CEO pay skyrocketed 1,460% since 1978: CEOs paid 399 times as much vs. worker(epi.org)
epi.org
CEO pay skyrocketed 1,460% since 1978: CEOs paid 399 times as much vs. worker
https://www.epi.org/publication/ceo-pay-in-2021/
156 comments
Capital allocators are always paid top dollar. CEOs are only a small part of it. Wall street bankers are paid top dollar too? They find investment opportunities that can generate returns. Traders make a lot of money too. What value do they add to society? They help in the price discovery of assets. Are they paid fairly, who knows?
From a job complexity standpoint, CEO jobs are more challenging than bankers since they have to manage a real business to generate a positive return. Bankers have no skin in the game and yet make millions.
From a job complexity standpoint, CEO jobs are more challenging than bankers since they have to manage a real business to generate a positive return. Bankers have no skin in the game and yet make millions.
"Capital allocators are always paid top dollar."
That seems to be unrelated to the subject matter. I could just as easily say, "senior employees are always paid top dollar over junior employees".
Presumably, "capital allocators" were paid top dollar in 1978. Somehow though, their wages have grown 1460% relative to the people who actually put the capital to work.
That seems to be unrelated to the subject matter. I could just as easily say, "senior employees are always paid top dollar over junior employees".
Presumably, "capital allocators" were paid top dollar in 1978. Somehow though, their wages have grown 1460% relative to the people who actually put the capital to work.
In 1978 GE was the largest by revenue. They made 54B in revenues ~13B in a quarter.
In 2022 Apple is the largest. They made 124B in a quarter.
Revenues are up 1000%
The larger the capital you manage, the the higher the compensation.
Btw, I am not justifying, just trying to understand what could lead to this.
In 2022 Apple is the largest. They made 124B in a quarter.
Revenues are up 1000%
The larger the capital you manage, the the higher the compensation.
Btw, I am not justifying, just trying to understand what could lead to this.
Keep in mind that CEO pay has grown 37% more than the stock market (which would be the companies they are managing).
In 1978 GE had 330,000 employees. In 2022 Apple has 164,000 employees, about half of which are in the US.
So if you're making 10x the revenue with half the employees, it stands to reason that the value of employees has increased on average by 20x... and if anything the CEO's value has increased proportionately less. Imagine the incredibly trivial case of a CEO who had 10 people under them in 1978 for $10 million in revenue, and now has 5 people under them in 2022 with $100 million. Sure, you might pay that CEO maybe 5x... maybe even 10x what you used to pay them in 1978, but you'd think, if anything you'd pay the employees more than 10x what you used to pay them (and you'd still be net ahead), because each one is far more valuable to you now.
Modern employees are expected to be more productive, and often expected to have more sophisticated skills & education than we expected in 1978... but we pay them proportionately less than CEOs that are expected to manage smaller organizations.
There's this odd notion that attributes most of the increased productivity to management, rather than the people doing the work.
In 1978 GE had 330,000 employees. In 2022 Apple has 164,000 employees, about half of which are in the US.
So if you're making 10x the revenue with half the employees, it stands to reason that the value of employees has increased on average by 20x... and if anything the CEO's value has increased proportionately less. Imagine the incredibly trivial case of a CEO who had 10 people under them in 1978 for $10 million in revenue, and now has 5 people under them in 2022 with $100 million. Sure, you might pay that CEO maybe 5x... maybe even 10x what you used to pay them in 1978, but you'd think, if anything you'd pay the employees more than 10x what you used to pay them (and you'd still be net ahead), because each one is far more valuable to you now.
Modern employees are expected to be more productive, and often expected to have more sophisticated skills & education than we expected in 1978... but we pay them proportionately less than CEOs that are expected to manage smaller organizations.
There's this odd notion that attributes most of the increased productivity to management, rather than the people doing the work.
Finance is a service job (like lawyers, gardeners, doctors, haircutters, etc). The fact that money is attached gives them disproportional adulation and influence. Their useful function is making sure there is liquidity and availability of capital for companies and households to function, just like gardeners keep the weeds, down and help make the flowers flourish.
The celebrity obsession with CEOs mostly gets in the way of them doing their jobs, but the job at least is part of making something happen. Hired gun CEOs can do a lot for a company, but the pay is probably out of whack there too.
The celebrity obsession with CEOs mostly gets in the way of them doing their jobs, but the job at least is part of making something happen. Hired gun CEOs can do a lot for a company, but the pay is probably out of whack there too.
Thanks for the whataboutism argument. It really opened my eyes to workers deserve less money.
If you want to really understand why it is that way, you have to dig deeper, and you'll find they are much more deep-rooted and has tentacles everywhere. It's simplistic to point to one job function and call it out as unfair as the system is set up so some key positions accrue value.
I had a much longer comment detailing my problems with this article, but it got quite unwiedly by the end being confused about various statements and representations of data. I won't touch upon those things as it seems others have already given some thought into a portion of the same topics.
I'd like to talk about Josh Bivens in general, this article appears to be a continuation of a similar one done in 2019: https://www.epi.org/publication/reining-in-ceo-compensation-..., and another one from 2013: https://www.epi.org/publication/pay-corporate-executives-fin..., yet another in 2011: https://www.epi.org/publication/ceo-ratio-average-worker/
I find it interesting that the key numbers rarely change, beginning years are deliberately used (1978), even though there is nothing really significant about 1978 in particular for economic terms. But why keep using that as the same starting year through so many articles through the years?
It also appears that Josh Bivens is Keynesian in beliefs. Previous articles support this beginning from ~2009 onwards, and becoming more apparent through to the 2012 US Presidential election. Bivens has rather strong support for Occupy Wall Street, numerous articles stating as much.
I'd like to talk about Josh Bivens in general, this article appears to be a continuation of a similar one done in 2019: https://www.epi.org/publication/reining-in-ceo-compensation-..., and another one from 2013: https://www.epi.org/publication/pay-corporate-executives-fin..., yet another in 2011: https://www.epi.org/publication/ceo-ratio-average-worker/
I find it interesting that the key numbers rarely change, beginning years are deliberately used (1978), even though there is nothing really significant about 1978 in particular for economic terms. But why keep using that as the same starting year through so many articles through the years?
It also appears that Josh Bivens is Keynesian in beliefs. Previous articles support this beginning from ~2009 onwards, and becoming more apparent through to the 2012 US Presidential election. Bivens has rather strong support for Occupy Wall Street, numerous articles stating as much.
Like most people I think that this is ludicrous, but could someone give a shot at playing devil's advocate and justifying this? Are competent CEOs so much harder to get, do they really produce a 1,460% more value compared to '78, etc.?
Yes.
1) Technology has always helped Top Performers. So, it is natural that the impact of high performers will grow faster than average performers.
2) American CEOs now also increasingly service the rest of the world. So, naturally their Total-Addressable-Impact have grown significantly. US Management Innovation are adapted / copied quickly unlike the rest of the world
3) Musk, Jobs, Bezos, Nadella have demonstrably added Trillions of Dollars of value to their firms. So, it make sense to award a %age of value they create
1) Technology has always helped Top Performers. So, it is natural that the impact of high performers will grow faster than average performers.
2) American CEOs now also increasingly service the rest of the world. So, naturally their Total-Addressable-Impact have grown significantly. US Management Innovation are adapted / copied quickly unlike the rest of the world
3) Musk, Jobs, Bezos, Nadella have demonstrably added Trillions of Dollars of value to their firms. So, it make sense to award a %age of value they create
> Musk, Jobs, Bezos, Nadella have demonstrably added Trillions of Dollars of value to their firms. So, it make sense to award a %age of value they create
Unlike CEO's of yore who contributed a tenth of the value to their companies?
Unlike CEO's of yore who contributed a tenth of the value to their companies?
It's Math 101. CEOs compensation is typically tied to Market Caps of firms, while employees have fixed/sticky wages.
In the 'Yore' It took a great deal of time for any firm to add $1 Billion value to their Market Cap. So, naturally CEOs compensation grew slowly.
In the modern era, companies can add a Trillion Market Cap in a year. So, naturally CEO's growth rate will rapidly grow.
A lot of phenomenon in this world can be explained if you apply Mathematical concepts and natural laws instead of resorting to conspiracy, billionaire-hate and anything lately pushed by mainstream media
In the 'Yore' It took a great deal of time for any firm to add $1 Billion value to their Market Cap. So, naturally CEOs compensation grew slowly.
In the modern era, companies can add a Trillion Market Cap in a year. So, naturally CEO's growth rate will rapidly grow.
A lot of phenomenon in this world can be explained if you apply Mathematical concepts and natural laws instead of resorting to conspiracy, billionaire-hate and anything lately pushed by mainstream media
> It's Math 101. CEOs compensation is typically tied to Market Caps of firms, while employees have fixed/sticky wages.
