But here’s the thing: How is the government supposed to change the pay scale of CEOs? Do we legislate it? I mean, most of these CEOs work for publicly traded companies. Maybe the Occupiers need to do some of what we used to call “consciousness raising” among the stockholding classes (which is a lot of Americans), but other than that, what’s your proposal?
My husband proposes we adopt the German method of having 1/3 of board elected by labor, 1/3 by management, and 1/3 by stockholders.
The US method, where the board itself votes on its own pay structure, is completely ripe for abuse. It’s become a game of “I scratch your back, you scratch mine.”
Well, that will never work! Our nations top executives are men of brilliance, talent, and experience. To remain competitive, America must lavish money on these men, otherwise they might not grant us the boon of their leadership. In the recent debacle, America was the alpha lemming, the others might not even have known where the cliff was, never mind having the good sense to leap off, if it had not been for American business leadership and know-how!
You think its easy to utterly wreck a global economy? No! And again, no! It takes men of very special talent and ability, the keen edges of their mind honed and sharpened, to screw the global pooch. If we cannot offer them the compensation they demand, they might very well veer off into new careers, as baristas and bicycle messengers.
And then where would we be? Who would replace them? Where would the next New Coke come from? Who could have the talent and experience to dream up exciting new investment opportunities, that combine the profit of risk with rock-solid, triple-A rated security? Can we possibly expect to nurture a new generation of Corzines and Thunes if they are doomed to a few paltry millions for their vast expertise? Not hardly, they will abandon us, and go work in Albania.
Only men with courage and vision can fuck up on such a colossal scale! Where would we be without them?
Well, while i might have focused on the super-rich in my previous post, because this thread is about the 1%, i have no problem with some tax increases for those who earn good money but are not in the super-rich class. I’m happy to increase the tax burden somewhat on just the plain old rich and the really well off.
You can call them the “upper middle class” if you want to try and make it seem like someone on $300,000 a year somehow shares the same struggles and financial concerns as someone on $50,000, but it’s a disingenuous term. Referring to everyone but the “super-rich” as middle class or upper middle class is a rhetorical strategy designed to deflect attention from the fact that, if you are in the top 5 or 10 percent of Americans, you are rich by just about any reasonable definition of the term. If the upper middle class encompasses everyone except the super-rich, the term “middle class” has lost all meaning.
You are, of course, welcome to oppose tax increases on the wealthy people i’m talking about here. There may even be some reasonable argument to made for such a position. But those people are not “middle class” by any reasonable economic definition of the word. Some of them may feel middle class in that general, cultural, we’re-all-sort-of-the-same bland consumerism that Americans love so much, but in terms of sheer financial wherewithall, they’re not middle class.
This sounds like some sort of bot-created series of slogans. Socialism, utopianism, opportunity, too much of a good thing. Could you be any more cliched?
Increasing opportunity? You’re hilarious.
Pop quiz for you: How much has real income (i.e., what their wages will actually buy) grown for middle income earners since the 1970s? Is it easier for a median-income family to buy a house now than it was 40 years ago? What was the gap between CEO pay and average worker pay in 1970, and what is that gap now? By what percentage has a college degree increased in cost over and above regular inflation in the same time period? What percentage of Americans are living under the federal government’s (absurdly calculated) poverty line, and how has this changed over time?
If you even have any general sense of te answers to those question (you don’t even need the exact numbers; just a ballpark), you’ll know that claiming a growth of opportunity is problematic at best, ad ridiculous and mendacious at worst.
More meaningless cliches.
What do you mean by “wasted”? What constitutes waste in your book? Because that is a necessary first step in evaluating your “analysis” (i’m being generous using the word). Is money “wasted” when it’s spent on infrastructure like failing highways and bridges? Is it “wasted” when it’s spent ensuring that poor families are able to feed their kids? Is it “wasted” on things like Pell grants? Is it “wasted” on National Parks or the Library of Congress? Is it “wasted” on maintaining a defense force?
Also, i’m wondering what sort of concessions you expect from the other side, in an era that has seen taxes cut (and cut more for the wealthiest Americans) and spending and services slashed for people who need them most.
I’m not arguing that there is no waste in government, or that we shouldn’t try to reduce government spending in areas where that can be done. I’m a supporter of government working efficiently, and i believe that certain laws and regulations can be simplified and streamlined in ways that will reduce overhead without compromising public health and safety, the environment, etc.
But grade-A assholes taunting people by saying things like “I wouldn’t really even have to adjust my lifestyle if you increased my taxes, but you’d waste it anyway” isn’t an intelligent place to start the discussion.
More slogans. “We need to expand opportunities.” Wow, what a creative thinker you are. Next you’ll be telling us we need to think outside the box and break out of the paradigm.
We also need to work smarter, not faster. 
That’s why I said it’s going to take CEOs to give a shit, or as you say stockholders (but see previous threads, where I argue that one of the nasty effects of the concentration of wealth is that the people voting stock and sitting on the boards that decide C-level pay ARE those same C-level people).
I’ll agree that a government mandate for CEO pay relative to average or lowest employee pay is not a great idea, since there will ALWAYS be a loophole in the definition of “CEO Pay” similar to how many are paid in options rather than salary to take advantage of lower cap gains taxes now.
The stupidest part is that it seems to me that the course of action I suggest should be self-evident to someone who has the brains and ability to be a CEO–hell, all I’m doing is paraphrasing Henry Ford: “Pay the employees enough so that they can afford to buy the product.” It seems to me that too much of corporate America is focused on the 5-year return and not the 20-year, whereas every single investment decision and most of the career decisions I make plan on a 30-year timeline.
