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Ideally and the way this system was designed is that the profits the private sector makes would be re-invested in the domestic market which would spur economic growth for everyone. But that surely isn't the case.
I'll tell you that in the past few decades all the strong economic growth in the domestic markets was business running stagnant profits. They were investing heavily.
Now it's the opposite. With tremendous profits and a stagnant 90% of the population. The money ain't flowing around.
Prices have increased and wages have been cut which means record profits. That's no good for the health of the economy. You need balance.
that is true but there is NO balance. the government is encouraging the population to SPEND (Bush has said it, Obama has said it, Gordon Brown said it to the UK, pretty much every government.. they are ALL directly responsible)..this means that companies profits go up at the expense of the average person. when people are spending, they are not investing and THAT is hurting their wealth. let me show you an example:
considering in this example, person is an average american, 20 years old, earning 50k a year after tax. what americans should be doing is investing 35k out of the 50k a year and only spend 15k a year on accomodation and living. if they keep investing 35k every year and get 5% interest every year, in 18 years they would be a millionaires ! and can retire from their jobs because they can live off the 5% interest from the million, which is $50k which is what they would be getting from their jobs, which means there will be a lower supply of workers and hence higher wages for others.
today, what that same average american, aged 20 and earns 50k a year does is pay $2k a month for a big house and $1k a month for a fancy car, spends the rest on fancy clothes, nights out, whatever, just all out spending. this person will end up working for 40 years plus, hogging their job and the job market forcing wage prices to drop year on year as the workers supply increases and at the end, their net worth will STILL be nowhere near $1 million.
It's all perceived value, really. There's no way any individual is truly worth the type of pay corporate CEO's get unless he or she founded the company, turned it from a failure to a success, or invented some incredible new product. The first 2 cases are rather rare - most corporate founders of large companies are retired or deceased, and in the last case, the product invention would actually be done by a bunch of engineers or similar workers, who'd probably each get a couple of hundred bucks bonus for their invention while the CEO gets a $10 million a year raise for "leadership" or some nonsense.
The real flaw, however in the argument that they "get paid what they are worth" is the sheer number of executives who get paid huge fortunes even when they complete fail. If a typical employee completely failed at his job, he'd be fired. At best, he might be let go with a piddly severance package. The executives, however, can often flounder miserably for years, still raking in more money per year than they could spend in a lifetime, and then when they fail, they STILL get paid lavish bonuses despite literally TAKING from the bottom line.
No, if this was about true value added, more executives would be paid far less, and they would not be rewarded for failure with lavish severance packages that alone could pay all of man's bills for the rest of his life. Note that the same idea applies to many sports stars, movie stars, etc. Plenty of them fail regularly, and get paid the same regardless of performance. That movie actor that only shows up in terrible movies? He's still richer than you. That professional sports team that hasn't made the playoffs in years? Yep, they all make more money than you. Failure is clearly being rewarded - or at least tolerated with huge salaries - so it's not about the bottom line.
Of course, people will claim that companies "have to do this to get talent," but that poorly sidesteps just how many terrible executives there are out there who, despite being paid a king's ransom per year, still are unable to do their jobs - great "talent" there. It also makes the poor assumption that "demanding more money" = "more talented." We'd all like to be paid more, sure, but what company would put out an job ad for employees and then hire the guy who demanded the HIGHEST wage?! Of course that wouldn't happen - companies lowball their employees all the time - and yet we're to believe that tossing ever greater amounts of cash into the money pit of executive compensation is somehow a good thing and a way to ensure "talent." Yeah, I'm not buying it.
If you feel a CEO shouldn't make the money he/she is receiving, don't buy stock in that company or products from them.
Cute idea, but it assumes 2 things:
1) That there's any reasonable choice. You're assuming that grossly overpaid executives are the exception. They are the norm, and most cases, you'd be hard-pressed to find any options if they even exist.
2) You're assuming that a consumer boycott over such a thing will make any difference. It won't. To give you an example, Wal-mart and McDonald's are two of the most hated and boycotted "big name" stores in this nation. Both are doing just fine, and continue their practices of shoddy products, lousy pay, and big executive compensation.
That there's any reasonable choice. You're assuming that grossly overpaid executives are the exception. They are the norm, and most cases, you'd be hard-pressed to find any options if they even exist.
This comes off as if there's something wrong with it....
You make some interesting points. People forget the basis of capitalism is capitalizing off other people and opportunities. This system naturally leads to corruption and M.O.E..
All systems lead to corruption, from the very first form, to the end of days. The beauty of capitalism is the ability for anyone to start their own business. Whats happened to this system? Cronyism. Its near impossible to start up a small business now due to heavy barriers to entry, too many taxes, too much corporate competition from companies with DEEEEEEEP pockets. The list goes on.
We used to break up monopolies in this nation, but thats gone the wayside for some reason.
It's all perceived value, really. There's no way any individual is truly worth the type of pay corporate CEO's get unless he or she founded the company, turned it from a failure to a success, or invented some incredible new product. The first 2 cases are rather rare - most corporate founders of large companies are retired or deceased, and in the last case, the product invention would actually be done by a bunch of engineers or similar workers, who'd probably each get a couple of hundred bucks bonus for their invention while the CEO gets a $10 million a year raise for "leadership" or some nonsense.
The real flaw, however in the argument that they "get paid what they are worth" is the sheer number of executives who get paid huge fortunes even when they complete fail. If a typical employee completely failed at his job, he'd be fired. At best, he might be let go with a piddly severance package. The executives, however, can often flounder miserably for years, still raking in more money per year than they could spend in a lifetime, and then when they fail, they STILL get paid lavish bonuses despite literally TAKING from the bottom line.
No, if this was about true value added, more executives would be paid far less, and they would not be rewarded for failure with lavish severance packages that alone could pay all of man's bills for the rest of his life. Note that the same idea applies to many sports stars, movie stars, etc. Plenty of them fail regularly, and get paid the same regardless of performance. That movie actor that only shows up in terrible movies? He's still richer than you. That professional sports team that hasn't made the playoffs in years? Yep, they all make more money than you. Failure is clearly being rewarded - or at least tolerated with huge salaries - so it's not about the bottom line.
Of course, people will claim that companies "have to do this to get talent," but that poorly sidesteps just how many terrible executives there are out there who, despite being paid a king's ransom per year, still are unable to do their jobs - great "talent" there. It also makes the poor assumption that "demanding more money" = "more talented." We'd all like to be paid more, sure, but what company would put out an job ad for employees and then hire the guy who demanded the HIGHEST wage?! Of course that wouldn't happen - companies lowball their employees all the time - and yet we're to believe that tossing ever greater amounts of cash into the money pit of executive compensation is somehow a good thing and a way to ensure "talent." Yeah, I'm not buying it.
Failure is rewarded because it all boils down to cronyism; once you make it within the "inner circle" of your field, whether it be the CEO/shareholder/director class, Hollywood elite, or the NFL, you are protected so long as you toe the line.
A powerful CEO, with numerous connections and influence, is not someone you want to **** off by holding them "accountable" with piddly severance packages....one day they will be sitting on your board so you better play nice.
Same with famous actors.....regardless of their talent.....if they have the wealth, connections, and influence, its really not in anyone's career interest to tell them their acting sucks. So they will continue to get star roles even if better qualified talent exists.
This notion that those at the top all got there by sheer talent and merit alone reflects a childish naivete of those who espouse it. Failure and punishment is something that is only experienced by the little people. The elite are largely exempt.
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