It NOT Math 101. You're making some assertions that really don't stand up to even basic Econ 101 theory of markets. Why shouldn't other employee compensation be tied to market cap of firms (relative to the number of employees) and CEO compensation be fixed/sticky wages?
The forces driving CEO wages should be no different than other employee wages. They should be driven by the net value they can provide for a company. (Seriously, if you're going to tie anything to the market cap of a firm, it should be more CFO/comptroller type roles, not CEO... but you don't see the accounting team being compensated more just because the company has a bigger budget.) It's not unreasonable that companies might think that CEOs provide more value than their other employees (not always true, but not an unsurprising perspective), but you'd have a hell of a time convincing me that CEO performance has improved 1460% in the last 50 years.
Indeed, for the most part the job hasn't become harder, nor have the criteria become more stringent. You go back 50+ years ago, and you actually had a more difficult job because a company needed to manage far more employees to achieve the same economic value. If you can get so much more economic value out of fewer employees, it should follow that the individual employees should be valued, if anything, more relative to the CEO.
Sure, absent other factors, if a company is able to produce more economic value with fewer employees, that increases the value of the CEO... but it also increases the value of most, if not all, of the employees as well, and arguably it increases their value proportionately more than the CEO's.
> while employees have fixed/sticky wages.
You have to ask yourself why it works that way.
If employee productivity increases (as measured by ARPE), it stands to reason that employee compensation would grow proportionately (or at least near proportionately... you would expect some of the increased productivity to be siphoned off into profits) with it. Instead, the CW is that CEO pay should increase disproportionately to employee productivity increases, and employee wages should stay stagnant... because against all reason, we attribute any productivity growth to the CEOs.
> A lot of phenomenon in this world can be explained if you apply Mathematical concepts and natural laws instead of resorting to conspiracy, billionaire-hate and anything lately pushed by mainstream media.
You can rationalize anything with; mathematical models are abstract, so it's all about how you map those models to the real world.
I'm not trying to suggest there's any kind of conspiracy, nor am I engaging in "billionaire-hate" (and let's be real, billionaire CEOs are, for the most part, owner-CEOs, not your typical hired-gun CEO).
What I am trying to suggest is that there might be flaws in the systemic structures we have for compensation and attribution. No conspiracy necessary.
It NOT Math 101. You're making some assertions that really don't stand up to even basic Econ 101 theory of markets. Why shouldn't other employee compensation be tied to market cap of firms (relative to the number of employees) and CEO compensation be fixed/sticky wages?
The forces driving CEO wages should be no different than other employee wages. They should be driven by the net value they can provide for a company. (Seriously, if you're going to tie anything to the market cap of a firm, it should be more CFO/comptroller type roles, not CEO... but you don't see the accounting team being compensated more just because the company has a bigger budget.) It's not unreasonable that companies might think that CEOs provide more value than their other employees (not always true, but not an unsurprising perspective), but you'd have a hell of a time convincing me that CEO performance has improved 1460% in the last 50 years.
Indeed, for the most part the job hasn't become harder, nor have the criteria become more stringent. You go back 50+ years ago, and you actually had a more difficult job because a company needed to manage far more employees to achieve the same economic value. If you can get so much more economic value out of fewer employees, it should follow that the individual employees should be valued, if anything, more relative to the CEO.
Sure, absent other factors, if a company is able to produce more economic value with fewer employees, that increases the value of the CEO... but it also increases the value of most, if not all, of the employees as well, and arguably it increases their value proportionately more than the CEO's.
> while employees have fixed/sticky wages.
You have to ask yourself why it works that way.
If employee productivity increases (as measured by ARPE), it stands to reason that employee compensation would grow proportionately (or at least near proportionately... you would expect some of the increased productivity to be siphoned off into profits) with it. Instead, the CW is that CEO pay should increase disproportionately to employee productivity increases, and employee wages should stay stagnant... because against all reason, we attribute any productivity growth to the CEOs.
> A lot of phenomenon in this world can be explained if you apply Mathematical concepts and natural laws instead of resorting to conspiracy, billionaire-hate and anything lately pushed by mainstream media.
You can rationalize anything with; mathematical models are abstract, so it's all about how you map those models to the real world.
I'm not trying to suggest there's any kind of conspiracy, nor am I engaging in "billionaire-hate" (and let's be real, billionaire CEOs are, for the most part, owner-CEOs, not your typical hired-gun CEO).
What I am trying to suggest is that there might be flaws in the systemic structures we have for compensation and attribution. No conspiracy necessary.
The growth in C suite pay since 1978 is largely attributed to salaries of executives at public and non profit companies becoming public.
However, yes, a fantastic CEO can potentially provide incredible value to a company. But it is incredibly hard to tell who will succeed and who will fail. It is a complex job. Some of it comes down to gut instincts and intangibles.
However, yes, a fantastic CEO can potentially provide incredible value to a company. But it is incredibly hard to tell who will succeed and who will fail. It is a complex job. Some of it comes down to gut instincts and intangibles.
The scale linking cost to quality of a good is not linear. People often pay twice as much for something that is only 10 percent better. Prices are a matter of allocation, not value.
My devil's advocate take is that this is downstream of corporate consolidation. Corporate consolidation IMO has become easier with greater economies of scale achievable with far better communication, shipping networks, and generally global connectivity.
If CEO's of today on average leading companies that are orders of magnitude larger than in the 70's (CEO has 100-1000 people in the company in 70's vs 1,000-100,000 today), then the jump in pay isn't surprising. If the CEO is driving the direction of a company and those decisions affect orders of magnitude more workers and orders of magnitude more revenue, then it follows that they can get a higher salary. They might not be any better, but the stakes of their decisions are bigger.
If CEO's of today on average leading companies that are orders of magnitude larger than in the 70's (CEO has 100-1000 people in the company in 70's vs 1,000-100,000 today), then the jump in pay isn't surprising. If the CEO is driving the direction of a company and those decisions affect orders of magnitude more workers and orders of magnitude more revenue, then it follows that they can get a higher salary. They might not be any better, but the stakes of their decisions are bigger.
Corporate consolidation may be easier now, but monopolies are nothing new. Theodore Roosevelt was famous for being a "trust buster". Some part of the story has to be regulatory.
I’m partial to the Lake Wobegon explanation, which gets a mention in the article:
> Alluding to the fictional town in the radio program A Prairie Home Companion, Clifford (2017) describes the Lake Wobegon world of setting CEO compensation that fuels its growth: Every firm wants to believe its CEO is above average and therefore needs to be correspondingly remunerated.
In other words, CEO pay isn’t just a way of attracting CEO talent, it’s also a way of signaling to investors that you have a good CEO. After all, who wants to invest in a company whose CEO (by the compensation committee’s own reckoning) is worse than average! This is rational for an individual company, but has the aggregate effect of inflating CEO compensation for everyone.
> Alluding to the fictional town in the radio program A Prairie Home Companion, Clifford (2017) describes the Lake Wobegon world of setting CEO compensation that fuels its growth: Every firm wants to believe its CEO is above average and therefore needs to be correspondingly remunerated.
In other words, CEO pay isn’t just a way of attracting CEO talent, it’s also a way of signaling to investors that you have a good CEO. After all, who wants to invest in a company whose CEO (by the compensation committee’s own reckoning) is worse than average! This is rational for an individual company, but has the aggregate effect of inflating CEO compensation for everyone.
As opposed to employees, where companies think their employees are average or below average?
I’m not playing devil’s advocate, as I think the pay is indefensible. But I think the reason for the gap is that C-level executive salaries are public info. So, C-level employees have a lot of negotiating leverage. In addition to this, they generally have the ability to give themselves a raise (given that most boards are just yes-men).
I imagine connections are pretty important.
I would be interested to see the stats on what percentage of the profits of top companies went to all administrative employees(managers, hr, execs, etc) not just CEOs over the same period.
What about ones perception of being able to improve their life? What of opportunity? hope? These are human beings after-all, they perceive such concepts as integral to their reality.
In the post-war period prior to the 70s, it was (more) common and reasonable for a high school educated factory worker (in the US) to have optimism in their ability to work in that role and improve their state of affairs. Afford to buy a home, pay off the mortgage, buy a car, provide for a couple of kids, send one of them to college, drive to a national park for an annual vacation.
Nowadays, one can be both lucky in terms of their upbringing and be highly educated (post secondary or even advanced degrees), and yet very easily find themselves in a position where the above "life staples" (house, car, family without poverty) are meaningfully out of reach. And in many cases, not even conceivably within reach.
It's not merely that housing in major cities is objectively less affordable, it's that the stage upon which life is lived has changed in it's nature. It's a perpetual sunset rather than sunrise, optimism is either for suckers or for those who mischaracterize a certain degree of background luck as merit.
