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Salary caps for CEOs

OMGJustinBieber
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5/26/2013 10:29:32 PM
Posted: 3 years ago
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.
darkkermit
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5/26/2013 10:34:17 PM
Posted: 3 years ago
The theory is that if salaries are based on supply and demand, then resources are allocated effectively. CEOs are paid high salaries because they are the best and can increase the output of their company more than the amount they are paid in wages. This end results in cheaper goods and services for consumers. Plus, this is a volunteer transaction in which both parties benefit from it. Nobody is harmed from CEOs salaries.
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TamikaJones17
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5/26/2013 10:40:27 PM
Posted: 3 years ago
The idea that the government can tell you that you can't give your money to someone after you have spent your life earning it and the government has already taken 33% of it in taxes. CEOs are paid by a board of directors who either own or represent someone who owns a significant portion of the company.
Contra
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5/26/2013 10:48:31 PM
Posted: 3 years ago
Another way to look at it is a 100% tax on all income earned above a certain rate. Nobody is going to work once they reach that income tax threshold, they'll stop working and halt their business operations, harming the economy (less production and therefore less hiring, halted payments of wages to workers, fewer goods to consume, lower potential GDP, etc).

So no revenue is collected, while a deadweight harm is imposed on the economy. All the while it violates people's freedom, and the basic essence of the free market system -- which says that people should receive wages which equal their contribution to the economy -- is violated.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

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OMGJustinBieber
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5/26/2013 10:54:06 PM
Posted: 3 years ago
At 5/26/2013 10:34:17 PM, darkkermit wrote:
The theory is that if salaries are based on supply and demand, then resources are allocated effectively. CEOs are paid high salaries because they are the best and can increase the output of their company more than the amount they are paid in wages. This end results in cheaper goods and services for consumers. Plus, this is a volunteer transaction in which both parties benefit from it. Nobody is harmed from CEOs salaries.

I understand nobody is harmed and that CEOs are often very talented, but I don't see why anyone would need the excessive amount of money that they earn. Why can't salaries excessive of, say, a few million be allocated to the workers? The CEO still ends up fine here.

I don't take the fairness claim seriously (that is, that CEOs deserve it because they're the best.) I understand that it's voluntary, but I'm not impressed.

Do goods rise in price if, say, instead of $15 mil the CEO gets like $10 mil? Wouldn't it matter what he's doing with the money? If he reinvests it into the company fine, but otherwise...
darkkermit
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5/26/2013 11:20:05 PM
Posted: 3 years ago
At 5/26/2013 10:54:06 PM, OMGJustinBieber wrote:
At 5/26/2013 10:34:17 PM, darkkermit wrote:
The theory is that if salaries are based on supply and demand, then resources are allocated effectively. CEOs are paid high salaries because they are the best and can increase the output of their company more than the amount they are paid in wages. This end results in cheaper goods and services for consumers. Plus, this is a volunteer transaction in which both parties benefit from it. Nobody is harmed from CEOs salaries.

I understand nobody is harmed and that CEOs are often very talented, but I don't see why anyone would need the excessive amount of money that they earn. Why can't salaries excessive of, say, a few million be allocated to the workers? The CEO still ends up fine here.

Because there simply isn't enough money. For example, if you were take all the money the CEO of Mcdonald's make and distribute it to the workers, the end result is that they'd only get a few bucks a year from it, not a significant sum at all. And the end result w/out a CEO is that.

You can say that nobody needs to own that much money, but you can theoretically say that about any industrialized country who lives middle class. Most people don't spend money need solely based on survival. After about $10,000 in GDP per capita for nations, people's life expectancy doesn't change much at all.

It doesn't matter if the CEO needs that excessive amount of money. He/she can still want it. And it should also be noted that most of the super-wealthy actually spend their money on philanthropy. Think how much Bill Gates has done from his foundation.

I don't take the fairness claim seriously (that is, that CEOs deserve it because they're the best.) I understand that it's voluntary, but I'm not impressed.

Don't see why not?

Do goods rise in price if, say, instead of $15 mil the CEO gets like $10 mil? Wouldn't it matter what he's doing with the money? If he reinvests it into the company fine, but otherwise...

