John Mace's (and others') opinion about societal fairness, 99%, etc

That’s an interesting choice of words, and it’s telling the Shodan, in his first response, said

I’m inclined to agree, and I’d say the lofty salaries of CEOs aren’t necessarily unfair, or to use Shodan’s words, that they demonstrate injustice. They are, I think, totally unbalanced, and I don’t understand the refusal by some to accept that point. Westerners who visit developing countries are often cautioned from throwing their money around, because if a bunch of rich white tourists are willing to pay 5 for a bowl of soup that would cost a local .05, the soup stand is going to either raise its prices out of the reach of local residents and/or simply make it a policy to only cater to wealthy tourists. Soup becomes out of reach for the commoner.

Likewise, if the top 25% of the US was making a cool million every year, and the bottom 75% of the US was making 5 grand, our economy would either fracture into two classes or become unworkable, or both. The bottom 3/4s would no longer be able to afford anything, and producers and merchants would stop catering to them.

Anyone who thinks that this hypothetical economy isn’t unbalanced is nuts. The only thing keeping wealthy CEOs from having a similar effect on prices is the fact that there aren’t very many of them, but knowing the potential for inbalance there, I don’t see how anyone can look at the staggering rate of growth of CEO salaries and say, “Ah yes, the wisdom of the free market.”

I have to wonder how much the change in CEO salaries is part of the overall change in celebrity and professional sports salaries. You don’t see the Occupiers ranting about how much ARod makes or how much Tiger Woods has boosted the take for Golf Tournaments (easily $1M minimum now for a win, and sometimes $2M). Is it the same phenomenon? Not sure how you would show that to be true, but it would be interesting to see a graph of CEO salaries and top sports players and movie stars over time.

I would have to say that, whatever it says about fairness, training people for four or eight years to develop skills in complex and difficult areas and then having them flip burgers hardly represents optimal use of society’s resources. It’s a waste, a stupid waste, like much of what occurs under capitalism.

I don’t follow your reasoning. Your post implies that there is some authority “training” these people when, in a free society, we all choose what subject we study and what our majors are. If some obtains training for himself (the correct wording for what happens) in some skill that other people don’t want, are we obligated to utilize that skill even if we don’t need it?

In my view, the issue isn’t a matter of making average pay go up, but to mitigate the disparity of wealth. Rich and Poor are relative terms. Tomorrow if I had the same amount of money I had today, but everyone else in the world had double their money, I would be Poorer for it because I would have less buying power.

With a 1% running way ahead in wealth, they have increased capabilities and power. Power disproportionate to their numbers. For example, let’s say Dude A wants to sue Dude B out of existence. If Dude A has 6x the wealth of Dude B, he probably could achieve his goal, but it would hurt to do so. If Dude A has 60x the wealth of Dude B, he could do it and it would hurt less. If Dude A has 600x the wealth of Dude B, then he could do so without batting an eye. Money is power. I don’t mind the wealthy being wealthy (someone has to be, right?), the problem stems from social policy that facilitates the wealthy becoming so wealthy that their power is overwhelming.

If one takes the view that “they still only get one vote,” then we will have to simply disagree on how the country operates in real life.

As it is, wealth accumulation is super hard when you are poor and way easier when you are wealthy. I don’t think there is any way to avoid that fact, but things that mitigate it are worthwhile in my opinion.

I believe **EC **is making the case for subsidies to buggy whip manufacturers.

Regards,
Shodan

We need to do more than simply disagree, we need to change it.

What we can deduce is to do with the importance of language. The “free” market isn’t free in any meaningful sense of the term. The libertarian right leans on the concept of economic freedom, trying to cow opposition by suggestion that any restriction on pure economic liberty is an attack on a meaningful concept of freedom. A choice between starvation and a particular action is not a free choice. A capitalist system has such duress at is core. Taking actions then to limit economic “freedom” may be seen as increasing, not reducing a more meaningful sense of freedom.

I have no issues with those who defend the “free” market on pragmatic grounds. I’d agree in many areas it is the best system we’ve found. But those who seek to add a moralistic aspect seem to me to be cloaking a justification of privilege and exploitation.

Actually, whenever contract disputes in baseball or football come up you often hear fans grousing about it just being “an argument between millionaires and billionaires.” So there is resentment, clearly, though, hilariously, its rarely directed at the billionaire team owners.

And there does seem to be an increasing tendency for a “lottery approach” to salaries where a few people win big and everyone else goes home poor. It has even happened in publishing to some extent, as the big publishing houses have cleared out their mid-list writers and focused all their efforts on the big-name bestseller writers who are the most profitable for the publishers. Tremendously unfair, of course, but capitalism, you bet!

To me it seems that libertarians and capitalists take the viewpoint that the individual is all that matters, that taking any consideration of societal needs is not only not necessary but absolutely evil. They see society as a battle, and it doesn’t matter how many people end up lying by the side of the road with an economic bullet in their brains (“flip that burger, boy!”) so long as the talented, driven few (John Galt and company) are able to reach the top free of societal interference.