I'm in the lucky category. But I think when we boil down the collective subjective experience of hundreds of millions (billions?) to broad metrics and indicators, our models lose the fidelity they need for the subjects to feel they are being taken seriously. I understand why we have these models and tools for better navigating the civilizational state-space, but they're obviously imperfect, and they're of little comfort when serious concerns go unacknowledged (let alone unaddressed) for decades.
Now it's possible that CEO pay is orthogonal to all of this. Perhaps as a measure it's one of the metrics that loses too much descriptive power in it's generalization... but it certainly does reek of something.
In the post-war period prior to the 70s, it was (more) common and reasonable for a high school educated factory worker (in the US) to have optimism in their ability to work in that role and improve their state of affairs. Afford to buy a home, pay off the mortgage, buy a car, provide for a couple of kids, send one of them to college, drive to a national park for an annual vacation.
Nowadays, one can be both lucky in terms of their upbringing and be highly educated (post secondary or even advanced degrees), and yet very easily find themselves in a position where the above "life staples" (house, car, family without poverty) are meaningfully out of reach. And in many cases, not even conceivably within reach.
It's not merely that housing in major cities is objectively less affordable, it's that the stage upon which life is lived has changed in it's nature. It's a perpetual sunset rather than sunrise, optimism is either for suckers or for those who mischaracterize a certain degree of background luck as merit.
I'm in the lucky category. But I think when we boil down the collective subjective experience of hundreds of millions (billions?) to broad metrics and indicators, our models lose the fidelity they need for the subjects to feel they are being taken seriously. I understand why we have these models and tools for better navigating the civilizational state-space, but they're obviously imperfect, and they're of little comfort when serious concerns go unacknowledged (let alone unaddressed) for decades.
Now it's possible that CEO pay is orthogonal to all of this. Perhaps as a measure it's one of the metrics that loses too much descriptive power in it's generalization... but it certainly does reek of something.
> This escalation of CEO compensation and of executive compensation more generally has fueled the growth of top 1% and top 0.1% incomes, leaving fewer of the gains of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%.
I ignore every article that separates the top 1% from ordinary workers.
In the UK, to be in the top 1% of earners you need to earn 120K GBP gross a year, or 74K net. Don't tell me you are anything other than an ordinary worker with that. As a side note, you will also earn less net than a household of two earning 50K gross each, are they also not ordinary workers?
I don't give a single fuck about the salary of the 0.0001% of the population that is billionaire CEO, that's not the problem. The problem is that basic necessities have been turned into a profit-printing machine and you pay 2K a month for a 500 square feet apartment in London.
I ignore every article that separates the top 1% from ordinary workers.
In the UK, to be in the top 1% of earners you need to earn 120K GBP gross a year, or 74K net. Don't tell me you are anything other than an ordinary worker with that. As a side note, you will also earn less net than a household of two earning 50K gross each, are they also not ordinary workers?
I don't give a single fuck about the salary of the 0.0001% of the population that is billionaire CEO, that's not the problem. The problem is that basic necessities have been turned into a profit-printing machine and you pay 2K a month for a 500 square feet apartment in London.
It's more like 170k.
https://www.statista.com/statistics/1224844/monthly-pay-of-e...
https://www.statista.com/statistics/1224844/monthly-pay-of-e...
https://ceoworld.biz/2020/02/07/how-much-the-top-1-of-worlds... has $248k or ~205k GBP.
> I don't give a single fuck about the salary of the 0.0001% of the population that is billionaire CEO, that's not the problem. The problem is that basic necessities have been turned into a profit-printing machine and you pay 2K a month for a 500 square feet apartment in London.
Interesting that you don’t see those things as part of the same problem but rather two separate unrelated issues.
Interesting that you don’t see those things as part of the same problem but rather two separate unrelated issues.
How are they directly related?
Is Bezos, Gates or Musk at fault for high UK house prices ?
No, it's a failing of government policy. Straggling house building for decades, leads directly towards rampant land speculation. (70+% of a houses value is the land...)
Is Bezos, Gates or Musk at fault for high UK house prices ?
No, it's a failing of government policy. Straggling house building for decades, leads directly towards rampant land speculation. (70+% of a houses value is the land...)
Bezos, Gates and Musk are a result of failing of government too:
https://old.reddit.com/r/dataisbeautiful/comments/y1xqul/oc_...
https://old.reddit.com/r/dataisbeautiful/comments/y0a0ek/oc_...
https://old.reddit.com/r/dataisbeautiful/comments/xgyut8/oc_...
https://old.reddit.com/r/dataisbeautiful/comments/y1xqul/oc_...
https://old.reddit.com/r/dataisbeautiful/comments/y0a0ek/oc_...
https://old.reddit.com/r/dataisbeautiful/comments/xgyut8/oc_...
> No, it's a failing of government policy.
And who (or perhaps what socio-economic class) might be responsible for our inability to change these perpetually bad government policies that always seem to preserve this state of rampant inequality?
And who (or perhaps what socio-economic class) might be responsible for our inability to change these perpetually bad government policies that always seem to preserve this state of rampant inequality?
Actually, at least in Helsinki part of the rising costs of housing in the centre has been attributed to so called vacation housing, where apartments have been bought by rich people from abroad or rural areas, yet occupied maybe a couple of days/weeks a year, or rented out as an airbnb flat. I'm not saying its a major factor, but still an indicator that theres more than enough money to spend for some people, for them to take out from the 'necessities' pool, just to achieve some form of luxury.
> The problem is that basic necessities have been turned into a profit-printing machine and you pay 2K a month for a 500 square feet apartment in London.
There would be significantly more profit (and tax revenue) if it was possible to build more housing in London.
Although artificially constraining supply and reducing competition has contributed significantly to the problem of there being a few big winners vs a broad set. So it's still relevant.
There would be significantly more profit (and tax revenue) if it was possible to build more housing in London.
Although artificially constraining supply and reducing competition has contributed significantly to the problem of there being a few big winners vs a broad set. So it's still relevant.
In the USA I think the top 1% income income floor is circa $550k nationally, or circa $400k when viewed state by state. Which is pretty solidly above what I'd call "typical incomes." It's an income level that should easily translate into permanent wealth within 20 years if sustained, even if it isn't billionaire class.
What occupation does an ordinary worker have in your books? I'm curious, since for example I have always held doctors in the higher end of middle class workers: not quite 'i own a yacht' rich, but still economically set for a more cushier lifestyle. Yet, according to NHS[1] doctors in the UK earn 120k at best, so I'm sorry but something doesn't add up.
[1] https://www.healthcareers.nhs.uk/explore-roles/doctors/pay-d...
[1] https://www.healthcareers.nhs.uk/explore-roles/doctors/pay-d...
NHS doctors are grossly underpaid, it's shocking.
I agree. In the US it’s really not hard to get into the top 1-2% as a salaried employee in the software industry.
The difference in feasibility between top X% of income vs wealth is large. Last I checked it was like $600k gross household income to get into the top 1% of incomes, but like $10mm wealth. You’d need to make a top 1% income and invest a good portion of the after-tax income for quite a while to get there.
All these punching up class warfare policies hurt the wrong people IMO. I have a 98%ile income and I live in a studio and can’t afford a house in the neighborhood I live in. Meanwhile Joe Rich works in a stereotypical rich boy field like sales, has a lot of family money ultimately stemming from things like land grants or moving to a US metro area a hundred years ago, has way more money than me and a more lavish lifestyle, and pays less taxes.
As far as I see it, higher income taxes actually just entrench class divisions and make it harder to enter upper classes. Rich people aren’t affected much by income taxes and remain rich, except even more unattainably so
The difference in feasibility between top X% of income vs wealth is large. Last I checked it was like $600k gross household income to get into the top 1% of incomes, but like $10mm wealth. You’d need to make a top 1% income and invest a good portion of the after-tax income for quite a while to get there.
All these punching up class warfare policies hurt the wrong people IMO. I have a 98%ile income and I live in a studio and can’t afford a house in the neighborhood I live in. Meanwhile Joe Rich works in a stereotypical rich boy field like sales, has a lot of family money ultimately stemming from things like land grants or moving to a US metro area a hundred years ago, has way more money than me and a more lavish lifestyle, and pays less taxes.
As far as I see it, higher income taxes actually just entrench class divisions and make it harder to enter upper classes. Rich people aren’t affected much by income taxes and remain rich, except even more unattainably so
Software engineers are the exception, not the norm. High-income people in the US are more likely to have high-income parents than in most Western countries. It's difficult to enter the upper class in one lifetime, because your peers who earn as much as you do already have intergenerational wealth.
