You know, the biggest mistake everyone here assumed was that the US is the only country in the world, hardly surprising.
But if all the top American entertainers left, the quality might diminish and people might start watching media from other countries. US culture might not be dominant any more, and as a result the industry might not recover. Look at the results of the writers strike, scripted shows were replaced by reality tv, and now reality shows dominate.
If the US has to shut down for a couple of weeks while it retools the rest of the world might go looking elsewhere for their fix.
You really love that word. Do you close your eyes at night and see nothing by strawmen? And odd that you chose page four of a ridiculous thread to bring in logic. We’re talking about several million people getting in a space ship.
None of the races I’ve participated in.
Even as a competitive swimmer there were differences between lanes, heats, time of day.
People love to cling to this mythical notion of a “level playing field.” If only we could tax people more we might get a more level playing field.
No, it’s pretty much just luck. The winner was simply lucky enough to have an event in his life that made him better that everyone else.
Man, I can’t help it if that’s all your debating style is.
To be fair, though, political debate is usually nothing but strawmen, because most of the time the two sides are reasonable, but the proponents of each just paint the other side in the most contemptible light possible.
See, here’s the fundamental break between your side and mine. You think the rich are ‘capturing value created by society’. I think the rich are generally creating value by hiring people within the society and putting them to uses that raise their level of productivity.
If you believe your story, then if those rich people leave, the value stays behind, to either be ‘captured’ by someone else or distributed to everyone below. If you believe my story, then if the rich leave, they take with them all the skills, initiative, and knowledge that they have, and the value that they would create with it in our society is lost.
Of course, the reality is somewhere in between, but then the question just shifts to whether you think my story makes up the preponderance of rich people or whether yours does.
But I think most of you seriously underestimate the value rich people represent. They mostly got rich for a reason. I know you like to focus on the very tiny sliver of very rich financial guys or the top level of CEOs. But when you get down to 250,000, you’re talking about the people who run the machinery of the economy. The guy who’s in charge of a nuclear power plant. The people who run the myriad medium-sized businesses in every city in the country. The entrepreneurs and venture capitalists who keep the innovation in Silicon Valley humming. The top engineering, scientific, and medical talent of the country.
You seem to think that the people I’m talking about make up such a small percentage of those making over $250,000 that even if they’re valuable, their aggregate value isn’t much because the large majority of such people could be replaced easily. I happen to think that the people making over $250,000 are by and large our most productive people, and it’s the exception that managed to land in a salary like that by happenstance, good fortune, connections, or inherited wealth. So if you lost all those people, the blow to the economy in terms of productivity loss would be closer to their aggregate annual incomes now than it would be to zero.
Look at a guy like Elon Musk. The guy started with nothing. He lived on a farm in Saskatchewan after emigrating from South Africa to avoid military service. He had no money, no connections. He got into school on a scholarship and worked his way through two B.Sc’s. Then he started a company from the ground up called Zip2, which he took from nothing to $360 million dollars in value in four years.
He sold off that company, and used the money to create PayPal. A lot of people thought PayPal was a joke that could never succeed (myself included, at first) but he turned it into a cornerstone of the internet economy, and in a few years it sold to eBay for 1.5 billion dollars.
Not done yet, he took his wealth and create Tesla Motors, another high-stakes gamble that a lot of people thought would fail. It didn’t. He helped prove out and refine electric car technology, and next year Tesla is bringing out a sedan that will be within range of the masses.
Not satisfied with having revolutionized internet finances and the electric car industry, he founded SpaceX, with a goal of opening up space for everyone. He went toe-to-toe with companies like Boeing, Lockheed-Martin, and NASA itself - and won. Within a few short years, SpaceX has managed to fly two brand new rockets for much cheaper than anyone else in the world, and next year they are going to fly Falcon Heavy, which can lift more mass into space than the Shuttle, and more than any other rocket since the Saturn 5. And he’ll do it for 1/6 the cost of NASA’s proposed heavy lifter.
You could argue that hitting it rich once is luck - being in the right place at the right time, or hitting on just the right idea. But when you do it four times in a row, in fields rife with the corpses of other businesses that tried and failed, it’s not luck. It’s vision, drive, knowledge, confidence, and whatever else it takes to create value at that level.
Elon Musk is very visible because he’s operating on a grand scale for all to see. But the business world is full of people like him. The guy in your city who managed to build a huge car dealership where others failed. The guy who outbid and out-competed other companies to build an engineering firm worth milions. The people inventing better mousetraps and processes that shave percentage points off of manufacturing costs and save companies millions or billions per year. The wizard engineering consultant who can go into a factory and spot inefficiencies that other engineers missed and reconfigure production so that products cost less or have higher quality.
