# Will the disparity of weath distribution destroy America? **URL:** \ **Category:** Great Debates\ **Created:** [April 12, 2011, 9:28am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068 "2011-04-12T09:28:22Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 12, 2011, 7:35pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/41 "2011-04-12T19:35:39Z")
> [@Euphonious\_Polemic](#): > > How about the third half that says “tax the rich at a more reasonable level, such as was the case in the recent past, then use that money to give the poor access to education, healthcare and supports that will let them leverage their talents to get into the middle class.” A hand up rather than a handout? If there is a third of the population that says that I have yet to see them. My perception is that “reasonable” doesn’t factor into US politics. Or at the very least, that 1/3 _half_ is split between two parties that really only care about abortion and gun control. Obama tried raising taxes (just slightly) on people making over $250,000 which to me was very reasonable. I don’t remember the “third half” being happy with that. It seems everyone was pissed. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [April 12, 2011, 7:36pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/42 "2011-04-12T19:36:51Z")
> [@Voyager](#): > > As for the harm it does, it seems clear that CEO entitlement means that they make money if they screw up and make money if they don’t screw up. Don’t you think enforcing responsibility would make for more effective corporations and a better economy? You also get short term thinking in that to make your numbers this quarter you might do things that are overly risky in the long term - like buy high yield mortgages that assume the housing market will never go down, for instance. > Someone getting a load of money by creating wealth is good. Someone getting a load of money despite destroying wealth is not so good, and that is what we have now in a lot of cases. The nasty way of doing this would be modifying the limited liability for corporate stock ownership, since so much of CEO compensation is in stock options and outright grants anymore. The problem is doing so without further shutting small investors out of the market. Off the cuff, as a first draft, how about: If you have an unproxied share or are another share’s proxy in a company (that is, proxies and large shareholders hold this responsibility and not individual small shareholders), you are liable for any debts/costs that company owes when it tanks, proportional to your share ownership. So for example, you have a company with five stockholders Bigshot CEO Adam holds 35% of the stock of Zebra Inc. and has the proxies of Charlie, Dan, and Elvira. Mutual Fund Owner Betty holds 50% of the stock of Zebra Inc. Charlie, Dan, and Elvira each hold 5% of the stock of Zebra Inc, but are not interested in board of directors stuff so they and Adam have severally mutually agreed that Adam will vote their shares at board meetings. Zebra Inc dies a fiery death in the Hoofed Mammal Bubble of 2015, and ends up underwater to the tune of 50 million after all the assets get liquidated. Adam and Betty are each liable for paying back Zebra’s creditors 25 million. Take that, and fold the “capital gains tax” back into ordinary income tax brackets, and you might start to break the feedback loop of increasing CEO pay -\> increasing stock ownership -\> increasing authority over CEO pay. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [April 12, 2011, 7:51pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/43 "2011-04-12T19:51:04Z")
> [@emacknight](#): > > Secondly, if the CEO’s salary is breaking the company, or if the CEO is not providing enough value, the share holders will, can, and do vote him out. And here’s where you lose my point, I think. I do a lot of investing, but I do it through mutual funds–I have neither the time nor the energy to learn both my own trade (and improvements thereof) AND play the market better than a professional. As a result, although I am technically a shareholder of a great many companies, it is only by proxy–and the guy voting my shares is yet another of the “rich” class. It is my contention, and I’d love a cite otherwise, that the majority of votes cast in board elections are cast (due to the combination of mutual funds and the proxy system) by people who are already in the multimillionaire club and who benefit by allowing the rate of CEO pay to rise relative to the rate of low- and mid-echelon worker pay. CEO pay doesn’t have to strangle a company to be unfairly high, after all–that’s shooting their own foot, and no one is saying they are stupid. What I AM saying is that the predominant way the publicly traded companies elect their boards today is skewed to over-represent the votes of people who benefit from raising CEO salaries relative to everything else in general. > [@](#): > > He’s (or he was) responsible for a $65.23 billion company employing almost 50,000 people. What do YOU think is fair compensation? My argument is not, in fact, dependent on the absolute rate of pay he makes, and I have made no claims as to the specific degree of fairness of any CEO’s salary, merely on the fact that the current system allows and encourages a positive feedback loop to exist. > [@](#): > > You know who else votes themselves pay raises–unions. Unions do not have even the slightest authority over their own pay in every private-sector jurisdiction of which I am aware. The management ALWAYS has the right to “fire” the entire union at contract expiration. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 12, 2011, 8:28pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/44 "2011-04-12T20:28:56Z")
