I'm not saying the government should dictate what a CEO (or anyone) should make, but I think the way the board of directors are selected needs to be changed.
Also I don't think "income redistribution" is a dirty word even if it is to the right wing, given the inequalities of the our present economic system.
If you look back at the last half century, the economy and middle class where doing a lot better when the marginal tax rates were a lot higher than they are now. The "supply side trickle down theory" doesn't really work. It's demand that creates jobs, not supply.

 

I'm not saying the government should dictate what a CEO (or anyone) should make, but I think the way the board of directors are selected needs to be changed.
Also I don't think "income redistribution" is a dirty word even if it is to the right wing, given the inequalities of the our present economic system.
If you look back at the last half century, the economy and middle class where doing a lot better when the marginal tax rates were a lot higher than they are now. The "supply side trickle down theory" doesn't really work. It's demand that creates jobs, not supply.

Well put.
I think what people are missing here is that the crazy lady's (Rand's) philosophy and competition are two different things.
We all depend on others for our daily lives.

 

Full stadiums == profit. So, yes, if a 20M athlete earns more for the team than he costs, then damn right he is worth it.

Same for a CEO. Shareholders do not hire a CEO to lose them money.

So you think CEO pay is a good investment for shareholders!

I'm not sure how well it's working in the US (certainly there were some questions about the efficiency of bonus schemes in the banking industry a few years ago), but this is amusing:



from:
http://www.abc.net.au/news/2013-07-31/kohler-executive-pay/4855062

 

So plot the salaries of athletes against the rankings of their teams -- probably would look something similar.

 

When an advertiser pays huge money to a team (or sponsors a NASCAR team, or you have it), then all of the people that don't give a hoot about that sport have to share the cost the same as the fans do.

1. Advertising increases sales and lowers cost due to economies of scale. There is a net benefit to you when many buy the product, regardless of whether or not you would otherwise go out of your way to support that [fill in the blank].

I don't have a solution for that (or at least not one that is acceptably consistent with my philosophy), so I have to accept it.

2. You are free to not buy the product. Vote with your dollars.

But I really have a problem with actors and athletes that make millions a year complaining about CEOs that, by and large, make considerably less. Especially when they go on about some CEO making 300x what the janitor makes. What about the multiple for that actor that made $20 million for a three month shoot compared to the lowest paid person on the set?

Agreed. That's one reason why I choose not to send any of my cash to Hollywood.

 

So you think CEO pay is a good investment for shareholders!

I'm not sure how well it's working in the US (certainly there were some questions about the efficiency of bonus schemes in the banking industry a few years ago), but this is amusing:

View attachment 107088

from:
http://www.abc.net.au/news/2013-07-31/kohler-executive-pay/4855062

I read the chart differently: draw a diagonal line from bottom left to top right. Let's call this expected performance.

About half of them exceed expected performance, some of them greatly. The other half don't, some miserably.

Just like life, some can do it, some can't. But you hire the one you think will get it done for you.

Some of the high performers in small business will likely advance to lead larger business where they may not succeed as well. Just like a star 'AAA' player that can't cut it in the Big Leagues.

There is lots of churn at the top. You don't stay there for long by losing other peoples money. Unlike government.

 

How about this.
Make the minimum wage the same price as 2 beers at your teams stadium.
Work 3 hours at MacDonald's and you can buy a 6 pack at the game. Another 3 hours and you can afford a ticket.

If all those Hollywood types are making so much money, why can I go to a movie for $6, but it costs $50 for a basketball ticket?

 

Going to a movie or a ballpark is entirely optional. I can choose to support the entertainer's salary or not.
That's not so much the case with the other things I buy.

 

Someone commented that some teenagers are simply not worth the minimum wage or not worth any wage at all.

However, if you are using someone's time and labor, they must be worth something otherwise you would not be using them in the first place. My reasoning is that if you want to use someone's time or labor, you should be willing to pay them what your own effort is worth.