Such people are everywhere. 3 million of them spread through the country. Sure, there are a handful of guys here and there who schmoozed their way into jobs they don’t deserve or happened to be in just the right place at the right time, but I believe they are a small minority of such people.
We have programmers in my company that do an ‘okay’ job. You can’t fire them because they’ve done nothing wrong, but they’re close to zero marginal productivity. You make sure they never work on stuff that’s on the critical path of a project, you have to spend a lot of time managing them, and when they turn in code it’s often the stuff that causes most of the bugs or is written so poorly that it’s hard to maintain and understand.
Then we have a couple of guys who are your ‘go-to’ people when you really need the job done. If your project is floundering or you’re behind schedule or another engineer gets in over his head and can’t solve a problem in a timely manner, you call in one of these guys and they’ll go away for the weekend and come in on Monday with a strategy and have it coded by Friday, and it’ll just work. Those guys eventually work their way up the ladder to engineering lead, then project lead, then perhaps architect or senior engineering manager or division head. Sometimes they hit a level and go no further, and other times they keep going until they’re running half the company and making a million bucks or more a year.
One thing I can guarantee you - the vast majority of the guys at those level are a hell of a lot more productive than the guys at the bottom, and as they move up and have more influence and control more resources, their productivity is magnified, justifying the higher salaries.
If you extracted all those people from every major company, those companies would take major hits to their productivity.
Bolding mine. Yes, if someone with the genes to be the next Wayne Gretzky were born today, he could find his to into the NHL. It’s possible…assuming his parents enroll him in the right summer camps, and he gets accepted to the right schools (and can actually afford to go to those schools), and he gets seen by the right people (assuming he’s not having an off-day during that game), and he doesn’t have any crippling injuries, and…oh yeah…he actually wants to be in the NHL.
It works the same for business as well. How many good ideas never got made because the geniuses who thought them up weren’t in the right place at the right time with the right people? I do believe that the people at the top are usually the best of the best. I also happen to believe that there are many, MANY people who *could *be at the top if it weren’t for a combination of life choices and unlucky circumstances beyond their control.
I’m curious, what factors distinguish the best of the best from everyone else? At what point has someone crossed the line from “amateur” to “expert?” Kelly Clarkson is a Grammy award-winning singer who only became famous because she decided to stand in line for a contest. What if she had decided to stay home that day and take care of her sick grandmother? Would she still have won a Grammy? Was she destined to win? Or is there a bit of luck in there?
And is there a specific moment in some episode of American Idle when she became a professional singer? Or did it happen when she first appeared on camera? Or during the last episode when she was announced as the winner? Or when she actually signed her contract? Or when she released her first album? See the point? Nothing changed between the time she was standing in line waiting to sing, and when she was on stage accepting her Grammy. The only difference is that at one point she was nobody, and at the other point she was famous. How many other nobodies just haven’t run into the right set of circumstances to become celebrities or CEO’s or presidents?
Really? You think so? What about a CEO who is very good at turning a company around, who steps in while the company is losing money hand over fist and puts it back into the black?
Ford took a serious dive in quality and profit when one of the Ford Family stepped in as CEO and tried to run the company. People were whispering that Ford was finished. Alan Mulally came in, and turned the company around. He scrapped entire product lines, re-focused the engineering teams, re-structured the company’s capital, and as a result Ford was only one of the ‘big three’ that didn’t have to take a bailout.
Alan Mulally does not come from old money. He got his degree in engineering from the University of Kansas, went on to get a Masters in Aeronautical and Aerospace engineering, and a Masters in management. He started working as a low-level engineer at Boeing, and worked his way up through the ranks of the engineering staff on sheer talent. He led the cockpit design team on the 757/767, which is still considered one of the great cockpits by pilots. He then went on to successfully manage other aircraft programs, then the entire engineering team, and eventually made his way all the way to president of Aircraft Operations at Boeing. He was so good at his job he was named person of the year by Aviation Week in 2001.
He left Boeing after being passed over for CEO, and joined Ford. At Ford he didn’t just ‘run things’ - he radically changed the company. He brought back the Taurus, and dramatically (and controversially) mortgaged all the company’s assets and raised 26 billion dollars in cash, just a year after taking over as CEO. Imagine the balls that must have taken. But he saw the writing on the wall, and built a war-chest for Ford that saved if from bankruptcy (and saved taxpayers billions of bailout dollars). He also sold off other divisions, successfully renegotiated cost-saving agreements with the UAW, and engaged in several risky but ultimately successful mega-engineering projects with other companies.
