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Debates Forum

  1. Donation rwingett
    Ming the Merciless
    23 Nov '13 19:08
    No, not the book of Equality. It's an initiative in Switzerland to limit CEO pay to 12 times that of the lowest paid worker in a company. I say it's only common sense to have such a limit on runaway inequality. The days when CEOs style themselves as kings of their private fiefdoms, and the workers are treated as peasants, has to end. And 1:12 is a good place to start.

    http://www.npr.org/blogs/parallels/2013/11/22/246678622/swiss-inequality-is-growing-would-curbing-exec-pay-matter
  2. 23 Nov '13 20:05
    Such a measure would probably be good for the productivity and profitability of companies, but I'm not sure it's the place of government to tell companies how much they can pay their employees. It's probably more effective to just make the tax brackets more progressive.
  3. 23 Nov '13 20:28
    Originally posted by rwingett
    No, not the book of Equality. It's an initiative in Switzerland to limit CEO pay to 12 times that of the lowest paid worker in a company. I say it's only common sense to have such a limit on runaway inequality. The days when CEOs style themselves as kings of their private fiefdoms, and the workers are treated as peasants, has to end. And 1:12 is a good place to start.
    Sounds great but I think I agree with KazetNagorra that tax is probably the more viable solution.
    I must add that the Swiss are well known for assisting in tax avoidance. In addition to swiss banks being used to hide funds, I believe the company most responsible for stealing Zambia's copper is based in Switzerland and is assisted by Swiss laws favourable to them.
  4. Subscriber Wajoma
    Die Cheeseburger
    23 Nov '13 21:07
    Originally posted by twhitehead
    Sounds great but I think I agree with KazetNagorra that tax is probably the more viable solution.
    I must add that the Swiss are well known for assisting in tax avoidance. In addition to swiss banks being used to hide funds, I believe the company most responsible for stealing Zambia's copper is based in Switzerland and is assisted by Swiss laws favourable to them.
    Ben and Jerry's ice cream started by a couple of hippies tried to limit the CEO salary, it didn't work because people making multimillion dollar decisions well command salaries that can not stand to be limited in this way. You lefty types think running businesses at that level is easy, it's not, and there is a limited pool of people to choose from that are capable of doing the job well.

    All this does is drive the dealings into the back room and salaries will be made up by other benefits.
  5. 23 Nov '13 21:20
    Originally posted by rwingett
    No, not the book of Equality. It's an initiative in Switzerland to limit CEO pay to 12 times that of the lowest paid worker in a company. I say it's only common sense to have such a limit on runaway inequality. The days when CEOs style themselves as kings of their private fiefdoms, and the workers are treated as peasants, has to end. And 1:12 is a good plac ...[text shortened]... g/blogs/parallels/2013/11/22/246678622/swiss-inequality-is-growing-would-curbing-exec-pay-matter
    It ignores the reality that a CEO's salary as determined in the free market is more than 12 times the lowest level worker. To force firms to outsource low level jobs or to change corpoarate structure so the CEO can be employed by a different corporation than other workers is just silly.
  6. 23 Nov '13 22:02
    Originally posted by Wajoma
    Ben and Jerry's ice cream started by a couple of hippies tried to limit the CEO salary, it didn't work because people making multimillion dollar decisions well command salaries that can not stand to be limited in this way. You lefty types think running businesses at that level is easy, it's not, and there is a limited pool of people to choose from that are c ...[text shortened]... is does is drive the dealings into the back room and salaries will be made up by other benefits.
    There are indeed not many people who excel at running businesses.

    Unfortunately, those people rarely get picked as CEOs.
  7. 24 Nov '13 00:41
    Originally posted by quackquack
    It ignores the reality that a CEO's salary as determined in the free market is more than 12 times the lowest level worker. To force firms to outsource low level jobs or to change corpoarate structure so the CEO can be employed by a different corporation than other workers is just silly.
    Yes, at the simplest level, why is it logical that government that can't run its own business will run everyone else's. Paying workers is based on the value of what they can do, not their needs or wants. Can there be a single ratio that expresses the difference?

    You rightly point out that corporations have many ways of getting around such nonsense, most of which tend to harm the low paid worker. Their work can be automated, farmed out to independent contractors, and in some cases eliminated altogether. Top level administrators can also be farmed out so that the ration is meaningless.
  8. 24 Nov '13 00:49
    Originally posted by KazetNagorra
    There are indeed not many people who excel at running businesses.

