Originally posted by quackquack I love how you put words in my mouth. I have no problem with paying CEOs the market rate.
The standard explanation for very high levels of top executive pay is that they are the going rates for the job. They may seem unfair to ordinary people, and the growing inequality they generate may be socially divisive, but it’s in all our interests that our large companies are run by the most talented managers money can buy. If you pay peanuts, in other words, you get monkeys.
Penny Hughes, the chair of RBS’s remuneration committee, expressed this view during the row over the pay of the state-owned bank’s chief executive, Stephen Hester. “It’s very clear,” she told the FT on February 17, “what the market rates for various different jobs are.”
In fact, it is very far from clear what the market rate for a CEO is. If Mr Hester is being paid the “market rate”, why is he being paid so much less than his opposite number at Barclays, Bob Diamond? To suggest both are being paid “market rates” is to imply one Diamond is worth roughly five Hesters, depending on how one does the sums.
The truth is that neither is being paid a market rate, because the system that sets their pay is not a “market” in the neo-classical sense where many transactions set the price, no single transaction affects the whole market, and competition, between applicants for jobs and between employers for applicants, guarantees both parties the market clearing price.
But is it not inconsistent, as is often claimed, to object to huge chief executive pay packets, yet be sanguine about those of footballers? Leaving aside concerns about any interests members of remuneration committees might have in maintaining executive pay at high levels, this argument is specious. As the FT’s Simon Kuper pointed out (“Bankers can learn from sport”, February 28 2009), footballers have to pass four tests before they become highly paid.
The first is competitive entry: millions of young men want to play in the English Premier League, and skill is the only selection criterion. Second, performance is all: there are no bad professional footballers. Third, only a few players are very well paid. Fourth, performance is under constant review: if a player is off form, he’s on the bench. The chief executives of large companies have passed none of these tests.
According to Rakesh Khurana, what passes for the “market” for chief executives is socially constructed. It is “closed”, in the sense that chief executives’ jobs within large, listed companies are only open to those “who fit certain socially defined criteria”.*
Three socially defined criteria used by nomination committees when drawing up shortlists for new chief executives are the candidate’s rank, and the performance and size of their employer, as in: “Must be a C-level executive at a well-performing FTSE 350 company”.
These criteria exclude from the candidate pool good people who just miss the cut as far as rank is concerned, good people who work for currently under-performing companies, and good people who work for smaller companies.
Using such “benchmarks” does not make it a market. As one chief executive put it: “I know I’m overpaid, but according to the benchmark I’m not overpaid enough.” (Benchmarking actually accelerates chief executive pay inflation when a business’s remuneration committee wants to be known as an upper quartile payer.)
If the contributions of chief executives, rather than luck or other people, to value creation could be precisely measured, some might turn out to be worth what they are paid. Steve Jobs’ techno-Zen aesthetic was certainly worth more to Apple than his annual salary of $1.
But the possibility that some chief executives are as able as their pay implies is no reason to cling to the convenient self-serving fiction that their wages are market clearing prices for skill as rare as hens’ teeth.
* Searching for a Corporate Savior. The irrational quest for charismatic CEOs, Princeton University Press, 2002.
Originally posted by quackquack No, I simply don't advocate constantly taking from one group to give to another.
I agree that the Democrat's great social welfare society experiment has been a failure. It is time to make America great again with Donald Trump as President.
Originally posted by quackquack I support the same rules for everyone. Companies should negotiate from all available candidates and pay no more than they need to.
Companies are artificial entities permitted by the State and given preferential legal treatment. They should be regulated to enhance the common good not make CEOs and executives richer and workers poorer.
Originally posted by Zahlanzi https://www.youtube.com/watch?v=HcZ031DSvac
this is from 2014 but it will never get old. It has bernie sanders in it, that's a plus. right now, i could listen to granpa talk for hours.
one particular exchange is noteworthy:
Senator: "Do you know how many people die in Canada because the waiting list is too long?"
Doctor: "No, but i know that forty ...[text shortened]... s it for everyone, and everyone is free to choose something else when and if they can afford it.
Not quite true. When I had cataract surgery in Canada a few years ago, the wait for Canadians under their system was 6 to 9 months. As an American, Medicare would have got me in in about a month, but alas I was too young, but cash got me an appointment the very next week.
Originally posted by quackquack It's a worse system for me if I have to pay for those who made life choices such that they cannot pay for themselves and then my health care is worse. I vehemently object to the idea that society is better when we continually cater to those who struggle most at the expense of those who have always done the right thing.
Originally posted by normbenign Why should I give up anything? And it is not a matter of punishing others. It is simply letting the suffer the consequences of [b]their decisions.[/b]
I'll let the next 6 year old with cancer know that you and QQ think she should die because of her poor decisions.
Originally posted by finnegan So what do you think of the transfer of wealth to the 1% from everyone else? Are they working harder these days?
What do you think of the evidence in Piketty's research showing that work does not and never can pay as much as investing unearned (largely inherited) wealth will continue to earn?
You can work as many jobs as you can fit into a week but work itself will never make you rich.
Piketty's "research" is inconclusive, as he repeatedly confirms in his book which I just finished.
Clearly, Piketty starts with a viewpoint and tries to make large number support his beliefs. Piketty's research proves nothing.
Originally posted by normbenign Thanks for a clear and correct response.
A correct response for those who who don't understand Human Nature and the purpose of human society. It really isn't to just benefit a few while the great bulk suffer.
I read the book completely, and made copious notes. Just as I did with your alleged economist Joseph Stiglitz. Have you yet read Human Action by Mises? Talk about Ostriches.
Originally posted by normbenign I read the book completely, and made copious notes. Just as I did with your alleged economist Joseph Stiglitz. Have you yet read Human Action by Mises? Talk about Ostriches.
You look at words, but you are unable to understand any concepts that stray from your narrow preconceived ideological biases. Wherever we discuss anything that does so, your misunderstandings of such material evoke one of two responses: 1) Laughter and/or 2)Head shaking in pity.
Originally posted by normbenign Does that 6 year old have parents? Has Obama Care helped that child's prospects? What makes me responsible?
So 6 year olds should die of diseases if their parents don't make enough money?
We're all responsible for each other; that what's human societies are for. The type of cruel selfishness you and QQ worship is unnatural in a emphatic social animal like Man.
Canada vs US (healthcare)
19 Aug '15 20:00
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