Liberals see society as an ecosystem where everyone’s survival and prosperity is codependent, and the benefit of one particular species over all the others is not a good thing … everyone, including the guy who busses tables and so forth, is entitled to a decent life, by some measure of “decent.” They see minimizing the number of people who wind up lying by the side of the road as an important task.

My feeling is that capitalism does drive the economic engines a lot more efficiently than any government-driven demand side engine, up to a point. The people who reach the top ALWAY try to rig the game in their favor once they get there, and because they are such driven creatures it can be very hard to stop them. We’ve reached the point where such rigging in the housing market and the financial markets wrecked the economy, and our government is so thoroughly bought out that they haven’t been able to bring the offenders to justice or set up new rules to prevent a recurrence of the mistakes that created the 08 crash. (Banks can still play with fire … er, CDOs, but it’s OK, they’re too big to fail donchaknow.)

We are WAAAAAY past the point where capitalism operates optimally, in fact, I would say that the challenge of our time will be getting government back from the super-rich … they fucking own it now.

Our conservative friends apparently feel that is an OK thing … after all, it’s just another reward justly delivered to our hard-working CEOs, who are the only really important members of society. The rest of us … just dross, fit to lie on the side of the road and die.

Cut to a musical interlude!

Evil Captor: Yes, I agree (and I’ve said this many times on this MB) that Libertarians grossly overestimate the degree to which personal liberty is the primary/sole motivating desire of people. It’s a system whose basic premise does not mesh with observable facts.

The key, of course, is agreeing on what a “decent” living is, and exactly how much moral hazard we create by softening the adverse affects produced by decisions individuals make.

But back to a point I made in my first post, I think we would be better served by a tax system that did not try and reward certain behaviors over others, as that is almost certainly going to end up being corrupted by the wealthy people who are inevitable in a free society and who have more access to the legislative system. Fix the tax code by making it simple, and don’t allow it to be corrupted by the baser aspects of human nature. That was the motivating factor of the Founders in creating separation of powers. Unless you set up the system so it’s difficult to corrupt, it’s going be corrupted. We are not angels anymore than we are innate Libertarian maniacs.

How is it determined when a salary is unbalanced?

Yours is a crisis of faith, EC. The Free Market, blessings and peace be upon it, has decided these things. A CEO is worth a thousand times a fireman, a teacher, or a truck driver. Yes, it appears as though it were nothing but an arbitrary abstraction, devoid of humanity or empathy. But it works in mysterious ways, its wonders to perform!

It is often said of us Americans that we worship money, and this is somewhat true. But not enough! Not enough! There are many amongst us who would undermine our sacred faith. I confess that I often have such misgivings, and doubt. But we are probed by the Invisible Finger, and we are judged. It is not for us to question, to carp, to cavil.

There are devils amongst us, who whisper lies about how sharing with our brothers and sisters is a duty and an obligation. They would have us believe, somehow, that this is the Golden Rule! Nonsense! The Golden Rule is this: whomsoever shall have the gold, shall make the rules and therefore shall have more of it! It was ever thus, it is Written.

Turn away from them, EC! Demand their proofs, where is their balance sheet, what is their bottom line? They are but weevils and rodents, gnawing away at the foundation of your faith, do not listen! For lo! the pensions funds of the doubter is rent asunder, and directed into the hands of the worthy and faithful!

God is dead, and Jesus died broke. Moloch and Mammon live in gated communities, beseech their forgiveness, but keep your distance. Such is the will of the Free Market, blessings and peace be upon it!

Tremble, and obey.

I don’t have a mathematical answer. Are you suggesting that wealth distribution can never be unbalanced? Or just that we haven’t reached that point yet? What’s the mathematical proof that the distribution of wealth was unbalanced in feudal England?

My personal opinion is that it’s not a black and white situation. There isn’t a definitive line where you can say everything on this side is under duress and everything on this side is okay. It’s more like a spectrum of shades of grey.

I think a key issue is the disparity between the choices. Are the consequences of one alternative so much greater than the other that it virtually forces the choice?

Suppose the owner of a business is a big Dallas Cowboys fan and he tells all his employees he wants them to wear a Cowboys t-shirt everyday the Cowboys are playing. And anyone who doesn’t do it will be fired.

Now theoretically, this is a choice. You can wear a shirt or you can lose your job. But the disparity between the two choices is pretty large. You’re effectively being forced to wear a Dallas Cowboys t-shirt.

What do you mean by “basically capitalistic?” Capitalism does exist. There’s no “ism” - no ideology. You’re either free to buy, sell, and trade as you please or you are not. Whether you do wise things or stupid, or even whether you do right or wrong, isn’t part of the equation.

Second, what do you mean by “rules”? I can imagien a society with powerful social bonds that constrain the free market. I see little evidence that America is one. I can imagine a society where the government was dominated by the elite; America is that, but it isn’t business or social elites who dominate the government. It’s an entirely separate class of lawyer-politicians.

You may, perhaps, wonder ifthe two mix. It certainly happens - and yet somehow it’s always passionate liberals who donate lots of money to Democrats who get saved. Republicans get raided by SWAt teams. Then when the economy weakens all the entrenched liberal interests complain about the rich, only now they are the best-off clas and start fighting amongst themselves for the last shred of pie.