Dude you live in one of the most in-demand cities in the world, expecting cheap rent is a pipe dream. The only way prices will go down is if lots of people, maybe even you, move out of London!
In other words they may have/earn (big distinction that is often overlooked) 100x more which seems egregiously unfair but if there are 10000x fewer of them, then it's not a big problem unless you're trying to appeal to emotion with single case studies.
The issue here is that power among people tends to concentrate rather than diffuse. CEOs are comped disproportionately because the top 1% have an exceptionally better network and power structure over others. Why? Because people bandwagon onto known entities.
There’s a similar phenomenon with authors, actors, and musicians. A-list actors command an order of magnitude more in compensation over B-list because they have concentrated a much stronger hold over an audience.
This isn’t only true of “celebrity” CEOs like Jobs, Musk, etc. CEOs can develop their own mini fiefdoms of celebrity within a niche industry. This network and power gives them access to opportunities that can be pivotal to the success of a company.
I think in order to equalize exec pay, you’d need to figure out how to stop the bandwagoning that consolidates exec power.
There’s a similar phenomenon with authors, actors, and musicians. A-list actors command an order of magnitude more in compensation over B-list because they have concentrated a much stronger hold over an audience.
This isn’t only true of “celebrity” CEOs like Jobs, Musk, etc. CEOs can develop their own mini fiefdoms of celebrity within a niche industry. This network and power gives them access to opportunities that can be pivotal to the success of a company.
I think in order to equalize exec pay, you’d need to figure out how to stop the bandwagoning that consolidates exec power.
Might have to due with the fact that the typical company is a lot larger than they were in 1978.
Largest company in 1978 was GM they did about 53b in revenue, and 4b in gross profit.
Largest company in 2022 is Apple they did 400b in revenue and 170b in gross profit.
The list of people that can run and manage Apple is one, Tim Cook. The list of people that can work at Apple is millions.
Largest company in 1978 was GM they did about 53b in revenue, and 4b in gross profit.
Largest company in 2022 is Apple they did 400b in revenue and 170b in gross profit.
The list of people that can run and manage Apple is one, Tim Cook. The list of people that can work at Apple is millions.
Yeah, there really wasn’t much global competition either. So we have much larger companies competing all over the world against other huge companies.
Because CEOs are 399x smarter and work 399x harder! Plus they take all the risk!
/s
/s
I feel it's not a stretch to say your average ceo has more than 399x impact however.
A 'simple decision' such as do I approve this product or not can make or break a company. The iPhone is a great example, it was far from considered a slam dunk money printer at the time. You can still find old articles from people wondering why you would want to browse the web on a phone.
A 'simple decision' such as do I approve this product or not can make or break a company. The iPhone is a great example, it was far from considered a slam dunk money printer at the time. You can still find old articles from people wondering why you would want to browse the web on a phone.
The seat itself is more impactful yes, but the human sitting in it not necessarily.
We have brought 2000 muskets and 1 tank to war. We find the musketmen are not very effective, so we have chosen not to pay them very much. They just deserve less.
We have brought 2000 muskets and 1 tank to war. We find the musketmen are not very effective, so we have chosen not to pay them very much. They just deserve less.
that impact can be very negative.
It is largely because there is much greater salary transparency for the C suite. Everyone walks into the negotiation with a clear understanding of what fair market value is. This is not true for most positions. The worker is at a disadvantage.
I believe every job ad should have a minimum salary listed with other compensation and benefits.
I believe every job ad should have a minimum salary listed with other compensation and benefits.
Maybe Karl Marx had a point? Sure, communist revolutions of the 20th century produced suboptimal results, but only because violent psychopaths were in power. We need democratic socialism. Maybe Bernie Sanders has right ideas.
Psychopats have unreasonably high efficiency in convincing people they should lead them tho
Taken alone that sentence applies equally well to any system of government.
Salvador Allende in Chile wasn't a violent psychopath, but also produced suboptimal results during his short period.
Then came a real psycho, but that's another sad story.
Then came a real psycho, but that's another sad story.
One of the biggest weaknesses in highly centralized authoritarian regimes is that it creates enormous incentives for the largest assholes to lie, cheat, steal, and kill to get into power, because one they're in power they will be free of any consequences. This also means they have to be exceptionally regressive towards the population because they know the next huge asshole will be itching to do the same to them. With decentralized power you can have checks and balances to punish people like that.
Was it Salvador Allende or the CIA and the IMF?
> but only because violent psychopaths were in power.
There were way more problems with socialism than just the fact it breeds dictators.
If you're starving your people in the time of greatest abundance of food in history it might be more fundamentally flawed.
There were way more problems with socialism than just the fact it breeds dictators.
If you're starving your people in the time of greatest abundance of food in history it might be more fundamentally flawed.
A lot of starvation is due to the kulaks burning the crops so the communists wouldn't seize their land. Also times are even more prosperous now and people are still starving.
Ultimately the more centralized the power the less efficient the system is. Markets are great because they push decision making down to the fringes, closer to where the ground truth is. With highly centralized systems there is a bottleneck both in getting information to the decision makers, but also in overwhelming those decision makers with too much detail and losing fidelity.
The flipside is that markets are only efficient at distributing things that can have a price on them. They're mostly blind to externalities (pollution!) and to problems that can't be solved by distributing the goods most efficiently.
This is why both pure command (Communist) and pure market (Capitalist) solutions fail. You need to decide which system is best for each problem and use the one that works. Consumer goods are absolutely best handled by markets. Healthcare is far more efficient in a command system, because the demand curve is a total mess so markets can't price it efficiently. Utilities are another example where markets are typically worse.
The flipside is that markets are only efficient at distributing things that can have a price on them. They're mostly blind to externalities (pollution!) and to problems that can't be solved by distributing the goods most efficiently.
This is why both pure command (Communist) and pure market (Capitalist) solutions fail. You need to decide which system is best for each problem and use the one that works. Consumer goods are absolutely best handled by markets. Healthcare is far more efficient in a command system, because the demand curve is a total mess so markets can't price it efficiently. Utilities are another example where markets are typically worse.
> Consumer goods are absolutely best handled by markets.
But what about the previous paragraph where you said
> markets are... mostly blind to externalities (pollution!)
What about the externalities from consumer goods? (And everything else we value via markets, which is nearly everything else)
But what about the previous paragraph where you said
> markets are... mostly blind to externalities (pollution!)
What about the externalities from consumer goods? (And everything else we value via markets, which is nearly everything else)
No disagreement with your post in particular.
Just pointing out that the C-suite is also a kind of centralized power.
Unsure why these kinds of stories always devolve into some kind of ism-vs-ism in the comment section because it almost always missed the point.
CEO pay is held up as a symptom of something. My interpretation of that symptom is that it represents a shift in capital over a period of decades. The interesting discussions are around what changed? how did that happen? is it ok? if not, what should be done?
Me? I happen to think it's not ok but like most, don't have a coherent set of suggestions about a path forward.
[edited for grammar]
Just pointing out that the C-suite is also a kind of centralized power.
Unsure why these kinds of stories always devolve into some kind of ism-vs-ism in the comment section because it almost always missed the point.
CEO pay is held up as a symptom of something. My interpretation of that symptom is that it represents a shift in capital over a period of decades. The interesting discussions are around what changed? how did that happen? is it ok? if not, what should be done?
Me? I happen to think it's not ok but like most, don't have a coherent set of suggestions about a path forward.
[edited for grammar]
> Ultimately the more centralized the power the less efficient the system is. Markets are great because they push decision making down to the fringes, closer to where the ground truth is. With highly centralized systems there is a bottleneck both in getting information to the decision makers, but also in overwhelming those decision makers with too much detail and losing fidelity.
Wouldn't this point to CEOs not being super effective?
Wouldn't this point to CEOs not being super effective?
I think it's a careful balance. You need the ability to take decisive action, but at the same time the decisive action might just kill the company. I think the solution is supposed to be that you have multiple companies and when one dies off due to stupid missteps another is there to take its place. Unfortunately it appears that companies keep consolidating and gobbling each other up, which I don't think is healthy for society.
Sometimes the best action for a company to take is the one that doesn't maximize short term profit. That's where a CEO can shine. Markets are like genetic algorithms, they are prone to getting hung up on local maxima.
I think Polanyi had a point. The creation of the market and the economy as abstract entities to which other parts of life should be subservient - a surprisingly modern idea - is the root of the evil in modern liberalism - itself a concept mostly disconnected from its root.
What I always find surprising is that, as soon as it’s made abstract enough, even humanist and rational people are apparently ready to defend the worst atrocities.
Just set your priorities in the right orders. If you find yourself defending a system which see sick people die in the street in one of the richest country in the world and history, you are probably in the wrong.
What I always find surprising is that, as soon as it’s made abstract enough, even humanist and rational people are apparently ready to defend the worst atrocities.