> [@Zeriel](#): > > The nasty way of doing this would be modifying the limited liability for corporate stock ownership, since so much of CEO compensation is in stock options and outright grants anymore. The problem is doing so without further shutting small investors out of the market. > > Off the cuff, as a first draft, how about: If you have an unproxied share or are another share’s proxy in a company (that is, proxies and large shareholders hold this responsibility and not individual small shareholders), you are liable for any debts/costs that company owes when it tanks, proportional to your share ownership. Interesting idea, but in a lot of cases CEOs screw the company without a significant amount of stock. The solution I’ve read about is to have a lot of compensation long term, more or less in escrow. If you get a bundle for gains this year, but those short term strategies crater the stock in two years, the money is yanked back. The underlying problem is that when you have specific metrics that determine bonuses, people act to maximize the metric, not what the metric was supposed to measure. If you get compensated based on stock price June 5, you sure as hell don’t announce bad news until June 6. The Times reported that law schools report on the percentage of graduates employed as measured during one month - so they hire unemployed graduates as temps during that month. I worked on one project where one of the goals was the number of transistors laid out. Management had people laying out those transistors - though the high level descriptions of the circuits they were implementing weren’t debugged yet. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 12, 2011, 8:38pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/45 "2011-04-12T20:38:17Z")
> [@emacknight](#): > > He’s (or he was) responsible for a $65.23 billion company employing almost 50,000 people. What do YOU think is fair compensation? Out of curiosity, what do you think is fair compensation for someone who is responsible for a $3.5 trillion budget with about 2 million employees? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 12, 2011, 8:40pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/46 "2011-04-12T20:40:57Z")
A hell of a lot more than the President actually makes. But then again, I’d raise the salaries of the folks in the Congress and Senate too…substantially. I’d then hold them to much higher standards. I think part of the problem is that we pay them so little, and so they find, er, creative ways to buff up their pay. -XT ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 12, 2011, 8:43pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/47 "2011-04-12T20:43:04Z")
Maybe we could start a stock option plan for politicians. You know, have them financially invested in how the country is doing. Nope, don’t see how that plan could go wrong. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 12, 2011, 8:53pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/48 "2011-04-12T20:53:55Z")
Make their salaries and benefits dependent on how well they stick to the budget and how well the US GDP is doing? I’m all for it. 😛 -XT ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [April 12, 2011, 9:13pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/49 "2011-04-12T21:13:16Z")
> [@xtisme](#): > > Actually, Bo, I misunderheard what he was saying there. I thought his number 2. said When a business does poorly, the business needs to pay the CEO LESS so he will do a better job. I totally misread it, and still hadn’t seen it until you pointed this out. Thank you Bo…appreciate that old boy. You’re welcome. Please knock off the condescending nicknames (i.e. please don’t call me: dude, old boy, pal, buddy, etc.). I’m not your friend, not your pal, not even your acquaintance; I’m a poster on this message board is all. > [@xtisme](#): > > I don’t have any issues with collective bargaining for labor. I have some issues with how some unions work in practice, but none what so ever with people collectively negotiating for their labor to get a better price. I see. Thanks for the clarification. > [@xtisme](#): > > And what’s your solution to this? If I had a solution, I’d be doing something to help it along. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 12, 2011, 9:16pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/50 "2011-04-12T21:16:31Z")
[QUOTE=Snowboarder Bo] You’re welcome. Please knock off the condescending nicknames (i.e. please don’t call me: dude, old boy, pal, buddy, etc.). I’m not your friend, not your pal, not even your acquaintance; I’m a poster on this message board is all. [/QUOTE] It wasn’t meant to be more than marginally friendly, or folksy, or whatever else you were thinking…it’s meant to be short hand so I don’t have to type in your whole name on my iPad. I can call you SB if you like, or I could call you some other names if that will help with whatever problem you have. -XT ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [April 12, 2011, 10:31pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/51 "2011-04-12T22:31:52Z")
> [@xtisme](#): > > Make their salaries and benefits dependent on how well they stick to the budget and how well the US GDP is doing? I’m all for it. 😛 > > -XT Yeah, not seeing the downsides of this plan at all, seriously. Except you’d need some kind of exemption to control external forces, or no one would ever want to be a war congressman even in something like World War II when it was clearly morally necessary. ---