Yes, prices would rise and/or profits would fall. In terms of reinvestment, there's really no point. Even a CEO's pay is insignificant to the total amount of assets a company owns. There's no reason a CEO needs to reinvest in his or her company, because other financial institutions can do that if its a worthwhile investment.
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wrichcirw
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5/26/2013 11:43:05 PM
Posted: 3 years ago
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I addressed this a long, long time ago as a precursor to my debate about CEO pay:

Lets assume that in 1990, McDonald's had only 100,000 workers, and One CEO. The workers receive $20,000 annually, and just for argument's sake, the CEO received $1 million annually. That's 50 times a worker's salary. I think most people can accept that a CEO's job is a lot more demanding and requires compensation close to this level.

Let's also assume that today, McDonald's has 400,000 workers, and One CEO. The workers still receive $20,000 annually. Should the CEO still receive $1 million? No. If he really did grow this business by four times, the CEO should be paid four times what he was paid in 1990, i.e. the CEO SHOULD be paid $4 million. That's 200 times a worker's salary, AND IT IS FULLY JUSTIFIED.

This is because as the work force expands, leadership does not. Leadership CANNOT expand, because it would cause ridiculous gridlock - you don't want 50 CEOS shouting over each other trying to get things done.

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Therefore, the AFL-CIO argument is totally invalid.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
OMGJustinBieber
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5/27/2013 12:02:58 AM
Posted: 3 years ago
Don't see why not?

I'm going to bed right now so I'll just address this one since it's the only one I have a quick and easy answer to. You're actually engaging in philosophy if you want to argue that since something is voluntary it has some kind of superior status to the non-voluntary. Outside of that I'm simply not impressed because simply because a worker agrees to a contract doesn't mean his situation is a-okay - what are his alternatives? A narrow focus on whether something is voluntary is taken at great ignorance of other factors; I don't see why anyone should be taken in by the point that a CEO deserves his excesses based on brilliant personal qualities or that it's his due given the risk/reward of the free market. This displays great ignorance of inter-personal factors and the factors that allowed him to undertake that effort in the first place.
Logical-Master
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5/27/2013 12:05:50 AM
Posted: 3 years ago
It's bad because the federal government has no compelling interest in setting "pay caps." Frankly, it has no business setting "minimum wage" either, but that's a different story.

Regardless, you're more than welcome to avoid doing business with any company that has a CEO with what you consider "a large salary." Granted, I recommend you promptly toss your computer out of the window as well as just about every other commodity in your home.
suttichart.denpruektham
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5/27/2013 1:48:52 AM
Posted: 3 years ago
At 5/26/2013 11:20:05 PM, darkkermit wrote:
At 5/26/2013 10:54:06 PM, OMGJustinBieber wrote:
At 5/26/2013 10:34:17 PM, darkkermit wrote:
The theory is that if salaries are based on supply and demand, then resources are allocated effectively. CEOs are paid high salaries because they are the best and can increase the output of their company more than the amount they are paid in wages. This end results in cheaper goods and services for consumers. Plus, this is a volunteer transaction in which both parties benefit from it. Nobody is harmed from CEOs salaries.

I understand nobody is harmed and that CEOs are often very talented, but I don't see why anyone would need the excessive amount of money that they earn. Why can't salaries excessive of, say, a few million be allocated to the workers? The CEO still ends up fine here.

Because there simply isn't enough money. For example, if you were take all the money the CEO of Mcdonald's make and distribute it to the workers, the end result is that they'd only get a few bucks a year from it, not a significant sum at all. And the end result w/out a CEO is that.

You can say that nobody needs to own that much money, but you can theoretically say that about any industrialized country who lives middle class. Most people don't spend money need solely based on survival. After about $10,000 in GDP per capita for nations, people's life expectancy doesn't change much at all.

It doesn't matter if the CEO needs that excessive amount of money. He/she can still want it. And it should also be noted that most of the super-wealthy actually spend their money on philanthropy. Think how much Bill Gates has done from his foundation.

I don't take the fairness claim seriously (that is, that CEOs deserve it because they're the best.) I understand that it's voluntary, but I'm not impressed.