Just set your priorities in the right orders. If you find yourself defending a system which see sick people die in the street in one of the richest country in the world and history, you are probably in the wrong.
Reading Karl Marx made me realize how much of an arrogant idiot he was, and now I think differently about people who take him seriously
Yes, but those men work really hard.
I see a lot of revolution and socialism vs capitalism comments here, but isn't this a not surprising finding given corporate consolidation and increase in CEO:total worker ratio?
Sure, there's debate about pro's and con's of corporate consolidation and market failures surrounding monopolies and oligopolies. But, with the increase in connectivity between regions via telecom, internet, mobile, etc; wouldn't there be an expectation of increased economies of scale from more frictionless communication?
If we note increased economies from scale for companies, it would naturally follow a CEO's wage would rise given the weight CEO's decisions when compared to results of company and number of workers affected. The CEO of walmart vs the CEO of 5 general stores would obviously change.
All I'm noting is that perhaps this is downstream of consolidation and that's the pertinent discussion, not deciding on socialism/revolution.
Sure, there's debate about pro's and con's of corporate consolidation and market failures surrounding monopolies and oligopolies. But, with the increase in connectivity between regions via telecom, internet, mobile, etc; wouldn't there be an expectation of increased economies of scale from more frictionless communication?
If we note increased economies from scale for companies, it would naturally follow a CEO's wage would rise given the weight CEO's decisions when compared to results of company and number of workers affected. The CEO of walmart vs the CEO of 5 general stores would obviously change.
All I'm noting is that perhaps this is downstream of consolidation and that's the pertinent discussion, not deciding on socialism/revolution.
> I see a lot of revolution and socialism vs capitalism comments here, but isn't this a not surprising finding given corporate consolidation and increase in CEO:total worker ratio?
Sure, I guess that makes sense, except... given what corporate consolidation and increase in CEO:total worker ratio? Sure, you hear lots of news stories about mergers and worries about competition, but the likes of US Steel, GM, etc. used to have way more employees. Tech companies generally have fewer employees that comparable sized (by revenue) companies of yore. I'd sure need to see some evidence that the CEO:total worker ratio has actually increased...
Sure, I guess that makes sense, except... given what corporate consolidation and increase in CEO:total worker ratio? Sure, you hear lots of news stories about mergers and worries about competition, but the likes of US Steel, GM, etc. used to have way more employees. Tech companies generally have fewer employees that comparable sized (by revenue) companies of yore. I'd sure need to see some evidence that the CEO:total worker ratio has actually increased...
I'd be interested in how this compares to, say, sports stars or celebrity actors.
That is, the growth of markets in the past 35 years means that people at the top in "winner take all" markets are able to take a lot more from the bigger pie they command.
I'm not saying this is fair or good for society, but I think comparing to things like sports stars would shine a better light on the dynamics that allow all of those at the top to rake in disproportionately more money.
That is, the growth of markets in the past 35 years means that people at the top in "winner take all" markets are able to take a lot more from the bigger pie they command.
I'm not saying this is fair or good for society, but I think comparing to things like sports stars would shine a better light on the dynamics that allow all of those at the top to rake in disproportionately more money.
It's just a matter of time before people revolt, we went from something like 1:6 employee:employer comp ratio to 1:400 (and much more for a lot of companies, up to 1:5000+)
If we could harvest energy from the hardcore early capitalist theorists rolling in their graves we'd have infinite energy at that point
If we could harvest energy from the hardcore early capitalist theorists rolling in their graves we'd have infinite energy at that point
> It's just a matter of time before people revolt
Trump was the first warning sign IMO, and some are still not taking it seriously, blaming the voters themselves for being so dissatisfied with the status quo that they would take a chance on someone like that.
Trump was the first warning sign IMO, and some are still not taking it seriously, blaming the voters themselves for being so dissatisfied with the status quo that they would take a chance on someone like that.
>blaming the voters themselves for being so dissatisfied with the status quo that they would take a chance on someone like that.
It is the fault of the voters. Especially after it was obvious Trump was just a grifter who couldn't care less about the common man, and they voted for him again because they were scared of the immigrants and black activists with whom they should have had class solidarity. And it will still be the voters' fault when they vote for him a third time in 2024, based on whatever batshit QAnon lunacy their conservative truth-bubbles drip into their eyeballs.
And Trump wasn't the first warning sign by any means. Arguably Occupy was the first warning sign in recent memory. We don't recognize that because the current narrative is that "the left" supports the status quo of the elites, neoliberalism and capitalism while "the right" are the anti-capitalist, anti-statist underdogs.
It is the fault of the voters. Especially after it was obvious Trump was just a grifter who couldn't care less about the common man, and they voted for him again because they were scared of the immigrants and black activists with whom they should have had class solidarity. And it will still be the voters' fault when they vote for him a third time in 2024, based on whatever batshit QAnon lunacy their conservative truth-bubbles drip into their eyeballs.
And Trump wasn't the first warning sign by any means. Arguably Occupy was the first warning sign in recent memory. We don't recognize that because the current narrative is that "the left" supports the status quo of the elites, neoliberalism and capitalism while "the right" are the anti-capitalist, anti-statist underdogs.
Voters in the US have very little actual influence when it comes to national politics. Yes, they have one final vote, but their vote is highly distorted due to systemic issues, like e.g. first-past-the-post.
There are 300 million people in the US. How come the voters only get to make a binary decision? Simple; because the two parties have designed everything so that the voter only gets to make that decision.
So, I'd say that blaming the voters is a bit short-sighted when it comes to a quasi-aristocracy like the US.
There are 300 million people in the US. How come the voters only get to make a binary decision? Simple; because the two parties have designed everything so that the voter only gets to make that decision.
So, I'd say that blaming the voters is a bit short-sighted when it comes to a quasi-aristocracy like the US.
Then why should Trump voters be considered a "warning sign" of anything? Either Trump's election was a successful populist repudiation of the status quo - as they themselves will often claim - in which case voters clearly had power (albeit extremely limited by the system) or they don't and he was in essence elected by the system, despite for some reason not being the best candidate for the party.
> It is the fault of the voters. Especially after it was obvious Trump was just a grifter who couldn't care less about the common man
You mean like most other politicians?
> and they voted for him again because they were scared of the immigrants and black activists with whom they should have had class solidarity
This racist trope is propaganda. Also, "class solidarity" is not a thing anymore thanks to the dominant parties who have been squashing it for over 50 years.
> Arguably Occupy was the first warning sign in recent memory.
Occupy didn't accomplish anything, it was a weak protest. Electing Trump definitely accomplished something and proved the discontent runs deep and can affect the cushy established class. Then came the messaging about baskets of deplorables and ultra-maga threats to democracy.
You mean like most other politicians?
> and they voted for him again because they were scared of the immigrants and black activists with whom they should have had class solidarity
This racist trope is propaganda. Also, "class solidarity" is not a thing anymore thanks to the dominant parties who have been squashing it for over 50 years.
> Arguably Occupy was the first warning sign in recent memory.
Occupy didn't accomplish anything, it was a weak protest. Electing Trump definitely accomplished something and proved the discontent runs deep and can affect the cushy established class. Then came the messaging about baskets of deplorables and ultra-maga threats to democracy.
Indeed!
Trump winning was to a large degree just a sign of the times; too many people were unsatisfied with the status quo.
2016 had two outsider candidates (Trump, Sanders) and while the Democrats managed to smother their revolt, the Republicans - because of existing structures, see "Tea party" - didn't.
In his term of office, Trump managed to address few of the problems that got him elected to office - the discontentment is still there, brewing and festering.
Trump winning was to a large degree just a sign of the times; too many people were unsatisfied with the status quo.
2016 had two outsider candidates (Trump, Sanders) and while the Democrats managed to smother their revolt, the Republicans - because of existing structures, see "Tea party" - didn't.
In his term of office, Trump managed to address few of the problems that got him elected to office - the discontentment is still there, brewing and festering.
What does a revolt look like? People can live in unimaginable conditions and not revolt. The idea that if things get bad enough "people" are going to do something about it can just occur to someone that hasn't seen enough of the world.
CEOs getting insane pay doesn't exist in a vacuum. You can't use the "trickle down" economy as a proverbial carrot when people can't put gas in their car or heat their home while Bezos&co buy a new yacht every other day
> The idea that if things get bad enough "people" are going to do something about it can just occur to someone that hasn't seen enough of the world.
Or I'm French, who knows ;)
Continue selling ports to China, continue selling sport clubs to Qatar, apartments to Emiratis, continue to delocalise industries to third world countries to save on labor, continue to force people into precarity, to force them into shittier and shittier jobs while asking them to work longer hours and retire at 67 for less and less quality of life. I'm telling you, at some point people won't have anything to lose and heads will start rolling
> The idea that if things get bad enough "people" are going to do something about it can just occur to someone that hasn't seen enough of the world.
