Be a sport and elaborate on this: “I don’t think that you are serious when you say that you have no problem with CEOs that create their own corporations.”
Please explain.
I thank you for your friendly comments about me as well as your insights into the issue. But I must say that I’m not a bitter person at all, though I do have some “righteous anger” about certain types of CEOs and how so many people seem to act like cattle and just go along with the madness without so much as a peep, even if it hurts their own kids.
Also, I’m not a pugnacious person as I think your last (well meaning) sentence seems to suggest. Just a simple old geezer that’s trying to make sense out of what’s going on in the world is about all. 
Over the years I’ve listened on the radio to dudes like Michael Savage, Larry King, and Roy Masters and sorta like to think that my writing “voice” is a blend of those guys. (If only I were even half as smart as any 'em!:D) And so while it’s great fun and somewhat cathartic to take the gloves off … I try to be mindful of making it a point to not get too ugly about expressing my views (though the snake, piglet hyperbole may have been cutting it close:o).
I remember back in the '80s Lee Iaacola (sp?) along with several other auto-maker CEOs went with POTUS to Japan to confront the Japanese about them supposedly doing shady things that resulted in them getting a very sizable share of the American market while American cars didn’t fair so well in the Japanese market.
And so I had to laugh because the Japanese CEOs simply pointed out to them that, besides not selling cars in Japan with steering wheels on the right side, their product’s quality was poor due to them hogging so much dough that there wasn’t much left for R&D. Plus they pointed out the numbers relevant to pay discrepancy … which while wasn’t the 300 x that we’re talking about now, but was very substantial just the same.
And so those big important American CEOs got back on the plane and had egg all over their faces after having “told off” their Japanese counterparts, and with the whole world watching!
Wow! If that’s not the embalming fluid then what is!
I can’t say I disagree.
Unfortunately, it’s unlikely to be the nail in anyone’s coffin.
We evolved from ape-like societies with alpha males leading the group. Some part of us deep down still wants to let the ones who talk a big game and carry a big stick lead the way. If they fail, we can join together and mock them. But by and large they usually get something done, and call that a success. It’s probably hard NOT to make a profit of some kind when you have thousands of bright staff at your beck and call.
Perhaps this is a key point. As recently as the early 1980’s union organization was a big thing. I’m out-of-touch now (except for political news, mainly from SDMB) but today’s lower-earning Americans seem more glum (“Would you like Vaseline with that?”) and happy to vote for anti-labor politicians as long as they get to keep their guns.
An interesting refutation for some of the simplism in the thread. OTOH, isn’t Forbes.com some pinko rag? 
That raises a good point though- it’s not the CEO really being greedy in many of these cases, it’s boards of directors either being stupid, or having motivations that we’re not aware of in paying these guys as much as they do.
I mean, if you were negotiating for a good job, would you take 90k and no guaranteed severance if you thought you could negotiate for 130k AND a sweet guaranteed severance package? Of course not- you’d take the second deal.
The other thing is that I suspect CEOs negotiate these severance packages into their employment contracts because they’re fundamentally being judged on things they have limited control over, like say… per-share price. By that, I mean that a CEO can make his company as profitable as possible, but if for some reason, that profitability doesn’t translate into higher stock prices or acceptably higher dividends, the CEO’s still on the hot seat. Or if he does everything absolutely right, and one of their primary suppliers or customers has a total meltdown and fucks up business for that quarter, the CEO’s still on the hot seat.
I personally would HATE having my job performance being judged based on things I can’t really control and can only influence. I can totally see why a CEO might like insurance against that kind of caprice.
Now that’s not to say that I think it’s necessarily right for a CEO to make a crazy salary and deliberately or unthinkingly screw his workers just to make a quick buck, but if the workers are competitively paid, and the company’s still solvent, then I don’t really care how much more the CEO makes. That’s between him(or her) and the board, and none of my business.
(and FWIW, Dad worked for the water department, and Mom was a teacher. Both happily retired now.)