Finally, one must consider that CEO’s may be materially better off, but as a proportionate change are doing worse. The rich and super-rish are in fact losing much more than anyone else, though of course it doesn’t pinch them as it does us.

For one, economics IS what happens when we tinker with it. Government is the outcome of nature: a strongman gives orders and hurts anyone who doesn’t obey. Economics is quiten unnatural and artificial: humanity in evidence.

It has happened, but is almost certainly not the real issue. The rise in CEO salaries started when the tax laws were changed in the 70’s, which meant that CEO’s could benefit more from cash than lots and lots of untaxable perks. American companies give out very few perks these days, compared to competitors around the world. On the toher hand, this actually works out to the indirect benefit of the nation through a bigger tax base.

However, even if your proposition is always right (it isn’t) were so, what’s it to you? Unless you own stock in the company, the CEO’s pay has no real relationship with the employee’s pay. Both are ultimately trying to drive the best deal possible. If the CEO gets more, it doesn’t mean the employees get less, and vice versa.

How so? Nobody forces you to work, and you can work for anyone which will hire you, more or less. Yes, quitting is tough, especially now. That doesn’t mean you have shown a point.

You miss the actual history of government intervention in the market.

First, the anti-trust laws are almost inevitably too little and way too late. They have the almost uncanny ability to get a judgement right about the time some new technology or competitor is absolutely destroying the old guard. AT&T gave up, and was followed by wild swings in rates and the landline business being supplanted by the already-developing cell market. Microsoft didn’t outgrow IBM because of anti-trust, but because it had something people wanted, and IBM didn’t even twitch in that direction. the Internet Explorer antitrust did jack squat, despite the money it cost.

Sure, you can point to the internet, but DARPA’s project did almost nothing to create it. It simply connected two systems at a distance. WIthout that, the internet would still exist because people were already thinking about doing something like it. It would simply have had a different seed.

Wow. You don’t actully know what the word ‘Duress’ means, do you?

Here’s a hint: It doesn’t mean that people who don’t give you lots of money for small amounts of easy work are evil.

Agreed and it should be obvious. Liberty is a luxury good, though a commodity spread more by the free market than any government on earth.

Now having told everyone what I don’t agree with, here’s my position:

I don’t particularly like high CEO pay. I think companies are in many cases overpaying for talent. However, many cases is not all cases, and we can show that numerous forms of firms are paying more-or-less the same rates, even in the face of contrary factors. So we have family firms, private companies, and public ones all paying top-dollar for talent. They may guess wrong.

Guess what? Not your business. In the end, who cares? If firms overpay for CEO’s, they’ll lose money and opportunities to other firms.

I do sometimes worry about he role of money in politics, but not how you think. Legislators have an awfully easy time making money while in office, and it isn’t bags full of cash. The, when they leave, they get cushy jobs persuading their old friends and colleagues. That is worrisome. It’s not the open corruption that worries me so much as the implicit quid pro quo - much harder to detect and harder to stop.

I once half-facetiously suggested that we allow open, legal bribery. Anyone could post bounties for legislators’s votes, who could take the money or not as they pleased. Half goes to the Treasury in any case. I’m no longer sure it wouldn’t be a good plan.

Now, socially speaking, Americans like money and respect those who made lots of it honestly. They also just like to whine about people who make lots of money on general principal. Guess what? Not your business, either. They don’t magically owe you a red cent because they did well, nor it is “fair” for them to give an even greater percent just because. There may be good reasons for doing it, but fairness isn’t one. A much better reason is that they can afford it, but even then we must recognize that a vast discrepency exists between people who nominally earn the same.

Finally, I do love the notion of the board’s liberals and leftists complaining about the role of money in politics. It ain’t Republicans dominating Wall Street. It ain’t conservatives pouring piles of money campaign coffers. They’d rather whine aout the Kochs excercising their First Amendment rights than their pal Obama’s elitist buddies. Today’s leftists don’t ignore the plank in their eye - they ignroe the whole redwood, and then are surprised when the big tree sticking out keeps them from going out the front door. (To which we respond, “Duh!” but are not heard.)

I am questioning how one can determine when a salary is unbalanced. I said nothing about wealth.

Is there anyone who would oppose a rule that says that a publicly traded company could not allow the CEO to sit on the BoD? I’m not sure if this would actually do much good, but would it do harm? What are the reasons that a company would benefit more than it lost by having the CEO sit on the BoD? I can certainly see why a small or private company would want to be allowed to do that, but a large, public company? What does it gain?

Indeed - as a wise man once said:

To repeat what I have already said, and you have chosen to ignore/have failed to understand…

There’s a difference between “Employer X is placing Employee Y under duress” and “Employee Y is under duress to accept the conditions offered by Employer X.”

It is the latter that makes “free” market economics a fallacy.

So can I just say that a salary is unbalanced when it results in unbalanced wealth and kick it back to you?

Well, I am not sure what you mean with the phrase of, “when it (salary) results in unbalanced wealth.” What exactly do you mean by this phrase? I can conceive of a plethora of actions this phrase could plausibly include so please tell me what exactly this phrase means?