    Unfortunately, those people rarely get picked as CEOs.
    I don't know if it is still the case, but in the '90s most American CEOs were CPAs. Corporate boards apparently believed understanding the books was the highest qualification of the CEO. While this is important, it may be even more important to have a vision of the companies mission, and how to use human capital, not things that bean counters do well. This doesn't constitute an argument that government can evaluate talent better.
  9. Standard member wolfgang59
    Infidel
    24 Nov '13 02:21
    Originally posted by rwingett
    No, not the book of Equality. It's an initiative in Switzerland to limit CEO pay to 12 times that of the lowest paid worker in a company. I say it's only common sense to have such a limit on runaway inequality. The days when CEOs style themselves as kings of their private fiefdoms, and the workers are treated as peasants, has to end. And 1:12 is a good plac ...[text shortened]... g/blogs/parallels/2013/11/22/246678622/swiss-inequality-is-growing-would-curbing-exec-pay-matter
    A noble thought but I cannot see it working.

    Firstly large industries who employ non-skilled manual workers and highly
    qualified senior staff will be at a disadvantage because they naturally have
    large pay differentials.

    Secondly any company wishing to avoid the system would just sub-contract
    out all the poorly paid jobs. Effectively you could have a company of just a few dozen senior employees and contractors doing everything.

    I am in favour of systems which distribute company profits fairly. So
    that workers can be paid the appropriate rate but success is shared throughout all employees. (Perkaps as percentage bonuses)
  10. Donation rwingett
    Ming the Merciless
    24 Nov '13 03:06
    So nobody seems to think it would work. Probably because you've been told a thousand times that it will not work, and you've internalized that particular narrative. Well, it can work. And does. I will point to the example of the Mondragon Cooperatives again. From Wikipedia:

    Wage regulation

    At Mondragon, there are agreed-upon wage ratios between executive work and field or factory work which earns a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns 5 times as much as the theoretical minimum wage paid in his/her cooperative. In reality, this ratio is smaller because there are few Mondragon worker-owners that earn minimum wages, because most jobs are somewhat specialized and so are classified at higher wage levels. The wage ratio of a cooperative is decided periodically by its worker-owners through a democratic vote.

    Compared to similar jobs at local industries, Mondragon wages are 30% or less at management levels[clarification needed] and equivalent for middle management, technical and professional levels. Lower wage levels are on average 13% higher than similar jobs at local businesses. Spain's progressive tax rate further reduces any disparity in pay.


    And Mondragon isn't the only one. There are other corporations that operate by the same principle. Equal Exchange, a fair trade chocolate company, caps executive pay at 4:1 over that of the lowest paid worker.
  11. 24 Nov '13 07:03
    Originally posted by KazetNagorra
    Such a measure would probably be good for the productivity and profitability of companies, but I'm not sure it's the place of government to tell companies how much they can pay their employees. It's probably more effective to just make the tax brackets more progressive.
    This way a small business owner who has worked many hours to build his business and finally starts getting financial reward for it now gets it taken from him. How do you think it is the place of government to tax the incentive out of entrepreneurship?
  12. 24 Nov '13 07:04
    Originally posted by KazetNagorra
    There are indeed not many people who excel at running businesses.

    Unfortunately, those people rarely get picked as CEOs.
    Where is the empirical data for your comment?
  13. Subscriber kmax87
    You've got Kevin
    24 Nov '13 07:57
    Originally posted by normbenign
    Yes, at the simplest level, why is it logical that government that can't run its own business will run everyone else's. Paying workers is based on the value of what they can do, not their needs or wants. Can there be a single ratio that expresses the difference?

    You rightly point out that corporations have many ways of getting around such nonsense, ...[text shortened]... altogether. Top level administrators can also be farmed out so that the ration is meaningless.
    With the global economy fully established and globalization now fully entrenched at some point where can business run and hide if a 1:12 ratio were instituted. In the long run do you want to see American workers paid that of the Indians or the Chinese?
  14. 24 Nov '13 08:55
    Originally posted by normbenign
    I don't know if it is still the case, but in the '90s most American CEOs were CPAs. Corporate boards apparently believed understanding the books was the highest qualification of the CEO. While this is important, it may be even more important to have a vision of the companies mission, and how to use human capital, not things that bean counters do well. This doesn't constitute an argument that government can evaluate talent better.
    CEO appointments get done through the old boys' network and have little, if anything, to do with being able to run a business.

    Needless to say, government officials are equally poor at determining what constitutes a good leader.
  15. 24 Nov '13 08:57
    Originally posted by joe beyser
    This way a small business owner who has worked many hours to build his business and finally starts getting financial reward for it now gets it taken from him. How do you think it is the place of government to tax the incentive out of entrepreneurship?
    Most small business owners tend to reinvest profits in their business. Very few of them will exceed the 1:12 ratio.