No, what you did was to skip over those points, happily nodding your head until you saw the word union. Then I presume your eyes glossed over and you went into autopilot.
So the conclusion is: absurd statements about CEOs is okay, absurd statements about unions is a cause for war.
Most of my experience has been with Canadian unions both public and private, with the exception of Steel Works of America while working in Canada as a lifeguard, not sure how that goes together but hey it got their membership numbers up.
So of all the unions in America, you think none of them have enough corruption to end up with an overpaid president? Not one?
I notice that you included “president to set his own salary” which isn’t what we were talking about before.
Feel free to put the goal posts down so I at least know which direction to kick.
Why? Was that not the message I was suppose to receive? Did you know US CEOs are the highest paid in the world?! Did you know they happily run their companies into the ground so they can get huge bailouts and compensation packages?! Did you know you can make any statement at all about CEOs no matter how general or absurd and Snowboarder Bo won’t bat an eyelash.
For private or public companies?
In the case of private, in the subcase where CEO is owner, the CEO sets his own compensation because that’s what he does. The negative feed back you are looking for is that if profits fall so does his salary.
In the case of private where CEO is an employee, the owners are free to compensate him how ever they damn well please. It’s their money and their company. The negative feed back is the same though, if profits fall so does the guy in charge. Owners want profits, and hire a CEO to get them.
In the case of publicly held companies, the CEO’s compensation is there for everyone to see. Share holders can vote as needed, attend share holders meetings, and voice their opinions. If you own stock in a company you want the stock to go up, and you hire a CEO to achieve that goal. If the stock price falls, so does the CEO. If the stock price goes up, so does the CEO’s compensation. There’s your feed back.
CNBC did a special once on a [hedge] fund that created an interesting methodology. They would identify a company with shitty leadership, but otherwise strong earning potential. First they’d buy as many shares as they could to get them a voice. Then they’d start working with other share holders to eventually push the top execs out. If everything went according to plan, the new CEO would clean shit up and getting the company profitable again. Meaning the stock price went up.
Since you asked: clean shit up. Put in a proper UHC and 90% (heh) of your problems are solved.
Notice how slightly higher unemployment in the US caused people to freak out. It shouldn’t have been a big deal, unemployment should be temporary. It sucks for 3 to 6 months, then people get back on their feet.
But what is it so fucked in the US? Health care. You can save all the money you want, but you can’t “save medical care.” Even the most responsible American that has a year’s worth of living expenses saved and moves in with his mom is completely and totally fucked when he loses his health coverage.
That is what creates desperation in the American workforce. That is what drives down wages. Do a poll and see how many people take a job “for the medical benefits.” They’ll take any job, for any rate, so that they get medical benefits for their families.
Often times (from personal observation) one family member is earning a decent middle class income, but the other family member takes a shitty low paying job so they get benefits.
You are necessarily going to get a race to the bottom as the value of medical benefits keeps getting higher. I watch this time and time again. I have so many friends that make great money self-employed (typically in software related fields and consulting), and they all have spouses that work to make sure they have benefits for their families.
From 1921 to 2001 we have had Democrat presidents for forty years, and Republican presidents for forty years. A lot of factors effect the economy. Nevertheless, the president sets the tone. The following website provides data collected by the Department of Commerce about changes in the per capita gross domestic product (GDP) adjusted to 1996 dollars.
If you do the math, you will see that from 1921 to 2001 there was over twice as much economic growth under Democrat Presidents. There was more economic growth during Franklin Roosevelt’s first two terms than during the terms of Warren Harding and Calvin Coolidge.
During the 1920s, the 1980s, and the administration of George W. Bush the U.S. government cut taxes for the rich. When Democrats are in the White House the government pursues policies that benefit those who are not rich. When those who are not rich have more money, they buy more, encouraging employers to hire more. When those who are rich have more money, they do not hire if people are not buying.
Cutting taxes for the rich, and expecting the unemployment rate to decline, is like pushing on a string.
Absolutely. I don’t think in a modern economy there’s anything you can do to attempt to control a private business owner, since he’s also taking on the risk personally I wouldn’t even want to.
Same deal. Owner provides capital, has all risk, makes decisions.
I think we’re arguing two different things here. My point is that as more stock is held by people who have a vested interest in CEO compensation going up (which is admittedly arguable, but the plain fact is that the “rich” currently have a lot more money to invest), there will be a tendency for those rich stockholders to vote in such a way that a relatively larger percentage of profit goes to themselves, rather than to dividends or lower-ranked employee compensation, to the extent this can be done while still serving shareholder interests. None of this implies evil, or running companies into the ground, merely that there’s no check on the feedback loop. Certainly CEOs should have their pay tied to stock price, that’s just decent business sense. I’m also not arguing this is a new phenomenon or a particularly rapid-acting one–we’ve seen a slow upward creep in Gini for decades now, and I would not be surprised to find this feedback loop to be a factor in it–we (as in, the public) are just noticing it now due to a combination of the recession and a perceived acceleration in the rate of change.