Or I'm French, who knows ;)
Continue selling ports to China, continue selling sport clubs to Qatar, apartments to Emiratis, continue to delocalise industries to third world countries to save on labor, continue to force people into precarity, to force them into shittier and shittier jobs while asking them to work longer hours and retire at 67 for less and less quality of life. I'm telling you, at some point people won't have anything to lose and heads will start rolling
Problem with the idea of heads rolling is that it doesn't really achieve anything. Let's hypothetically say you just stormed the parliament and slaughtered all the members there. Then what? Install military junta? That requires actual military backing, and doesn't exactly have great track record. Hold new elections? Attacking democratic institution seems unlikely strategy for winning seats, and if you think you can win that way then why did you need violence in the first place?
Last time heads were rolling in France people were starving.
If you mean the last revolution, this is wrong. The last successfull French revolution (1830) had nothing to do with starvation. Even the 1871 revolt didn't had much to do with what and how to eat. We killed factory owners for far less than an empty stomach.
But at the time, we understood that the police was really representing the business owners (landowners, industrialists) more than the government and put their crimes not on the individual, but on the hand that lead them. I feel like this understanding is coming back in the US.
But at the time, we understood that the police was really representing the business owners (landowners, industrialists) more than the government and put their crimes not on the individual, but on the hand that lead them. I feel like this understanding is coming back in the US.
Well we have 10m people living under poverty, even armed with forks and spoons they'd take the Elysee in a day. Even the 42 000 homeless children living in France could take care of it
Poverty definition is a relative definition. Hence you're measuring inequalities, not wealth
[deleted]
Well that's what the discussion was about in the first place wasn't it ? The inequalities between CEOs and workers grew, one side lives in absolute poverty, the other in absolute opulence
The poor are still too poor to live properly and the rich are too rich to count, that's not how they sold us capitalism is it ? Wasn't it supposed to even out inequalities ? Money trickling down to the poorest ? Why are there still people in ultra advanced countries who can't afford to heat their home ?
> Poverty definition is a relative definition.
Criteria such as:
"can't afford clothes"
"can't go out with friends/family at least once a month due to financial reasons"
"not having access to internet"
"can't pay water/electricity bills"
"can't heat apartment above the minimum temperature determined by the law"
"can't afford one week of vacation out of their own place"
"can't afford meat/fish every other day"
The poor are still too poor to live properly and the rich are too rich to count, that's not how they sold us capitalism is it ? Wasn't it supposed to even out inequalities ? Money trickling down to the poorest ? Why are there still people in ultra advanced countries who can't afford to heat their home ?
> Poverty definition is a relative definition.
Criteria such as:
"can't afford clothes"
"can't go out with friends/family at least once a month due to financial reasons"
"not having access to internet"
"can't pay water/electricity bills"
"can't heat apartment above the minimum temperature determined by the law"
"can't afford one week of vacation out of their own place"
"can't afford meat/fish every other day"
Our patron saint has this to say about it
> For example, let's attack poverty, and if necessary damage wealth in the process. That's much more likely to work than attacking wealth in the hope that you will thereby fix poverty. [9] And if there are people getting rich by tricking consumers or lobbying the government for anti-competitive regulations or tax loopholes, then let's stop them. Not because it's causing economic inequality, but because it's stealing. [10]
> If all you have is statistics, it seems like that's what you need to fix. But behind a broad statistical measure like economic inequality there are some things that are good and some that are bad, some that are historical trends with immense momentum and others that are random accidents. If we want to fix the world behind the statistics, we have to understand it, and focus our efforts where they'll do the most good.
http://paulgraham.com/ineq.html
> For example, let's attack poverty, and if necessary damage wealth in the process. That's much more likely to work than attacking wealth in the hope that you will thereby fix poverty. [9] And if there are people getting rich by tricking consumers or lobbying the government for anti-competitive regulations or tax loopholes, then let's stop them. Not because it's causing economic inequality, but because it's stealing. [10]
> If all you have is statistics, it seems like that's what you need to fix. But behind a broad statistical measure like economic inequality there are some things that are good and some that are bad, some that are historical trends with immense momentum and others that are random accidents. If we want to fix the world behind the statistics, we have to understand it, and focus our efforts where they'll do the most good.
http://paulgraham.com/ineq.html
> And if there are people getting rich by tricking consumers or lobbying the government for anti-competitive regulations or tax loopholes, then let's stop them. Not because it's causing economic inequality, but because it's stealing.
If we did that Bezos&co wouldn't have nearly as much money.
A big part of the wealth of these individual is tax evasion or """optimisation""", taxes which are supposed to be used to fix these inequalities... Again, these people don't exist in a vacuum, these massive companies became what they are by squeezing as much as they're legally (and some time not so legally) allowed to squeeze, it's our collective job to set the boundaries. Not doing anything is letting them decide and their end goal is squeezing us and the planet dry
You don't "attack poverty" with good intentions and nice speeches
If we did that Bezos&co wouldn't have nearly as much money.
A big part of the wealth of these individual is tax evasion or """optimisation""", taxes which are supposed to be used to fix these inequalities... Again, these people don't exist in a vacuum, these massive companies became what they are by squeezing as much as they're legally (and some time not so legally) allowed to squeeze, it's our collective job to set the boundaries. Not doing anything is letting them decide and their end goal is squeezing us and the planet dry
You don't "attack poverty" with good intentions and nice speeches
You also don't attack poverty by randomly trying and failing to lash out at everyone who isn't in poverty
How about we talk about actually attacking poverty? Coincidentally, the way that Gates, Buffett, Bezos, etc seem to be doing with all their money and time
How about we talk about actually attacking poverty? Coincidentally, the way that Gates, Buffett, Bezos, etc seem to be doing with all their money and time
> Coincidentally, the way that Gates, Buffett, Bezos, etc seem to be doing with all their money and time
What ?
They do that once they absolutely milked the world for decades because they're approaching death and start to get worried about their karma. Too little too late, it's like burning a random house and going in to save the cat while the family is burning, you don't get to be applauded for that
If they truly attacked poverty you wouldn't have a single homeless person in the west
What ?
They do that once they absolutely milked the world for decades because they're approaching death and start to get worried about their karma. Too little too late, it's like burning a random house and going in to save the cat while the family is burning, you don't get to be applauded for that
If they truly attacked poverty you wouldn't have a single homeless person in the west
If we want to stop them from milking us we should stop with intellectual property and patents so that more companies can compete with their big companies
No offense but a significant proportion of HN readers and contributors (me included) are here for the tech news and don’t think much of PG as the essays you quote brightly illustrate.
I'm not sure about a revolt, but this is what we're seeing:
People mobbing into stores, grabbing things off the shelves, and just walking out. Sleeping in tents in massive encampments, turning parks and sidewalks into shanty towns. Pissing and shitting on the street in broad daylight.
The richest are driving up rents and housing prices in cities. Gas is increasingly unaffordable, driving up cost of living in rural areas. People who cannot keep up will find other solutions. It might not involve guillotines, but the US has more guns per capita than anywhere else in the world.
edit: what I've described above is not a revolt, per se, but it is revolting.
People mobbing into stores, grabbing things off the shelves, and just walking out. Sleeping in tents in massive encampments, turning parks and sidewalks into shanty towns. Pissing and shitting on the street in broad daylight.
The richest are driving up rents and housing prices in cities. Gas is increasingly unaffordable, driving up cost of living in rural areas. People who cannot keep up will find other solutions. It might not involve guillotines, but the US has more guns per capita than anywhere else in the world.
edit: what I've described above is not a revolt, per se, but it is revolting.
Populists have so far been able to focus all that anger at immigrants and LGBT people.
You got it the other way round.
After the 1% protests, media started publishing social justice articles to divide & conquer the population. The percentage of woke words like “racist”, “sexist” and “gender” rose rapidly!
After the 1% protests, media started publishing social justice articles to divide & conquer the population. The percentage of woke words like “racist”, “sexist” and “gender” rose rapidly!
It’s eminently clear that identity politics is the name of the game across the political spectrum.
Sure, but if we're talking about co-opting the anger around wealth inequality, that particular fight ended with Occupy Wall Street becoming Black Lives Matter.