Don't see why not?

Do goods rise in price if, say, instead of $15 mil the CEO gets like $10 mil? Wouldn't it matter what he's doing with the money? If he reinvests it into the company fine, but otherwise...

Yes, prices would rise and/or profits would fall. In terms of reinvestment, there's really no point. Even a CEO's pay is insignificant to the total amount of assets a company owns. There's no reason a CEO needs to reinvest in his or her company, because other financial institutions can do that if its a worthwhile investment.

In some instances it is also a cheaper alternative as even that excessive amount the CEO made is still only a fraction of what he made for the company. If this is to be calculated by traditional method, let's say salary basic, a CEO earning 3 percent of the increased revenue he made for the company can be extremely large amount. As the old said, sometime it is cheaper to simply buy him off, and this is often the case.
FREEDO
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5/27/2013 6:09:22 AM
Posted: 3 years ago
The idea that everything in the economy just sorts itself out because it's voluntary, is completely thoughtless.

The market is full of randomness and inconsistency. Things may work out great sometimes but never always. Because things never work out the same.

Most Capitalist countries have CEO-to-worker pay ratios much lower than the United States. Because that's just the way it has worked out. America has a very serious inequality problem.

In larger part, things like this are the result of culture. We think of the economy as a mechanical thing that always works the same way with the same rules. But that's not so. Culture has a huge impact on economies.

And America, simply put, has a pretty messed up culture.

It isn't always necessary to step in. We need to look at things on a case by case basis. Because there's always different context. And blind ideology can't cope with that.

I quite like the idea the French had here. Not sure if they actually implemented it. But there was at least a proposed law that said, rather than raising the minimum wage, that CEO-to-worker pay had to be below a certain ratio. This makes a lot of sense. As a society, there has to be a point where we decide things have gone too far. The market isn't always going to work out perfect. The market is all over the place. We should find that place, tailored to our needs, and set a standard there. Then let the market do the rest.

The economy works best with checks and balances. I think Capitalism and Socialism can both back each other up when they inevitably have their own failures. That was the big failure of socialism in the 20th century. It completely disallowed Capitalism to exist. Likewise, when Socialism is left out of the equation, market failures will occur.
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muzebreak
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5/27/2013 6:21:41 AM
Posted: 3 years ago
"Every kid starts out as a natural-born scientist, and then we beat it out of them. A few trickle through the system with their wonder and enthusiasm for science intact." - Carl Sagan

This is the response of the defenders of Sparta to the Commander of the Roman Army: "If you are a god, you will not hurt those who have never injured you. If you are a man, advance - you will find men equal to yourself. And women.
darkkermit
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5/27/2013 11:49:58 AM
Posted: 3 years ago
At 5/27/2013 6:09:22 AM, FREEDO wrote:
The idea that everything in the economy just sorts itself out because it's voluntary, is completely thoughtless.

The market is full of randomness and inconsistency. Things may work out great sometimes but never always. Because things never work out the same.

Most Capitalist countries have CEO-to-worker pay ratios much lower than the United States. Because that's just the way it has worked out. America has a very serious inequality problem.

In larger part, things like this are the result of culture. We think of the economy as a mechanical thing that always works the same way with the same rules. But that's not so. Culture has a huge impact on economies.

Agreed, but I don't see the point.

And America, simply put, has a pretty messed up culture.

This is just an opinion. There's nothing wrong with people obtaining a lot of wealth. And if the culture is the reason that CEOs have higher salaries, then legislation doesn't change the culture completely.

It isn't always necessary to step in. We need to look at things on a case by case basis. Because there's always different context. And blind ideology can't cope with that.

I quite like the idea the French had here. Not sure if they actually implemented it. But there was at least a proposed law that said, rather than raising the minimum wage, that CEO-to-worker pay had to be below a certain ratio. This makes a lot of sense. As a society, there has to be a point where we decide things have gone too far. The market isn't always going to work out perfect. The market is all over the place. We should find that place, tailored to our needs, and set a standard there. Then let the market do the rest.