Mulally also sold off Jaguar (at a loss, since the previous CEO bought it for way too much money). He was criticized for that, but within a couple of years Jaguar’s value had plummeted (big luxury cars not being compatible with recessions and high oil prices), and now he looks like a genius for doing it.
So, is Mulally worth his $2 million per year salary? He also gets stock options, but those only have value if the company’s value increases, and when he took over Ford was bleeding money and being out-competed on all fronts. Do you think if he had been replaced by any other random person Ford would have fared as well?
Why don’t you pick another name at random from your CEO list, and see if that person looks like someone who’s just average and hit it lucky?
If you read about Wayne Gretzky, what you’ll find is that he lived hockey from a very young age. He father built a rink for him in his backyard, and Gretzky skated on it all the time from a very young age. He was also very driven - practicing drills and techniques while the other kids were just playing shinny on the road in haphazard fashion. So how much of his talent is innate and how much is just hard work is debatable - was it his innate talent and drive that caused him to work so hard? Or did the hard work create most of the talent? In the end, it doesn’t matter. For whatever reason, Gretzky rose to the absolute pinnacle of his sport, and there was nothing ‘lucky’ about it. And it’s obviously something that is not easy to replicate, since no one has ever come along since Gretzky retired who could reasonably said to have his level of talent. Even other great players of the time like Mark Messier were just in awe of his talent.
Bear in mind that Gretzky isn’t even built like a hockey player. He was small for hockey. He wouldn’t even have been drafted had he not shown amazing ability to score goals. He had a strike against him, physically.
And while I’m sure there are some players who could have made the NHL but didn’t due to an unlucky break here or there, like being sick the day the scouts came to town, that certainly isn’t the case for someone like Gretzky. He was so far above the pack that he had eyes on him while he was still in PeeWee hockey. He made his own way into the NHL, and he did it with such ability that there was never a question of ‘luck’ playing a factor, other than that he needed to stay healthy. But even that was largely in his control - he’s widely known as being the hardest player to hit in the history of hockey. He had eyes in the back of his head and always managed to swerve and avoid a hit.
‘The Right Idea’ is an overused concept. Most successful people don’t get there on the strength of a good idea - they get there on the strength of the execution of that idea. There’s nothing revolutionary about an iPad, other than the fact that it’s executed perfectly. Facebook doesn’t have anything that Myspace or any number of other social media projects had - facebook just did it better, and the people behind it made the right business decisions that got it exposure and built a community faster than the other guys.
Go to a venture capitalist with a ‘big idea’, and he won’t be interested. What venture capitalists care about is you. THEY know the value of the person, and they put their money on the line to back him or her.
There are a handful of people in Silicon Valley who have created numerous companies. And it’s not that they’re idea geniuses - they’ll be the first to tell you that there are always good ideas out there to be had. What they’re good at is recognizing market opportunity, then knowing how to assemble the right team of people and raise the right amount of capital to get it off the ground. Then they work their asses off.
That’s undoubtedly true, but the fact is they did make those life choices or didn’t have the circumstances to allow them to rise to their ability. That doesn’t make them interchangeable.
Well, you picked an example (winners of reality shows) that probably represent the luckiest group of people in an industry that probably has the luckiest group of rich people in it. And even then, Clarkson wouldn’t have won if she sang like a frog. She still had to have a lot of talent and years of training and practice to get to the point where she could even contemplate getting ‘lucky’.
You’re missing the point. Or maybe you’re avoiding it.
You claimed that CEO’s are worth the money that is paid to them. But that is not supported by the evidence. I pointed out a number of examples of corporation that are paying their executives less money and making higher profits.
Here are the possible conclusions:
Executive ability is unrelated to profits.
Executive ability is unrelated to how much the executive is paid.
The market is highly inefficient.
Regardless of which of these is true, the conclusions are the same. A corporation has a duty to its stockholders to produce the maximum of profits. Executive salary should be regarded as an expense and evaluated by the same standard as any other expense - does it justify the cost and can it be reduced without reducing profits. The evidence is clear - high executive salaries do not produce high profits. That being the case, high executive salaries are an unjustifiable expense.
CEO value is measured by more than current profits.
CEOs can take actions that cause a drop in short-term profits in exchange for long-term health of the company.
Some CEOs aren’t doing a good job, and will be replaced.