I actually disagree somewhat. A great of MAGA rhetoric was/is about elites abusing their positions at the expense of regular folk. Trump was viewed as an insider telling people the truth about how the sausage gets made.
yeah, but MAGA is even more diffuse and ineffective as a movement than Occupy was
Occupy was seriously thinking about killing the rich, but MAGA just has some nebulous ideas that there are pedophile cannibals sneaking around and that social media and the news are heavily biased
Plus there's the fact that Occupy Wall Street was popular among pretty much everyone below a certain wealth level, but now everyone from that demographic is split up into smaller groups who hate each other: MAGA, Bernie Bros, "Hillary/Biden or You're A Nazi", etc
Occupy was seriously thinking about killing the rich, but MAGA just has some nebulous ideas that there are pedophile cannibals sneaking around and that social media and the news are heavily biased
Plus there's the fact that Occupy Wall Street was popular among pretty much everyone below a certain wealth level, but now everyone from that demographic is split up into smaller groups who hate each other: MAGA, Bernie Bros, "Hillary/Biden or You're A Nazi", etc
Can anyone recommend any solid writing about this?
Because billionaires own the media and they don't want anything to affect the status quo.
Because they're part of it, the other side of the coin, what we need is a new coin
Why revolt when your quality of life keeps increasing? Some fucked up obsession with "fairness"?
Who's quality of life ?
Having a 4k TV and a smart fridge doesn't balance the degraded day to day working conditions, pays, longer hours, later retirement
Quality of life peaked somewhere in the 90s in the west, now it's all non essentials, people are giving up on the idea of owning their home and retiring healthy, &c.
Having a 4k TV and a smart fridge doesn't balance the degraded day to day working conditions, pays, longer hours, later retirement
Quality of life peaked somewhere in the 90s in the west, now it's all non essentials, people are giving up on the idea of owning their home and retiring healthy, &c.
If that pay didn't go to the CEO, who would get it? The shareholders.
And who are the shareholders? The wealthiest 10% own almost 90% of stocks.
And who are the shareholders? The wealthiest 10% own almost 90% of stocks.
It could go to the people who produce the value in the first place: the workers.
I know, they could use the market to determine the rate at which that wealth transfer occurs. And then they could distribute it biweekly via direct deposit. They might even call it a salary!
Companies fight tooth and nail to keep the market from encroaching on their decisions about worker pay. Why do you think there's a taboo or outright ban on talking about compensation at many companies?
I wonder how many companies have "friendly" no-poaching agreements with each other like what Apple, Google, and co had[1].
[1] https://www.theguardian.com/technology/2014/apr/24/apple-goo...
I wonder how many companies have "friendly" no-poaching agreements with each other like what Apple, Google, and co had[1].
[1] https://www.theguardian.com/technology/2014/apr/24/apple-goo...
At what point should someone's creation be confiscated and given to employees?
Gradually over the course of ~12-36 years, depending on the number of employees. If you started your business, say, Bamazon, 25 years ago or whatever, and its year 26, you're a trillion dollar corporation, etc, most of the new value add happening at Bamazon isn't down to the CEO's brilliance anymore, just because of the sheer scale of Bamazon. So by then most of that new value add should be going to the workers. Bezos would still have become a billionaire or whatever. And you can implement this pretty straight forwardly actually by just printing new shares for workers as part of their total comp.
This is nice in theory. What do you think happens in practice? People have two primary motivations for starting businesses. Money and independence. For the half that value independence, they will not hire people and all their businesses will remain lifestyle businesses.
I actually don't think it's nice in theory either btw. How does employee control benefit society at large? It only benefits employees. Employees will just pay themselves as much as they can for the least amount of work possible. It's the same reason price controls on housing are dumb. It just creates an entrenched class of individuals. If adding more employees to the business means the employee share of profit shrinks, they will just hire less.
I actually don't think it's nice in theory either btw. How does employee control benefit society at large? It only benefits employees. Employees will just pay themselves as much as they can for the least amount of work possible. It's the same reason price controls on housing are dumb. It just creates an entrenched class of individuals. If adding more employees to the business means the employee share of profit shrinks, they will just hire less.
It's not their creation, it's their idea. The employees are the ones who literally created it. Even if you assume all CEOs are founders, the thought that they deserve more than two orders of magnitude more compensation for leasing their idea is wild.
> It's not their creation, it's their idea.
Except in the cases where they literally create it? Every single idea and business started with a small group of people and often just a single person. Sometimes they create it, sometimes they pay someone else to create it.
If they pay someone to create it, do you think that person should take ownership in the company? Ok, maybe they should, but of course if they are taking part ownership they have to accept less cash right? Turns out most people don't want to deal with that risk and don't want to be paid in equity.
Except in the cases where they literally create it? Every single idea and business started with a small group of people and often just a single person. Sometimes they create it, sometimes they pay someone else to create it.
If they pay someone to create it, do you think that person should take ownership in the company? Ok, maybe they should, but of course if they are taking part ownership they have to accept less cash right? Turns out most people don't want to deal with that risk and don't want to be paid in equity.
> If they pay someone to create it, do you think that person should take ownership in the company?
What do you think the people working every day are doing? They're literally creating the company. If they don't exist, the company stops existing, because companies are just people working. Effort in, revenue out. Divide up the profits by the amount of effort put into the business.
If the founder wants to profit from their idea, they should be more worried about the equity they already have and their personal impact on its value than their annual compensation going forward. Continually getting paid for an idea you already had and were already compensated for is wild.
What do you think the people working every day are doing? They're literally creating the company. If they don't exist, the company stops existing, because companies are just people working. Effort in, revenue out. Divide up the profits by the amount of effort put into the business.
If the founder wants to profit from their idea, they should be more worried about the equity they already have and their personal impact on its value than their annual compensation going forward. Continually getting paid for an idea you already had and were already compensated for is wild.
At what point is something with somebody's name on it that they never touch, but is completely created and maintained by others, considered not their creation anymore? I would think it would be death, but it's probably 70 years after death. Thousands of people, laboring day and night on the creation of a dead man who even when he was alive may have never quite known how it worked.
What proportion of CEOs are also the founders of the company?
If they can create everything why do they need employees?
To expand the scale so they can provide their creation to more people. If the employees can gain control most creators will simply choose to keep their creations small in scale so they can maintain their freedom. Often the only way people are convinced to part with this control is copious amounts of money.
Most of the things that a company produces are created by the employees.
Why don't the employees just go and produce it on their own? That way they can capture 100% of the value they produce.
That would work better than if the CEO and the business owner tried the same.
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If this money was distributed among the wealthiest 10% it would be far more distributed than it is now.
Most of the people driving the 399x compensation figure are in the top fraction of a percent for wealth, and even small-time CEOs are mostly well above 90th percentile earners.
Most of the people driving the 399x compensation figure are in the top fraction of a percent for wealth, and even small-time CEOs are mostly well above 90th percentile earners.
Even if this is true, which I would need citations for, the wealthiest 10% of Americans is way broader than the singular CEO. They'd spend more money, pay more taxes, and generally distribute the money more broadly.
How about, the rest of the employees, whose nominal wages have remained almost completely flat in the same timeframe?
It's just sad to see the situation summed to these two options
Simple solution: make the employees the shareholders.
> The wealthiest 10% own almost 90% of stocks.
Source? Whenever I spot check this, the majority of individual company stocks are owned by index and mutual funds, and there’s no clear way to break down who holds those funds.
Source? Whenever I spot check this, the majority of individual company stocks are owned by index and mutual funds, and there’s no clear way to break down who holds those funds.
MOVIE PLOT: Refined hedge fund/blackmail ring whisks potential CEOs to private island, gets candidates all liquored-up, at which point children engage in 'activities' with them.
This is all recorded.
Later, CEOs invest large chunks of their salaries in the 'hedge fund'.
Evidence never quite leaks, as the 'hedge fund' has quite a few customers in various public offices.
Oh, never mind. Too far-fetched. Couldn't be happening. Right in front of everyone. Now.
This is all recorded.
Later, CEOs invest large chunks of their salaries in the 'hedge fund'.
Evidence never quite leaks, as the 'hedge fund' has quite a few customers in various public offices.
Oh, never mind. Too far-fetched. Couldn't be happening. Right in front of everyone. Now.
These remarks about the salary of the last percentile of the population only serve to raise controversy.
If you want to see how people's well-being has evolved, you have to make somewhat more intelligent comparisons: for example by looking at what people can afford today compared to 50 years ago, or through quality of life indexes. The only thing that has changed for the worse seems to me to be the cost of real estate in the big cities, because of an obvious concentration of the population in them and not because the 1 percent of the population has bought everything.
But outraged people will always find something to be outraged about.
If you want to see how people's well-being has evolved, you have to make somewhat more intelligent comparisons: for example by looking at what people can afford today compared to 50 years ago, or through quality of life indexes. The only thing that has changed for the worse seems to me to be the cost of real estate in the big cities, because of an obvious concentration of the population in them and not because the 1 percent of the population has bought everything.
But outraged people will always find something to be outraged about.
You seem to have missed that the thrust of the article could more be about overpaid CEO's than it is about underpaid workers.