That's a terrible idea, because there's so many factors involved with that punish certain things. If you work at a high-tech company, then since even the low paying workers obtain huge salaries, this pushed up the salaries of people in high-tech industries. Likewise, in low-tech industries, this is unable to attract quality CEOs. It also creates a situation where one can't take advantage of economics of scale (the larger the company, the larger the CEO pay because his/her decisions have a larger effect and involve more monetary gains/losses). This also becomes questionable when you have a multinational corporation involved. Does this mean that there can't be a McDonald's in France, since american CEOs are paid an extraordinary amount.
I mean the amount of unintended consequences from this bill is extraordinary and its actually telling when the French themselves didn't even pass the bill.

The economy works best with checks and balances. I think Capitalism and Socialism can both back each other up when they inevitably have their own failures. That was the big failure of socialism in the 20th century. It completely disallowed Capitalism to exist. Likewise, when Socialism is left out of the equation, market failures will occur.

I understand when there are market failures, but having someone become wealthy isn't one of them. I don't understand why people wish to punish people just for becoming wealthy.
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darkkermit
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5/27/2013 11:55:47 AM
Posted: 3 years ago
Let's take Japan for example. It has a situation where CEOs to worker ratio is lower. However, this is because of its collectivist culture. Is a collectivist culture necessary something to strive for? No because it means that your actions and decisions aren't automatically yours, and are deferred to the decisions of the group. This puts people in situations where they are trapped due to lack of choice and freedom, and as a result Japan has such a huge suicide rate.
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darkkermit
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5/27/2013 12:02:07 PM
Posted: 3 years ago
Actually interesting enough, one of the reasons why there's been a sudden rise in CEO pay is because now the data on CEO pay is public. This creates a situation where CEOs have better information on whether they think they are underpaid or not and allows them to compare themselves to their other CEO counterparts. As a result, this creates a situation where CEOs feel inadequate about their own pay and demand a higher salary.
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wrichcirw
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5/27/2013 3:12:35 PM
Posted: 3 years ago
At 5/27/2013 11:55:47 AM, darkkermit wrote:
Let's take Japan for example. It has a situation where CEOs to worker ratio is lower. However, this is because of its collectivist culture. Is a collectivist culture necessary something to strive for? No because it means that your actions and decisions aren't automatically yours, and are deferred to the decisions of the group. This puts people in situations where they are trapped due to lack of choice and freedom, and as a result Japan has such a huge suicide rate.

The bolded does not logically follow from lower CEO to worker ratios.

Lower CEO to worker ratios would merely suggest that the average size of a Japanese business is much smaller than elsewhere. I don't know what data you're looking at, so it's not possible to analyze your comment any further.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Lordknukle
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5/27/2013 5:38:55 PM
Posted: 3 years ago
Lefties seem to not understand the concept of possession, i.e., the salary of the CEO is his business and he gets to keep whatever he wants because it's his money- not the society's money up for redistribution.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
darkkermit
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5/27/2013 5:52:09 PM
Posted: 3 years ago
At 5/27/2013 3:12:35 PM, wrichcirw wrote:
At 5/27/2013 11:55:47 AM, darkkermit wrote:
Let's take Japan for example. It has a situation where CEOs to worker ratio is lower. However, this is because of its collectivist culture. Is a collectivist culture necessary something to strive for? No because it means that your actions and decisions aren't automatically yours, and are deferred to the decisions of the group. This puts people in situations where they are trapped due to lack of choice and freedom, and as a result Japan has such a huge suicide rate.

The bolded does not logically follow from lower CEO to worker ratios.

Lower CEO to worker ratios would merely suggest that the average size of a Japanese business is much smaller than elsewhere. I don't know what data you're looking at, so it's not possible to analyze your comment any further.

Yes, but collectivist organizations tend to care more about equality. For example, hunter-gather societies had a more egalitarian distribution of resources. Resources are evenly distributed in a family. In a collective corporation, it is looked down upon for a CEO to earn a lot more money then their workers, and people's performance might suffer as a result of this demoralization.

