Lowering CEO to average employee ratio".  My argument is that this is not unreasonable.  CEO pay is out of whack with anything resembling reasonableness 'in my world' and I am hardly a leftist freak. 

 

Right now, many CEOs are getting paid 100x or 150x or 200 x, or more than the average worker in their organizations.  None of them got these positions purely on merit.  Luck played a big role.  My other argument is that CEOs making all-star paychecks should feel the pain when the company underperforms to the same porportion as their shareholders and employees.  Right now they dont.  Brian Moynihan has collected obscene bonuses for what: Giving away 100 B in BACs capital to the regulators. 

 

CEO pay needs to be right sized.  Dont ask me how.  I dont think it will happen until shareholders get so annoyed with returns that they start demanding votes on pay.  To get to that point returns need to be suboptimal for a few years.  That may well be happening anyway due to deflation and a lower return environment. 

 

This discussion has become like flogging a dead horse so I wont be posting again.

 

I'm responding to what you wrote and the article you posted. Not sure what I assumed incorrectly. No one has supplied a reasonable argument about why the ratio of CEO pay to worker pay is a relevant metric to anything. I've written several times about why it's meaningless and a focus on inequality causes envy. No one really responded. I agree about the dead horse too.

[RichardGibbons]

a focus on inequality causes envy

 

No.  Inequality causes envy. 

 

The reason one would want to reduce inequality is because life is better for everyone, even the rich, with more equality. And, if inequality gets too high, the poor sometimes rise up and kill the rich.  Thus, there's value in discussing how to design the world optimally to reduce the horrible outcomes resulting from bad luck. 

 

That say, since you are a libertarian, you're going to have a really hard time contributing something useful a conversation that isn't based around your "might makes right" ideology.

[wachtwoord]

a focus on inequality causes envy

 

No.  Inequality causes envy. 

 

The reason one would want to reduce inequality is because life is better for everyone, even the rich, with more equality. And, if inequality gets too high, the poor sometimes rise up and kill the rich.  Thus, there's value in discussing how to design the world optimally to reduce the horrible outcomes resulting from bad luck. 

 

That say, since you are a libertarian, you're going to have a really hard time contributing something useful a conversation that isn't based around your "might makes right" ideology.

 

Lol lol more equality is better for the rich. Did I read that right?  :o

 

If you truly believe that. Stop advocating for the government to make things more equal. The rich will do so themselves. After all, it's in their own best interest  ::)

[Jurgis]

The reason one would want to reduce inequality is because life is better for everyone, even the rich, with more equality. And, if inequality gets too high, the poor sometimes rise up and kill the rich.  Thus, there's value in discussing how to design the world optimally to reduce the horrible outcomes resulting from bad luck. 

 

Very well said.

[Guest]

I can agree that life is better for everyone - even the rich. There is a reason Sanders and Trump have been strong lately...average folk are getting upset.

[wachtwoord]

I can agree that life is better for everyone - even the rich. There is a reason Sanders and Trump have been strong lately...average folk are getting upset.

 

That's because the non-rich are voting for them out of greed. NOT because equality is better for the rich.

 

This is what I hate about socialists so much. They aren't just thieves. They pretend to have the moral high ground as well.

[Guest]

I can agree that life is better for everyone - even the rich. There is a reason Sanders and Trump have been strong lately...average folk are getting upset.

 

That's because the non-rich are voting for them out of greed. NOT because equality is better for the rich.

 

This is what I hate about socialists so much. They aren't just thieves. They pretend to have the moral high ground as well.

 

Why are the rich better off to have money they'll never use?

[wachtwoord]

I can agree that life is better for everyone - even the rich. There is a reason Sanders and Trump have been strong lately...average folk are getting upset.

 

That's because the non-rich are voting for them out of greed. NOT because equality is better for the rich.

 

This is what I hate about socialists so much. They aren't just thieves. They pretend to have the moral high ground as well.