How likely are the odds their proposed solutions will result in better pay for workers? Rather than just higher tax rates?
Only one mentions workers pay:
> setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation
Even that doesn't seem like a good incentive to pay workers more.
It's also not clear how the IRS is going to evaluate CEO pay -> yearly tax rate when this study uses 'realized gains' which often happen well after the fact, since CEOs are paid with stock/equity. The study mentions almost all of the growth has been via the % of stocks CEOs now get, not their actual salary.
Only one mentions workers pay:
> setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation
Even that doesn't seem like a good incentive to pay workers more.
It's also not clear how the IRS is going to evaluate CEO pay -> yearly tax rate when this study uses 'realized gains' which often happen well after the fact, since CEOs are paid with stock/equity. The study mentions almost all of the growth has been via the % of stocks CEOs now get, not their actual salary.
Overpaid with respect to what? The comparison CEO-worker is not explicitly stated, but it's not very hidden either.
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> CEOs are getting ever-higher pay over time because of their power to set pay and because so much of their pay (more than 80%) is stock-relate
This is the key to their high compensations, and in some ways it has to be like that because how else are you going to incentivize a CEO to raise the value of the company? Say a CEO was paid exactly what the engineers at a company were paid, it doesn't matter to him if the stock goes up or down because his pay stays the same. By tying the CEO's salary to the stock price, you're telling them that they can make a killing if the company makes a killing.
It's unfair but it's necessary.
This is the key to their high compensations, and in some ways it has to be like that because how else are you going to incentivize a CEO to raise the value of the company? Say a CEO was paid exactly what the engineers at a company were paid, it doesn't matter to him if the stock goes up or down because his pay stays the same. By tying the CEO's salary to the stock price, you're telling them that they can make a killing if the company makes a killing.
It's unfair but it's necessary.
How about you fire them if they don't perform and only hire people who perform well. Even with this incentive most CEOs don't perform well and many gut their companies to raise the stock price and leave.
This is a really important point. Seems like the people who are justifying pay imbalances are doing so on the basis of conflating a company's value with its stock price.
Ultimately the question comes down to your ethics around money, but it is interesting to get a peek behind the psychological veil. People who worship CEOs for being able to pull big buxxx do so because they assume that more money in existence is better, period, without thinking about where that money goes and what it funds.
Ultimately the question comes down to your ethics around money, but it is interesting to get a peek behind the psychological veil. People who worship CEOs for being able to pull big buxxx do so because they assume that more money in existence is better, period, without thinking about where that money goes and what it funds.
Wow, really? The CEO needs to be incentivized 399 times? Pretty sure anything more than 0 would work. Wow, just wow that someone can actually think and better yet write it out. Nobody needs a 399X incentive. That is just stupid.
You're not competing with normal employees but with other CEOs and with other companies.
I don’t think there’s all that much concern about incentive packages tied to performance.
The question in my mind is: how much compensation is required to provide that incentive? And is it reasonable for that to result in a small portion of people making not just more than the typical person, but astronomically more to the point where the typical person is left very nearly broke and powerless?
The question in my mind is: how much compensation is required to provide that incentive? And is it reasonable for that to result in a small portion of people making not just more than the typical person, but astronomically more to the point where the typical person is left very nearly broke and powerless?
The real question is: How much money are the shareholders happy to pay for a CEO to accomodate their level of risk and their level of confidence in the returns?
If they could pay less, they would.
If they could pay less, they would.
Damn, why did people create companies for the past 300 years ? Why did people become entrepreneur ? They didn't have anywhere close to 400 times their workers salary, must have been a miserable life
What's the point of it all when you have enough money to sustain your entire genealogy tree from the birth of earth to the heat death of the universe ?
These people are clinically ill
What's the point of it all when you have enough money to sustain your entire genealogy tree from the birth of earth to the heat death of the universe ?
These people are clinically ill
How many companies in the last 300 years were as large as amazon or walmart?
A local hairdressing salon owner/director doesn't earn a lot more than the employees there.
Maybe it's time to disincentivize huge companies in favour of many smaller ones.
A local hairdressing salon owner/director doesn't earn a lot more than the employees there.
Maybe it's time to disincentivize huge companies in favour of many smaller ones.
> A local hairdressing salon owner/director doesn't earn a lot more
That is linear thinking, however income is very non-linear. In New Zealand minimum wage is ~$800 for 40 hours and you might have $100 disposable income after living expenses. Let’s say the owner gets $1200 at the end of the week. Their disposable income has increased by wayyy more than a 1:1 ratio. That is why you really care about a $0.50 pay rise if you are working near minimum wage, because it makes a huge difference to your marginal disposable income.
If you are “normal” minimum-wage then you compete for rental properties against all other normal people, so costs rise to soak up disposable income. A similar dynamic occurs for most people in middle/professional income levels - people compete against each other to pay as much as possible of their income on their mortgage and so they also don’t end up with as much disposable income as you might think. You probably know people in the 1% income bracket that are struggling to make ends meet due to that reason (they are way better off, and have far more disposable income and savings, but not as much as one might naively assume).
That is linear thinking, however income is very non-linear. In New Zealand minimum wage is ~$800 for 40 hours and you might have $100 disposable income after living expenses. Let’s say the owner gets $1200 at the end of the week. Their disposable income has increased by wayyy more than a 1:1 ratio. That is why you really care about a $0.50 pay rise if you are working near minimum wage, because it makes a huge difference to your marginal disposable income.
If you are “normal” minimum-wage then you compete for rental properties against all other normal people, so costs rise to soak up disposable income. A similar dynamic occurs for most people in middle/professional income levels - people compete against each other to pay as much as possible of their income on their mortgage and so they also don’t end up with as much disposable income as you might think. You probably know people in the 1% income bracket that are struggling to make ends meet due to that reason (they are way better off, and have far more disposable income and savings, but not as much as one might naively assume).
> Maybe it's time to disincentivize huge companies in favour of many smaller ones.
That's a fight directly against market forces. It's exceptionally difficult to fight the market and usually quite unpopular.
That's a fight directly against market forces. It's exceptionally difficult to fight the market and usually quite unpopular.
Tech driven automation is creating opportunities that didn't exist before and there is way more competition.
CEOs have a crucial impact on company and are paid in stocks.
Does this article and related figure accounts for all the failed startups CEOs whose stock turned out to be worthless?
CEOs have a crucial impact on company and are paid in stocks.
Does this article and related figure accounts for all the failed startups CEOs whose stock turned out to be worthless?
I want to say: so what ?
Getting paid 50 times your employees isn't enough ? You need to get paid 400 times their salary ? Why stop there ? 800 times ?
The invisible hand doesn't exist and without regulations these things will get worse and worse
Getting paid 50 times your employees isn't enough ? You need to get paid 400 times their salary ? Why stop there ? 800 times ?
The invisible hand doesn't exist and without regulations these things will get worse and worse
It's the STOCK PRICE. Say you get 100 shares of a company at a value of $100/share every year you are CEO, that's a pay of $10k/yr. Now say the value goes up to $1000 because you helped get your company there.
And now all the people come out of the woodwork to tell you how greedy you are.
And now all the people come out of the woodwork to tell you how greedy you are.
But again that's just what we collectively agreed on, not a God given law that we have to keep forever, we could come up with other mechanisms
If you can't see the difference between early capitalism and the monster it became that's another problem
If you can't see the difference between early capitalism and the monster it became that's another problem
Your first two points have no evidence to support the notion that CEOs need to be paid as much as they are. Your third point is useless because all of the employees also got shafted.
No, it's not necessary. It's exactly why things like Intel's current situation happen. You get some douche with an economics background in charge that spends a decade optimizing for profit, and when you realize the company is fucked because everybody else is suddenly ahead of you, you just move on an sell your time there as a success, while the next guy tries to fix it. Which obviously means it will get pretty bad for a while, but that's ok, because when shareholders are fed up with it after a few years, you put one of those douches in charge again that can take credit for the eventual success of the previous guy's work.
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>>> incentivize a CEO to raise the value of the company
They don't. The workers do.
They don't. The workers do.
This kind of splitting indicates two potential things here and only one of them is concerning/needs addressing. First of all, the wages could be splitting because the labor market characteristics of the two jobs changed. This is completely reasonable given the increased foreign competition faced by the lower 3/4 or so of the labor force, as well as the increasing immigration pushing labor prices down for that labor cohort. The second thing that could be going on, and is concerning, is ceo board capture being abused to increase compensation beyond a competitive ceo wage. This is also believable because most of these big companies have no single large shareholder to push back on ridiculous wage proposals and the mechanics of how voting the shares works means management suggestion is very likely to be approved so the board is often at the whim of the CEO far more than they should be. Only this second cause needs some action to resolve (although I don't have a good recommendation on what that action would be).