In the US, its completely different. A high CEO pay is an indicator of status, and a CEO would be looked down upon for having a low salary. Furthermore, there's something called the "tournament theory" in which you can motivate people to work if you offer them the possibility of a high-paying promotion for doing so, which requires a very individualistic way of doing work (competing against your own co-workers). The CEO salary being the ultimate prize.
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wrichcirw
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5/27/2013 7:07:09 PM
Posted: 3 years ago
At 5/27/2013 5:52:09 PM, darkkermit wrote:
At 5/27/2013 3:12:35 PM, wrichcirw wrote:
At 5/27/2013 11:55:47 AM, darkkermit wrote:
Let's take Japan for example. It has a situation where CEOs to worker ratio is lower. However, this is because of its collectivist culture. Is a collectivist culture necessary something to strive for? No because it means that your actions and decisions aren't automatically yours, and are deferred to the decisions of the group. This puts people in situations where they are trapped due to lack of choice and freedom, and as a result Japan has such a huge suicide rate.

The bolded does not logically follow from lower CEO to worker ratios.

Lower CEO to worker ratios would merely suggest that the average size of a Japanese business is much smaller than elsewhere. I don't know what data you're looking at, so it's not possible to analyze your comment any further.

Yes, but collectivist organizations tend to care more about equality. For example, hunter-gather societies had a more egalitarian distribution of resources. Resources are evenly distributed in a family. In a collective corporation, it is looked down upon for a CEO to earn a lot more money then their workers, and people's performance might suffer as a result of this demoralization.

In the US, its completely different. A high CEO pay is an indicator of status, and a CEO would be looked down upon for having a low salary. Furthermore, there's something called the "tournament theory" in which you can motivate people to work if you offer them the possibility of a high-paying promotion for doing so, which requires a very individualistic way of doing work (competing against your own co-workers). The CEO salary being the ultimate prize.

Ok, I think I get where you're going now. When you said "CEO to worker ratios" I thought you meant actual people. It's clear to me now you meant "CEO pay vs worker pay", in which case your point makes sense to me.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
innomen
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5/28/2013 3:11:50 PM
Posted: 3 years ago
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I don't understand why this would be a good idea. In absolute terms the CEO has far greater responsibility for the direction of a corporation. Why is it a good idea to allow government to involve itself with the pay of a private person? Don't you see this to be an obvious over step of government? Simply because it may feel good to you to have such a cap, certainly doesn't mean it is wise to do so. Feel good legislation is never justified by any actual good that is done. It's none of your business how much they get paid.
DanT
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5/28/2013 3:19:59 PM
Posted: 3 years ago
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

Their salaries are based on supply and demand. The CEOs are the supply and the board of directors is the demand. The demand created by the directors drives up the wage due to competition over the best qualified CEOs, while the supply of CEOs drive down the wage due to competition with other potential CEOs.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
OMGJustinBieber
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5/28/2013 3:34:11 PM
Posted: 3 years ago
At 5/28/2013 3:19:59 PM, DanT wrote:
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

Their salaries are based on supply and demand. The CEOs are the supply and the board of directors is the demand. The demand created by the directors drives up the wage due to competition over the best qualified CEOs, while the supply of CEOs drive down the wage due to competition with other potential CEOs.

This is a description, not a justification.
OMGJustinBieber
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5/28/2013 3:45:07 PM
Posted: 3 years ago
At 5/28/2013 3:11:50 PM, innomen wrote:
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I don't understand why this would be a good idea. In absolute terms the CEO has far greater responsibility for the direction of a corporation. Why is it a good idea to allow government to involve itself with the pay of a private person? Don't you see this to be an obvious over step of government? Simply because it may feel good to you to have such a cap, certainly doesn't mean it is wise to do so. Feel good legislation is never justified by any actual good that is done. It's none of your business how much they get paid.

Government is already involved with pay; do you not support income taxes? I can't say I do see it as an unwarranted overstep, we differ in political philosophy. I would agree, simply because I feel good about something doesn't mean it would be wise - that's why I've put it up to the rigor of DDOs economists to challenge. I don't uncritically accept the idea, I'm only toying with it. Why is it none of my business how much they get paid? Would you say the same thing for sweat shop workers?
DanT
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5/28/2013 4:33:57 PM
Posted: 3 years ago
At 5/28/2013 3:34:11 PM, OMGJustinBieber wrote:
At 5/28/2013 3:19:59 PM, DanT wrote:
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

Their salaries are based on supply and demand. The CEOs are the supply and the board of directors is the demand. The demand created by the directors drives up the wage due to competition over the best qualified CEOs, while the supply of CEOs drive down the wage due to competition with other potential CEOs.