I read, “We don’t need a lot of rules and regulations on the market and business practices because if anyone is mean or unfair no one will do business with them and that will solve the problem.” First Corollary: “If people continue to do business with someone, it must mean they are fair and honest and worth whatever it costs to do business with them.” Second Corollary, Uber Paragraph: “Anyone who wants to do business with the people better watch their effin’ Yelp ratings.”
Maybe I misread.
Dibbs,
Based on what you have written here, you are very blunt and to the point.
In respect to automobiles
The Japanese and US markets are very different. Japan built their cars for the Japanese Market initially and struggled in North America in the 70s initially until they
learned about the North America market and built cars more suited to the North American Market.
Did the US automakers make some automobiles that were poorly designed? Yes, certainly they did but they were not as bad as they were perceived and the Japanese were not as good as they were perceived in retrospect.
Did the North American automakers revise how they built cars - after the 80s. certainly. But as you can see often the engineering people were sometimes overruled by the business development types and that resulted in several high profile recalls that did not help the US market.
How much of this is the result of the high CEO pay, I don’t know. However, structurally, the US automakers had a top down structure whereas the Japanese automakers structured their companies a little differently
Take a look at the surviving cars out there still running from the 80s, Not many Japanese nor American vehicles left of either vintage.
Now go to the year 2015, I don’t see a huge difference in quality between the Japanese and the North American vehicles so yes the North American automakers have learned somewhat.
It is also more complicated with certain trade barriers and shipping costs as well.
Of course, you can pick out examples to make your case on way or another
You know, that’s the big annoyance I have with the “invisible hands ! Invisible hands !” crowd. Because while Adam Smith’s theory is fine and all, people forget that the Wealth of Nations is his second book - and building on the first, which was a treaty on ethics and morals. His entire financial/economic theory is predicated on the notion that once Enlightenment and proper education set in, people would naturally become all nice and moral because that’s what made sense to him. And it doesn’t work with amoral or immoral actors, or uninformed ones - only positive moral ones who know each other, their reputations and business history.
His idea was that, since morality produces the best result in the long term, any short-term shenanigan would self-correct, in due time, as people turned more and more moral and shunned the speculators, the finance sharks, the unfettered greed and so on. And that would happen any minute now therefore, hence the wise reader will disregard the rampant (and very destructive) speculation happening in France due to the recent deregulation of the grain market at the time of writing f’r’instance, 'cause that’s just a dying spasm of the Old World.
Which, you know, haaaaahahahhahaha. Haha. Haaa :(.
Which, in turn, means that the “invisible hands” theory is BS, since it is built on fundamentals that just ain’t so (or at least, have yet to happen). Sort of like communism.
All political, social and economic theories that require all players to abide by some arbitrary but unenforced and unenforceable rules are BS.
You can devise any set of rules you like, and like any logical construction they will work perfectly as long as all players abide by not only them but by the unwritten rule that no one will find any way to work around them. But sooner or later, someone shows up with a three-foot bowling ball or spikes on their shoulder pads or a 36-man outfield.
All socioeconomic systems have to withstand the spectrum of real people in the mix.
Here’s a touchstone for such policies: If they make a behaviorist laugh, they’re not gonna work.
I made mention of what happened back then mainly to underline the fact that this CEO greed thing has been going on for a very long time, and sadly it remains the “irresistible force versus the immovable object” to this day with the evil ones winning. And as I’ve said a dozen times in here, a sludge hammer needs to be taken to this whole idea that unproven CEOs that haven’t themselves created a thing are not the little demigods that they’d like us regular folks to think they are; we need to stop with the worship of these people and demand that they stop acting like pigs.
Btw, the Chrysler CEO Iaacola back around that time was hailed by many in the media for being something of a Mother Teresa on account of him going public and saying during one of his years of tenure that he’d only accept $1 for his salary for one year.
But what was left out was the fact that the guy that gave the world the K car (after successfully begging the government for a bailout) had for several years prior to his big act of generosity been paid many millions!!
I’m telling you these CEOs need to be called out in a major way for all of their despicable shenanigans!
This is selectively looking at Iacocca.