Incidentally, I treat publicly traded corporations differently from privately owned businesses because of the way publicly held companies distribute and limit risk (that is, they don’t distribute 100% of the risk because investor risk is limited to initial investment cost, and doesn’t include legal liability or potential debts incurred by the company in excess of assets).
Put another way: sole proprietor Adam invests 5mil in his company, and borrows 5mil on the strength of his business plan. Business folds badly, he liquidates for 2.5mil–and he’s on the hook for the other 2.5m he borrowed, in addition to losing his investment.
Meanwhile, Investors Bill, Clara, Duane, and Erin each put up 1.25m in stock to found a publicly traded corporation, elect a board, and then they borrow 5mil on the strength of their business plan. Business folds badly, is liquidated for 2.5m…and none of B, C, D, or E are on the hook for more than the 1.25m they each invested, even if Bill happens to have been made CEO by the board. 5mil in risk from the loan just plain disappears.
I mean correct me if I’m wrong, but that’s the whole point of corporate limited liability, right?
Sound strategy, no doubt. Wish I had a minuscule fraction of the money to execute it myself.
Hell, I couldn’t even pull what my dad did in today’s economy (namely, save 25% of his net Navy paycheck for eight years and have enough to buy a small general store with cash)–heck, I make more than he and mom put together do after 30 years of successful business operation, and if I saved 25% of my gross pay for 10 years I’d have about 1/3-1/2 of what I’d need to buy him out.
Really, that’s what burns me most, and why I’m looking for economic reasons for the way things currently are. I can compare my experience to my dad’s, and even though he was from a poor lower-class home with an alcoholic father and he went straight to enlisted military out of high school, his position after ten years out of high school was noticeably better on a purchasing power parity measure than mine is having a degree from a top-ten school and a job paying almost double the US average salary. Something major has changed from the 1970s to today, and that something has made it worse for middle-class me and everyone below me on the ladder (and quite a few above me, I’d imagine).
It’s like you know my parents. They both are working for their business, but their health coverage is absolutely ludicrously bad (like, $2500 deductible bad) and they’re still paying more than my employer-provided group rate plan’s absolute cost by almost double.
(regarding tying Congressional pay to budget and GDP performance)
Because if Congress’ pay was tied solely to budget, they would be incentivized to always slash expenditures without regard for the effect on the economy. Certain government expenditures are an investment – education and infrastructure, for instance – and cutting them too much can hurt the economy in the long term. Private enterprise isn’t worth as much if the roads look like something out of “Mad Max” or you can’t get a decent work-force. But a particular member of Congress may not care if the incentives reward cutting or balancing the budget alone and if they think they’ll be out of service by the time the economic effects arise.
Conversely, if Congress’ pay was tied solely to GDP, they would err on the side of more government spending to stimulate the economy without regard for the effect on the budget. Again, if you’re going to be out of Congress by the time the budget effects come home to roost, but you already collected your improved pay because GDP was up during your term, you may not care.
Tying Congressional pay to budget performance and GDP would incentivize members of Congress to balance those two effects as best as they can.
Or to put it humorously: Congressional pay tied to the budget alone would be the Tea Party run amok. Congressional pay tied to GDP alone would be Keynesianism run amok. Running amok is generally not a good thing.
Tying congressional pay to things like the budget is a colossally bad idea because it would be a massive disincentive for anyone who isn’t independently wealthy to make a choice to serve in public office.
In scenario one, in which a member of Congress would stand to lose out on substantial amounts of pay if the budget isn’t balanced and the country isn’t getting wealthier, a person who isn’t independently wealthy would have to be severely deluded to think that as a single member of Congress they would have sufficient power to make decisions that would substantially effect the budget and economy so as to insure that they have enough money to maintain two residences (one in their home district, one in DC) and support their family.
(This is even setting aside the very contentious notion that government has enough say in the economy to be able to insure we are on a path of continual growth. In fact, this kind of system would almost certainly lead to poor decisions, like making it insanely easy to borrow money because it would contribute to economic “quick fixes” that would probably boom-and-bust cycles in economic sectors, like the tech or housing markets have experienced.)
In scenario two, if members were guaranteed a base level of pay with incentives to earn more based on certain outcomes, I think it’s a pretty sick use of public funds to have to pay elected leaders bonuses like they are CEOs. They should be serving the public interest, not their own pocketbook.
In the end, it’s a bad idea because voters are ultimately responsible for who they send to Congress and giving them their marching orders. Trying to pretend that the voters should be held blameless for voting for legislative gridlock, and that we could make members of Congress do the right thing if we hit them in the pocketbook, is downright naive.