This is a description, not a justification.
1st off, you are the affirmative so you must justify salary caps.
Furthermore;
Wage floors aka minimum wage prevent employees from forming contracts with the employer, thereby creating an labor surplus.
Wage ceilings aka wage caps prevent employers from forming contracts with employees, thereby creating a labor shortage.

The value of one's labor depends on the value of their relevant knowledge skills and abilities (KSAs). Notice how I said relevant... A doctor will not get paid more for a fry cook position simply because he has valuable medical skills. When you create a price ceiling you create a shortage of KSAs, and the people who are available for the CEO position are of lesser quality.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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5/28/2013 4:39:11 PM
Posted: 3 years ago
At 5/28/2013 3:45:07 PM, OMGJustinBieber wrote:
At 5/28/2013 3:11:50 PM, innomen wrote:
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I don't understand why this would be a good idea. In absolute terms the CEO has far greater responsibility for the direction of a corporation. Why is it a good idea to allow government to involve itself with the pay of a private person? Don't you see this to be an obvious over step of government? Simply because it may feel good to you to have such a cap, certainly doesn't mean it is wise to do so. Feel good legislation is never justified by any actual good that is done. It's none of your business how much they get paid.

Government is already involved with pay; do you not support income taxes?
No because direct taxation does not adjust to the market. If I was in favor of an income tax, I would favor a flat tax. The flatter the better.
I can't say I do see it as an unwarranted overstep, we differ in political philosophy. I would agree, simply because I feel good about something doesn't mean it would be wise - that's why I've put it up to the rigor of DDOs economists to challenge. I don't uncritically accept the idea, I'm only toying with it.
You would have to ignore supply and demand to think it is a good idea. Which surprisingly many often people do.
Why is it none of my business how much they get paid?
Why is it your business how much they get paid?
Would you say the same thing for sweat shop workers?
sweat shops hire workers illegally. Thus they are black markets. The issue with sweatshops are not that they pay low, but that the conditions are deplorable. If they were legal workers they would have other alternatives.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
sadolite
Posts: 8,837
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5/30/2013 5:28:52 PM
Posted: 3 years ago
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I think your allowance is to high, your parents should put a cap on any further increases even if you are given additional chores.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
Citrakayah
Posts: 1,500
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5/31/2013 11:47:10 AM
Posted: 3 years ago
At 5/26/2013 11:43:05 PM, wrichcirw wrote:
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I addressed this a long, long time ago as a precursor to my debate about CEO pay:

Lets assume that in 1990, McDonald's had only 100,000 workers, and One CEO. The workers receive $20,000 annually, and just for argument's sake, the CEO received $1 million annually. That's 50 times a worker's salary. I think most people can accept that a CEO's job is a lot more demanding and requires compensation close to this level.

Let's also assume that today, McDonald's has 400,000 workers, and One CEO. The workers still receive $20,000 annually. Should the CEO still receive $1 million? No. If he really did grow this business by four times, the CEO should be paid four times what he was paid in 1990, i.e. the CEO SHOULD be paid $4 million. That's 200 times a worker's salary, AND IT IS FULLY JUSTIFIED.

This is because as the work force expands, leadership does not. Leadership CANNOT expand, because it would cause ridiculous gridlock - you don't want 50 CEOS shouting over each other trying to get things done.

http://www.debate.org...

Therefore, the AFL-CIO argument is totally invalid.

Is it necessarily that more demanding? I can buy possibly more demanding, but fifty times more demanding than manning a check-out lane for hours on end? Not so bad if you're part-time, but full-time?
wrichcirw
Posts: 11,196
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5/31/2013 6:19:52 PM
Posted: 3 years ago
At 5/31/2013 11:47:10 AM, Citrakayah wrote:
At 5/26/2013 11:43:05 PM, wrichcirw wrote:
At 5/26/2013 10:29:32 PM, OMGJustinBieber wrote:
Someone tell me why this is a bad idea on economic grounds. It seems CEO pay has skyrocketed both in absolute terms and compared to workers, so I would like to explanation for the idea of caps are bad.