THe K car was already in development when he took over. He also brought back the convertible, created the minivan class, and made airbags standard. He took over a company that was hurting big time, and turned it around. Perfect? Not by any means. Judge him by the fact that Chrysler still exists, made it through two bankruptcies, and the stock is still worth something.
Japan built heavy, clunky, primitive cars until the later 1970s because that’s the best they could do. The body sheetmetal on many, for example, was twice the thickness it should have been (even if durability was the aim) because that’s all Japanese steel mills could produce.
Not that what you say is wrong, precisely, but the truth is a bit more subtle than “they changed to meet NA expectations.” It wasn’t in any way that they were building the great cars of later decades and 'Murricans somehow didn’t want them.
Is it possible to look at any complex individual or situation any other way? Even Jesus said and did some highly questionable things, according to the novel.
Chrysler brought the minivan to the US market but did not invent it. The rest of the world basically invented every kind of small car and related innovation long before we stopped making fun of the Nash Metro and choosing our cars by extra inches.
Airbags were coming no matter who took the first steps.
And Chrysler just might have been worth propping up and saving - and I agree that it’s an economic win in many ways - because they were a major manufacturer of defense hardware like tanks.
When I was at the place where I’d worked for all those years, before the treacherous CEO arrived, us peons were getting mere crumbs from the corporate hogs at the top. But then someone very brave among us decided to form a protest group and when that happened the heretofore stellar public image that the company had been enjoying for so long (because they’d give out little $5,000 gifts here and there to the local university and charities and such) began to get tarnished, and it wasn’t long before the day came when we walked in one morning and were told that there was going to be a meeting and we all had to be there.
We got like $3.00 more per-hour on our paychecks because of putting some feet to the fire and we were all VERY happy about it, save for those slime-bags in their $1,200 Italian suits that had for years been cheating us!
I guess it has to be one coffin at a time … as regular folks slowly wake up to their exploitation and take the bull by the horns, as distasteful as it may be.
Here’s some more grist for the mill.
I submit that workers deserve a piece of that action. So either reduce profits and pay workers more or reduce CEO pay and give workers a share of his/her salary (or both).
A couple of things. A new CEO is more under control of a board, but after a while the CEO brings the board under his control. And there is the factor of cognitive dissonance, so the board will think the CEO they have just chosen is great until evidence to the contrary is overwhelming. Compensation committees especially can be manipulated. They probably don’t want to take the risk of pissing the CEO off and causing a crisis. It is also easy for them to game the decision by setting the formula for compensation. If you are the CEO of a mid-tier company, and convince the board to compare your salary and bonuses to CEOs of big companies, you will do well. Gretchen Morgensen just wrote how some companies used net income as a metric, but included large amounts paid out in stock benefits, which changed mediocre results if they were included to excellent results if they were not.
Sure the CEO is not in total control, but who is. Few workers laid off because of bad results had anything to do with getting those bad results. The captain of a ship is responsible - they don’t get to say not my fault some sailor screwed up.
A supplier had a screwup? Did they know far enough in advance? Did they have a second source? And of the CEO is not responsible for bad stuff, how can they expect to get credit for good stuff. A VP I once worked for said anyone can do well in an upturn - the sign of a good manager is how you do in a downturn. SarbOx was all about not letting CEOs say “I didn’t know what was happening, don’t blame me that the company imploded.”
I’ve worked for companies where stock options were given out to almost everyone, so the CEO, a founder, while very rich, was still worked liked. I’ve worked for companies that were very stingy so that the CEO, a founder and even richer, was not particularly well liked. The former company was better to work out. In the latter company people not getting the benefit of success tend to slack off. That’s how this stuff affects everyone.
I would not disagree, in principle. I would also not say that most companies could stand some objective adjustments to their pay structure and policies.
But this is an area where “market forces” do have a strong hand, and while grossly overpaying one guy might be faulty thinking, so is overpaying every mope who can barely punch his time card. And most companies have a lot of clock-watching, corner-cutting, can’t-make-me mopes.