**Author:** ![Carmady](https://avatars.discourse-cdn.com/v4/letter/c/f04885/32.png) [@Carmady](https://boards.straightdope.com/u/Carmady)\ **Post date:** [April 12, 2011, 10:51pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/52 "2011-04-12T22:51:46Z")
It isn’t the disparity itself that will destroy America, it is that the standard of living is finally going to lower significantly for the vast majority of people, and continue to get lower each generation. As long as it stayed above a certain point, nobody cared much about disparity. Education is a fraud. Most people would gladly trade an advanced degree in engineering, math, physics, statistics, or finance, for a relative or family friend with the connections to actually get them a job. Your are going to learn the important skills on the job anyway. The well-educated are finding they aren’t qualified for a lot of jobs (other than academia), because the only place to learn the skills is on the job, and the only ones getting the jobs are those with pre-existing connections or those in other countries. Only the top schools aren’t frauds, because of the connections they give you. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 12, 2011, 11:12pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/53 "2011-04-12T23:12:11Z")
> [@Carmady](#): > > It isn’t the disparity itself that will destroy America, it is that the standard of living is finally going to lower significantly for the vast majority of people, and continue to get lower each generation. As long as it stayed above a certain point, nobody cared much about disparity. > > Education is a fraud. Most people would gladly trade an advanced degree in engineering, math, physics, statistics, or finance, for a relative or family friend with the connections to actually get them a job. Your are going to learn the important skills on the job anyway. The well-educated are finding they aren’t qualified for a lot of jobs (other than academia), because the only place to learn the skills is on the job, and the only ones getting the jobs are those with pre-existing connections or those in other countries. Only the top schools aren’t frauds, because of the connections they give you. I got good news for you. I just hired two brand new engineering PhDs, and my HR department says that the competition for new PhDs in Silicon Valley is fierce. All is not lost. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 13, 2011, 12:31am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/54 "2011-04-13T00:31:07Z")
[http://www.alternet.org/newsandviews/article/557224/the\_rich\_getting\_richer%3A\_ceo\_salaries\_are\_soaring\_again/#paragraph4](http://www.alternet.org/newsandviews/article/557224/the_rich_getting_richer%3A_ceo_salaries_are_soaring_again/#paragraph4) It is not getting better. The disparity is growing every year. These huge pay rates don’t even mention the multi million dollar retirements the big shots get. The corporation is their piggy bank. ---
**Author:** ![Stoneburg](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@Stoneburg](https://boards.straightdope.com/u/Stoneburg)\ **Post date:** [April 13, 2011, 1:31am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/55 "2011-04-13T01:31:18Z")
> [@xtisme](#): > > Make their salaries and benefits dependent on how well they stick to the budget and how well the US GDP is doing? I’m all for it. 😛 > > -XT Budget I understand, but why GDP? ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [April 13, 2011, 1:31am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/56 "2011-04-13T01:31:52Z")
> [@emacknight](#): > > I’m growing tired of the misapplication of anger towards the perceived compensation of industry leaders. > > You know who else votes themselves pay raises–unions. Incorrect at the most basic level. You obviously have absolutely no understanding of how unions work or what constitutes a negotiated contract. This assertion is false. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [April 13, 2011, 1:33am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/57 "2011-04-13T01:33:30Z")
> [@xtisme](#): > > It wasn’t meant to be more than marginally friendly, or folksy, or whatever else you were thinking…it’s meant to be short hand so I don’t have to type in your whole name on my iPad. I can call you SB if you like, or I could call you some other names if that will help with whatever problem you have. > > -XT SB is fine, as is my two-letter name, Bo. Your excuse rings false, since what you typed is far longer than two characters. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 13, 2011, 2:01am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/58 "2011-04-13T02:01:47Z")
Yeah, 'cause there is abundant evidence that I never use shorthand for any other poster on this board… Oh, wait! In fact I do it all the time! 😛 -XT ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [April 13, 2011, 2:41am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/59 "2011-04-13T02:41:07Z")
> [@xtisme](#): > > Yeah, 'cause there is abundant evidence that I never use shorthand for any other poster on this board… > > Oh, wait! In fact I do it all the time! 😛 > > -XT Shorthand would be shorter than the original name. That’s why it’s called “short” hand and not “longer” hand. Is this related to your misuse of the terms “needed” and “de facto”? I don’t really care what you call other people on this board. They can accept or decline your use of patronizing nicknames for themselves. Thanks for indicating you’ll respect my request. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 13, 2011, 2:43am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/60 "2011-04-13T02:43:00Z")
> [@Carmady](#): > > Education is a fraud. Most people would gladly trade an advanced degree in engineering, math, physics, statistics, or finance, for a relative or family friend with the connections to actually get them a job. Your are going to learn the important skills on the job anyway. Why do people keep saying things like this? You aren’t going to learn multi-variable partial differential calculus “on the job.” Do you really want a surgeon that’s picking it up as he goes? [Previous page](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068.md?page=2) [Next page](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068.md?page=4)