I addressed this a long, long time ago as a precursor to my debate about CEO pay:

Lets assume that in 1990, McDonald's had only 100,000 workers, and One CEO. The workers receive $20,000 annually, and just for argument's sake, the CEO received $1 million annually. That's 50 times a worker's salary. I think most people can accept that a CEO's job is a lot more demanding and requires compensation close to this level.

Let's also assume that today, McDonald's has 400,000 workers, and One CEO. The workers still receive $20,000 annually. Should the CEO still receive $1 million? No. If he really did grow this business by four times, the CEO should be paid four times what he was paid in 1990, i.e. the CEO SHOULD be paid $4 million. That's 200 times a worker's salary, AND IT IS FULLY JUSTIFIED.

This is because as the work force expands, leadership does not. Leadership CANNOT expand, because it would cause ridiculous gridlock - you don't want 50 CEOS shouting over each other trying to get things done.

http://www.debate.org...

Therefore, the AFL-CIO argument is totally invalid.

Is it necessarily that more demanding? I can buy possibly more demanding, but fifty times more demanding than manning a check-out lane for hours on end? Not so bad if you're part-time, but full-time?

If a burger-flipper is late to work, generally not a huge deal...maybe a McD's makes couple fewer burgers that day.

If the CEO is late for an investment meeting, that could mean the difference between making or breaking a multi-billion dollar deal.

So yes, more demanding, and 50x may be too conservative.

Personally, I believe CEOs should be mostly compensated via direct equity, and if so, I wouldn't mind them "earning" a lot more than they do now, since they would stand to lose a lot more if things go wrong. It would be cheaper for the company to implement, more effective in retaining CEOs, and would more fully align their interests to the interests of the company.

Right now most corporations just throw cash and pseudo-equity (stock options, which is essentially a cash-equivalent) at CEOs, because CEOs are in charge of setting their own pay.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
OMGJustinBieber
Posts: 3,484
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5/31/2013 10:18:25 PM
Posted: 3 years ago
So yes, more demanding, and 50x may be too conservative.

You're using "demanding" in a difference sense than Citrayakah used. Sure, we can probably all agree that more rides on the CEO's appearance at the meeting, i.e. that there is more pressure on him/her in terms of the fate of the company.

However, when "demanding" is conceived in terms of actual physical hardship or the frustration of daily tasks I think you'll probably need to give Citrayakah this one. This seems, generally, to be the original sense Citrayakah intended.
wrichcirw
Posts: 11,196
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5/31/2013 10:46:31 PM
Posted: 3 years ago
At 5/31/2013 10:18:25 PM, OMGJustinBieber wrote:
So yes, more demanding, and 50x may be too conservative.

You're using "demanding" in a difference sense than Citrayakah used. Sure, we can probably all agree that more rides on the CEO's appearance at the meeting, i.e. that there is more pressure on him/her in terms of the fate of the company.

However, when "demanding" is conceived in terms of actual physical hardship or the frustration of daily tasks I think you'll probably need to give Citrayakah this one. This seems, generally, to be the original sense Citrayakah intended.

IMHO the obvious question would then be, how important is physical labor in comparison to all of the mental acrobatics it would take to be an effective manager?

This was all in my debate, Daniel Pink addresses all of this in his TED talk, which I highly recommend. Although his talk isn't necessarily restricted to just CEOs, one clear message is that CEOs have to think out of the box, while wage-earners with mechanical tasks don't really have to think much at all to do their work.

Since we're talking about money, pay, and financial incentives, it's important to note then that this brain-power equates to financial responsibility. The fact that the CEO has ungodly amounts of financial responsibility compared to the burger flipper thus justifies an ungodly pay differential.

---

On frustrations with daily tasks, I'm almost certain a CEO that is actually attempting to make the company outperform will face exponentially more frustrations with daily tasks than any burger flipper. Maybe not physical hardship, but most certainly mental hardships.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?