 

because CEOs and minimum wage was mentioned, I thought it was time... this is an old clip

 

Someone commented that some teenagers are simply not worth the minimum wage or not worth any wage at all.

However, if you are using someone's time and labor, they must be worth something otherwise you would not be using them in the first place. My reasoning is that if you want to use someone's time or labor, you should be willing to pay them what your own effort is worth.

Really? So an actor that makes $20 million for three months work should pay someone $40,000/hr to mow their lawn?

You should pay them what THEIR time is worth, which is the market clearing price for labor.

Working as an adjunct instructor is very similar -- here you have people that have a minimum of a master's degree and frequently a PhD and they typically get paid $2500 (some more, some less) per course. If they teach full time, that's four courses a semester so they are getting paid $20k/yr with no benefits. Does that suck? You better believe it. But the simple fact is that there is a sufficient supply of qualified people willing to teach courses for that rate that the universities have no need to pay more. Furthermore, they often go literally a decade or more without increasing that pay. At the place that I currently teach the adjunct pay rate in my department was $2000/course for just over twenty years.

The same thing with flight instructors -- they hourly rate is atrocious given the time and expense needed to become an instructor coupled with the fact that it is impossible to get a large number of hours (an instructor that is getting paid for more than 50 hours a month is rare due to scheduling realities and pre-post flight time spent with a student that is generally unpaid since you get paid for the hours that the engine is turning in most places) plus the very real potential for your student to get you killed. But the fact is that there is a huge supply of instructor pilots that are willing to fly at that rate because they are building their hours for a better job down the road. So very few flight instructors can live off that job alone and most have second jobs (and usually they can't be too picky about that job because they need to have the flexibility to schedule flight lessons literally at any time of the day or night).

 

How about this.
Make the minimum wage the same price as 2 beers at your teams stadium.
Work 3 hours at MacDonald's and you can buy a 6 pack at the game. Another 3 hours and you can afford a ticket.

If all those Hollywood types are making so much money, why can I go to a movie for $6, but it costs $50 for a basketball ticket?

Seriously? You can't figure that one out?

That's like asking if a modern IC fab costs billions of dollars to build and has a useful live of just a few years, how can you by some ICs for well under a dollar a piece.

How many millions of people went to see that new X-men movie this weekend? How many millions of people went to see the Yankees this weekend?

Now couple that with the fact that once the film is made the cost for actually showing it is basically nothing, but the marginal cost for every additional baseball game is the same.

 

WBahn, can you explain to me the salary for anesthesiologists since you have all the answers? They are currently performing a task that can be done by that kid that mows your lawn (assuming they are not in 3rd world country or northern BC)

 

WBahn, can you explain to me the salary for anesthesiologists since you have all the answers? They are currently performing a task that can be done by that kid that mows your lawn (assuming they are not in 3rd world country or northern BC)

You would really be happy to have the kid that mows your lawn be your anesthesiologist? So I guess it takes no skill or training at all to know what has to be done immediately when someone starts having a reaction to the drugs or their blood pressure starts falling or any of a host of potential complications come up and that have to be responded to within seconds.

Perhaps you can explain why anesthesiologists pay $20,000 to $30,000 a year in anesthesiology malpractice insurance alone for something that any kid that can mow a lawn can do.

Perhaps you can explain why the government doesn't allow the kid that mows your lawn to practice anesthesiology? If they did, then you would see prices fall dramatically. But since the supply in the labor market for anesthesiologists is so artificially tightened (if, indeed, any kid that can mow a lawn can do it) that the price goes up -- classic supply and demand. So, if you believe that any kid that can mow a lawn can be your anesthesiologist, why aren't you petitioning government to have the educational and experience standards for licensure as an anesthesiologist made commensurate with fifth grade and the ability to run a lawn mower?

 

@WBahn Yeah I did somehow read that wrong. I do not have dyslexia. I have reading while thinking-lexia

It happens -- but it sure made me smile at some of the mental images it produced!