Hell, I’m probably upper-middle-class rather than rich (I’m certainly between the two numbers you mentioned), and I’d be happy with tax increases on ME.
This, pretty much exactly.
I already handed him the numbers; let’s see what he does with them.
Especially when “the other side” HAS offered cuts in spending, significantly, and yet the “no tax increases ever!” line continues to be held.
Hell, in some cases, the “no cuts, either! No taxes and no cuts!” line is being held–dad’s American Legion magazine this month (holiday reading :D) was pretty adamant that the *military *budget needs, if anything to grow.
I think legislating pay caps for CEOS of publically traded companies is a good idea. I think pay above a certain amount is simply abusive to shareholders and proof that the company is not being run for their benefit.
I think the structure of a publically traded corporation requires pay caps.
Can you elaborate on how you’d determine an appropriate cap? Would it be absolute, or relative to the company itself? The industry? Some external reference, like GDP?
How are you planning on evaluating total CEO compensation so as to close loopholes such as “options in place of salary”?
I think you make it a function of the average full time employees wage, plus a maximum stock grant.
Well, you would have salary and bonus with a cap, then there would be a maximum stock grant cap as well.
You could do it a lot of different ways.
I already see a potential loophole (if you want to call it that) by hiring contractors and part-timers or outsourcees for the mundanities of running a company. Depending on how you organize the cap function, you could see a setup whereby I organize a corporation with no full-time employees called Zeriel Holdings Inc., and then have it merely hold a big portion of the stock in Zeriel Mining, Zeriel Aerospace, and Zeriel Automotive, all of which pay gigantic dividends that are booked as investment profit to the holding firm, the board and C-levels of which offer “suggestions” to the subsidiaries.
Is there a way of practically stopping this in the vargaries of financial law? I’m not aware of anything specifically that would make it possible to legally distinguish this sort of thing from, say, a mutual fund.
I’m worried about finding a loophole-free way, that’s the problem.
You never fail to surprise me. You are a mystery, wrapped in riddle, inside of an asshole.
I should say, maybe I have one full-time executive assistant who gets paid $30,000,000 per year, just so the company has an average salary.
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If you instead meant industry-wide or nation-wide average salary, I gotta admit I do see a need for profitable companies who pay their employees well to reward CEOs who reach that level of success. I WANT to see companies get to the point where they have to pay the janitor $75,000+ in order to give the CEO another raise.
Perhaps you’d want to tie part of the function to dividends, as well–shareholder value is a valid metric for assessing the value of a CEO in conjunction with average wages within the company.
Let’s suppose we did this. How would things be different? Would the economy be improved? Would employment go up? Work worker wages change (either up or down)?
I’m not criticizing your idea, I just want to know more as to why you are proposing it.
I’ve got an idea that needs details, but it’s an idea all the same.
I’d really like to get rid of the revolving door. This destroys incentives to regulate properly even when we have decent laws on the books. Companies, broadly defined, hire so-called “top talent” partly to figure out inventive schemes to evade regulation. We can kill both of these birds with one stone.
We need to be able to attract “top talent” to work for regulatory bodies. The only way to do this is to make the incentives of working as a regulator comparable with managing a hedge fund. So somehow we pass on the cost of regulation directly to companies in proportion to how much they pay executives. If a hedge fund wants a management team worth a few hundred million, then the company itself needs to pay some share of a regulation team worth a few hundred million. This hedge fund wouldn’t have to pay the entire regulation bill; it could be binned with other top-flight firms who would collectively pay for enough people to keep them honest. The cash would keep smart people working for the government because they would not be able to do any better in the private sector. Businesses that compromise on executive pay (and ability to evade regulation) would save on funding the costs of regulation. We’d eventually reach a nice equilibrium distribution of talent between government and the private sector, and it would have the net effect of reducing executive pay without having to tamper with the details of compensation.
Obviously we’d need to set the levels right, but this is true for any rule as it is.
I think that we have way too many CEO’s in hight turnover situations running companies for short periods of time, and then leaving with 100s of millions of dollars in shareholder dollars.
I think if companies were run more along the line of Deutsche Bank where the CEO I believe makes about 200k and runs the company for the long term, that things are better.
Simply put big compensation and high turnover in the executive suite equals shareholders getting fleeced.
That sounds accurate.
You make good points. Frankly, this is outside my area of expertise. I just know that for some reason they don’t seem to have this problem in Germany. I think our executive suite here in the US is getting compensated too much and it needs to be fixed.
Im open to suggestions, but I admit my ideas for reform are at best, half-baked.
I honestly think it’s partly cultural and partly political.
The cultural stuff, well, that’s just one of those things–even in the US you see CEOs who are in it for their own bankroll, and CEOs who are in it to improve their companies and the employees thereof as much as their own net worth. No idea where even to start there.
Politically? I think the systems we have in place in the US essentially force a two-party system (as third-parties generally function as spoilers for their closest ally major party), which means that change in the representation is slow and prone to lesser-of-two-evils judgements. Anyone who wants to make an impact by applying money has at most two people per legislative district they need to get friendly with.
Using your example of Germany, it has mixed-member proportional districts like many parliamentary countries. As a result it has eleven serious political parties (defined as “having seats on either a federal or state level”), which dilutes the power of lobbying substantially even before you look at cultural or legal differences. Not to mention the fact that you have a field of at least six and as many as eleven parties who are strong enough that you can generally vote for someone substantially different.
Can you quantify the high turnover rate problem?