Total profits are a function of company size. The companies you listed as the most profitable are also the ones that are among the largest.
Some CEOS work in commodity markets where profit ratios are very small and which are highly competitive, while others work in industries like tech where gains and losses can be very large. That doesn’t change the skill level required to run the company well, or the value the CEO brings.
What does the list look like if you measure it by profit gain/loss, rather than absolute numbers?
What does your list look like if you control for companies that are restructuring?
What does your list look like if you control for length of term of the CEO?
What does your list look like if you look at only salary and not stock options?
Your ‘analysis’ is superficial and incomplete.
Also, the correlation between CEO and profit can be small while still justifying CEO pay: Let’s say the difference between a good CEO and a bad one is twice their salary, so a guy who makes 20 million per year brings 40 million per year in value to the company. For a large multinational, that’s just a blip in their overall profit/loss picture. It doesn’t change the fact that the company paid out $20 million and got $40 million in value.
Also, sometimes you pay for a CEO who has a track record for not making stupid decisions that can sink a company. For CEOS in old companies in established markets, sometimes the value is in maintaining market share and not doing anything dumb.
A corporation does not answer to the stockholders. The American execs who can not keep up with Japanese , Chinese and Indian counterparts are making multiples of their salaries. They are not paid for what they accomplish. If they were we would have broomed hundreds of them in the Financial Crisis. They just kept on rolling along, collecting huge salaries and bonuses. American execs are not being paid for their successes or their ability. They get big bucks anyway, since they control the system that rewards them. The system is broken.
Many of them are also crooked as the NY Atty. General says.
In general, there is always room for excellence. If a new Wayne Gretzky were born today, he could find his way into the NHL,.[/QUOTE]
Not if he were born in Borneo or some other place that does not follow hockey. It takes a lot more than talent.
Our execs are way overpaid. They are way over esteemed.
Many of he guys who were involved in creating the internet, wanted it to remain open source. Were they stupid because they did not get rich off it?
Tesla .one of the smartest guys ever, did not patent much of his stuff. He wound up broke.
Sometimes I think that certain people believe the very wealthy aka “The Job Creators” (when they are not sending them to China and Mexico) just stand in an open field, face toward Wall St, lift their arms to heaven and goods and services just materialize out of thin air, brought forth by their own magnificence. Where would the wealthy be with out the massive numbers of low wage labor working for them? They can do absolutely nothing without people working for orders of magnitude lower wages than they earn actually doing the work.
Unless you want to count McDonald’s counter people and pizza delivery drivers, most of the people who work for wealthy people hardly qualify as low-wage laborers. Most of the people who work for Microsoft and Apple make pretty good dough, as do those who work for energy companies and airlines and cable companies, etc. Even public utility workers make a very decent living and all of these people have benefits which are quite costly for their employers.
But all of that aside, any number of those low-wage laborers who do exist are perfectly free to set about becoming wealthy themselves. But they don’t have what it takes. They lack the drive, the savvy, the willingness to face risk, and the belief in themselves to cope with the vagaries of the marketplace, the competition, and staying abreast or ahead of changes in technology and the marketplace that are almost always required in order to become wealthy.
So those who can, do…and they become wealthy. Those who can’t, don’t…and so they sell their time and labor to those who can.
It’s a win-win situation for all involved. Those who have what it takes get ahead and build large companies and become wealthy, and those who can’t or don’t want to fight the battles involved in making it on their own, get to do the 9-to-5 thing and then leave it all behind when they leave to go home at night.
Nothing is unfair and no one is being taken advantage of. The people who take the risks and do the hard lifting quite logically reap the greatest benefits, and the people who take the easier way out get to go home at night, turn on the TV, pop open a beer can, and forget about work until the next morning. And that’s the way it should be. The only way to create the kind of “fairness” you seem to be in favor of is for government to create it artificially, and as history has shown time and again, this not only results in less for everybody, but it eventually collapses under the weight of its own unrealistic expectations. The capitalist system is the only one that provides the greatest number of people with the highest standard of living, while at the same time providing people at the lower rungs of the income ladder with the abilty to get ahead in the future…which is what almost everyone does unless they simply don’t try.
As always some people actually think the rich work harder than the poor. That is blazingly wrong. The poor work much harder to survive. When the economy was better, They worked 2 or 3 jobs just to provide. Now they are living on the edge of bankruptcy as the owners sit on their cash.
Wages have been dropping for those at the bottom and middle for a long time while profits have soared. The rich exploit. They do not act for the betterment of society.