 

You really think that the CEO earning $20 million plus a year is actually worth that much to the company?
Or that he deserves a big bonus even when the company has lost money?

The CEOs answer to the shareholders. If they think the CEO deserves a raise, they get it. When is a loss a loss? Is it a loss when your projected profits fall short? Losing market share can be loss of projected revenue.

When they don't pay dividends, the CEO might be moving on.

 

It's demand that creates jobs, not supply.

That depends on the prospective. Looking at it from the manufacturer's side, they want the aggregate supply, they want to make 100 items and sell 100 items. Over producing, wastes money. On the flip side of that coin, you lose potential earnings by not having enough supply to meet the demand.

If your the laborer, you want to work all year and earn money all year, so your hoping the manufacturer's supply is insufficient to meet the demand, at least for the whole employable year, each and every year.

from Business dictionary. Supply Side Economics
Theory that income taxes reduce incentives for work, savings, and investment, and that accelerated economic growth without inflation can be achieved by increasing the supply of goods and services. Supply side economics advocates large scale tax cuts for individuals and corporation, deregulation of businesses, and strong incentives for investment. Based on Say's Law, and supported by classical and monetarist economists, it is however, opposed by Keynesian (demand side) economics which theorizes that aggregate demand constitutes the primary driving and stabilizing forces in an economy.

from the Business Dictionary. Say's law ... the law of markets
Economic concept that in an open economy 'supply creates its own demand.' As people produce and supply more to a market, they automatically demand more from the market; therefore, total supply would be equal to the total demand, and factors of production (land, labor, capital) would always be fully utilized. This apparently sound argument (because GDP, whether measured as income, value of expenditure, or value of output, remains the same) has not been scientifically proved. An alternative explanation was given by the UK economist, John Maynard Keynes (1883-1946), that the value of planned output of goods and services is equal to the their planned consumption or demand.

from Business dictionary. The Keynesian
A person that follows and believes in the economic principles established by John Maynard Keynes. These individuals support government’s intervention in the economy through public policies that aim to achieve full employment and price stability.

Like most, the truth is between the extremes. If the government changes their policy to achieve full employment, which has NEVER happened in recent decades, that included supply side interests, does that make their driving policy Keynesian?

In my example, the manufacturer was following the Keynesian ideal that the planned output of goods and services equaled the planned demand or consumption.

In the Keynesian theory of projected supply equaling projected demand, entire shifts are dismissed and some move to the unemployment rolls. If they got 50 per hour when they worked, say for one third of the year or $33,333 dollars and collected unemployment for two thirds of the year at a reduced rate, is the employer paying a livable wage?

 

However, if you are using someone's time and labor, they must be worth something otherwise you would not be using them in the first place. My reasoning is that if you want to use someone's time or labor, you should be willing to pay them what your own effort is worth.

I would be procuring their Knowledge, Skills and attitude. The price I put on that would be the minimum I would pay. Some are NOT worth the minimum wage, and they would NOT get hired by me. You procure their services based on what you think the job is worth, not what it is worth if you did it in the first place.

You can cut your own lawn or contract it out. If your worth 100 per hour and someone will do your lawn for 30, do you think you should forego the contract and work the lawn yourself. I'd go for the contract if I was busy billing out 100 per hour. If I were not, I'd do it myself.

It's my time and money. I'll decide how to spend it. I suspect you would do the same.

 

WBahn, can you explain to me the salary for anesthesiologists since you have all the answers? They are currently performing a task that can be done by that kid that mows your lawn (assuming they are not in 3rd world country or northern BC)

Are you paying them solely on their skills used at the moment or their Knowledge, Skills, and Abilities to keep your butt alive if things go awry. Maybe you can get a better deal from the lawn mower, after you agree to exempt the hospital from any and all liability when things go awry.

 

...but I think the way the board of directors are selected needs to be changed.

So, the 'leaders' should be chosen by those other than who own the corporation? Interesting.