Ravenman, I wasn’t advocating for Congressional incentive pay, I was merely answering the question why someone would suggest tying it to both the budget and GDP. Incentive pay for Congress may be a bad idea, but such incentive pay tied to only the budget or only GDP are significantly worse ideas.
Didn’t notice this post, but yeah, I did. I was taking it as a comment on the state of the tax burden in general. (although, despite the flat (marginal-value-recessive) nature of sales tax, it might STILL be worth it to get UHC kickstarted. :p)
Keep in mind that Canada’s UHC system is based on the Federal government generating revenue that it distributes to the provinces who provide services. So we have slightly higher federal income tax, plus the 7% federal sales tax. Good luck getting that past the constitutional objections.
[QUOTE=Ravenman]
Tying congressional pay to things like the budget is a colossally bad idea because it would be a massive disincentive for anyone who isn’t independently wealthy to make a choice to serve in public office.
[/QUOTE]
Actually, just to be clear here, I was joking…it wasn’t meant to be a serious proposal.
When is the last time that you, as a shareholder, voted on CEO compensation? When is the last time you voted for or against a CEO? You actually vote for directors (and you’ll notice that you don’t have a choice - you vote up or down, just like they used to do in the Soviet Union.)
Add to that the fact that you as a shareholder don’t have much of a voice, and even the people who run pension funds with lots of stock can barely make themselves heard.
Now if you make the board mad at you. like Fiorina did at HP, you are in trouble. If you drive the stock price down so low that you are a takeover target, you are in trouble. For the most part if things go bad, you argue that they need someone with your knowledge of the company to pull it out, and/or you fire a lot of people and collect a bonus for cutting expenses. Even better, you get yourself a bunch of options, and you ride them up as the market recovers. CEOs typically get compensated based on raw stock price, not stock price in relation to industry segment. If you get options in the depths of a recession, you make out just fine if your competitors’ stock goes up 40% while yours goes up only 30%.
I’ve offered no opinion here about CEO pay or statements regarding them. Any conclusions you draw about what I think are entirely drawn from your own mind, with no evidence from me to support your contention.
They’re your goalposts:
Unions do not vote themselves pay raises. Then you moved the goalposts to be “union presidents”. Now you move them further with
Why don’t you tell us which ones fit that argument? I mean, why not pick a union or a union president that fits your own argument, and then we can talk about that? You’re the one making ignorant assertions, after all. Or perhaps you’d care to move the goalposts further?
I used to submit my little voter cards all the time when I first started trading. But more importantly, I vote every time I buy and sell a stock. If I like what the company is doing, I buy, if I don’t I sell. Granted a typical company has hundreds of millions of shares issued, so it’s a little like voting for and against a president in a country of 900 million.
But when shareholders are [really] pissed, they dump the stock and the company sinks. Like you said, dump it hard enough and the company becomes a takeover target. Few CEOs can survive a massive sell off followed by insufficient recovery. That’s shareholders voting.
Yup, and if you can pull it out your a hero that’s earned his inflated salary.
Isn’t cost cutting important? Do you want a CEO that drags along dead weight?
Sure, but if given the choice would you rather 30% or 40%? You also can’t separate “raw stock price” from the industry. To be honest, industry is something like 90% of a stock move. I might have just made that up. Point is, if the industry is up 40% and your company isn’t, questions will be asked. Especially as investors start moving from your dog of a stock over to the industry leader (which you aren’t any more). Why isn’t your company performing to industry standards? Why are you losing market share? In other words, what are we getting for your overpriced salary.
And while we’re talking salary: Let’s say you’re on the board of directors (or a significant share holder) and your company is up 30% while your rival is up 40%: would you rather your CEO or the competition’s? In that scenario, which CEO is worth more?
So let’s get this straight: post after post goes by while people bitch and moan about CEO pay and compensation, here and in about a dozen other threads you participate in. All of which amount of ignorant assertions. But there you sit, happily watching.
Then suddenly you see the word union and you’re up in arms. Why is that? Why are you okay with post after post containing ignorant assertions, but then suddenly you take issue to one, one that contains the word union.
So ignorant assertions regarding CEOs is fine.
Ignorant assertions regarding unions is not.
I have never said anything regarding CEO pay in this thread. Feel free to quote me to prove me wrong.
Also, please feel free to provide a cite to back up any of your various goal-post-moving contentions regarding unions or union president pay.
ETA: I’ve seen cites for CEO pay being higher in the US than in other countries, as well as cites showing how CEO pay in the US has grown disproportionately compared to worker pay. Some of those cites were in this very thread. That’s the opposite of an “ignorant assertion”. What cites do you have to offer to back up your assertions?