 

Why are the rich better off to have money they'll never use?

 

Money is power, more money is more power.

 

Why do you people have the right to decide whether or not the rich deserve to have their wealth? If you want to steal, steal, but get off your damn high horse.

[RichardGibbons]

Lol lol more equality is better for the rich. Did I read that right?  :o

 

If you truly believe that. Stop advocating for the government to make things more equal. The rich will do so themselves. After all, it's in their own best interest  ::)

 

Yep, you read it right.  Based on data comparing both countries and states, outcomes for things like health, mental health, drug abuse, and violence both the rich and the poor are worse in rich countries with greater degrees of inequality.  That said, I imagine that it's optimal to have some degree of inequality, and I think most people believe this.

 

The idea that people will magically do something just because it's in their best interest is silly.  If you really believe this, why do we have any drug users at all?  Workaholics?  People who stay with abusive spouses?

[RichardGibbons]

 

That's because the non-rich are voting for them out of greed. NOT because equality is better for the rich.

 

Yeah, it's all greed! 

 

The laid-off autoworker without health insurance who doesn't want to die when his appendix ruptures!  Greedy lazy bum!

 

The single mother working two full-time jobs who wants enough time to see her children and raise them right.  Greedy mother!

 

The baby of a crack whore who wants adequate nutritious food and a loving household so they don't end up stunted and mentally unstable.  Greedy baby!

 

You're right. It's all about greed.  Especially that baby. How horrific that someone might stop you from buying your fourth Ferrari just to give a stupid kid food.  If she wants food, she should buy it herself.

 

This is what I hate about socialists so much. They aren't just thieves. They pretend to have the moral high ground as well.

 

Fixed that for you.

[wachtwoord]

So you take it upon yourself to steal it from others? Yes then you surely don't deserve food.

[DTEJD1997]

So you take it upon yourself to steal it from others? Yes then you surely don't deserve food.

 

Doesn't deserve food?  Whut Whut?  Thieves deserve what they can get away with! :-[

 

Look at the discussion when my father's house was broken into and his sport car stolen!  This is even with the response of the police who couldn't be bothered to do anything...

 

I am afraid that if certain people come to power in this country, it is going to devolve into the 1970's again.  Crime is going to explode off the charts...Lots of people who are now "grown up" don't remember, or weren't alive back then.  Maybe they don't care or understand?

 

We'll see.  I hope I am wrong.

 

 

[Guest]

How is it "stealing?" Taxes were way higher a few decades ago and people were still happy.

[Jurgis]

RichardGibbons and stahleyp, thanks for posting. I doubt that you will change the minds of people you're replying to. I mostly gave up, so I can only post a /support to you guys.

 

It is very surprising to remember that USA had top marginal tax rates of 90% and somehow it wasn't called socialist heaven then and its economy, entrepreneurship and innovation did not collapse as some would suggest. But now some people will call you communist and predict doomsday for suggesting even 40% marginal tax rate or any other mechanism to provide more equal renumeration, social services, and opportunities to people.

 

Right, even Koch brothers are now socialists. They dare to talk about income inequality and issues that come because of it. They dare to say that USA should keep social security programs until and unless other ways are provided for people to live a normal life.

 

 

[wachtwoord]

How is it "stealing?" Taxes were way higher a few decades ago and people were still happy.

 

"We're not stealing from you cause back in the day we used to steal less! You should be happy!" Brilliant argumentation. Really impressive.

 

If you take someone's belongings with force or under threat of force, it's theft.

[Guest]

How is it "stealing?" Taxes were way higher a few decades ago and people were still happy.

 

"We're not stealing from you cause back in the day we used to steal less! You should be happy!" Brilliant argumentation. Really impressive.

 

If you take someone's belongings with force or under threat of force, it's theft.

 

Being insulting doesn't really strengthen your argument. You've failed to say why paying taxes is theft. You've also failed to say why if who has substantial wealth has less why they it would hurt them.