Quote:
Originally Posted by Transplanted99
I have my beefs with executive pay, but have you considered that she/he also takes on greater responsibility and risk?
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This line of argument quickly devolves down to the notion that there should be some kind of cap on what people earn. Once we go there, we are essentially at "...to each according to their needs...".
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What is the risk they take on?
They are at no greater risk than their employees. If they fail, they go bankrupt. Just like a regular guy. There's no death penalty for CEOs. In Japan, they kill themselves when shamed, but our society has no shame--from top to bottom, actually, but not among CEOs, certainly.
And this is not a slippery slope towards salary caps. It is an argument for payment for work done rather than extortion, which is the case currently.
I am saying they didn't earn the money, so why give it to them?
I know why. It's called
extortion.
"My associates and I own bazillions of acres of land and we sit on piles of capital that you need*. If you don't let me continue to take a cut, I will cut off your access to that capital which is needed for the continued production of goods and services, and thus, profit. So pay me what I say."
*"We got this in large part as spoils of a few major wars and occupations, during which we taxed people to pay for our own industrial projects and took over huge tracts of natural resources, which we could do because we had a bit of capital at a time when many had none, so we got elected."
The entire bailout was due to extortion. "Too big to fail," "Don't burn your bridges," they said. In other words, though we did poorly and should be fired, you have to give us money or we will cut off your access to capital. And since the capital is so centralized, they can do this.
This is not a free market. It is truly a plutocracy. A free market would not allow you to use capital to buy other types of power, such as political power, which would then limit the market's freedom.
But that is what has happened: we have allowed people to amass wealth (on the heads of Indians, by the way, not earned but taken--acre by acre, dead Indian by dead Indian, slave by slave, that is not earned capital, that is theft) and then use it to stop the free market.
I said in my post specifically that I'm opposed to distribution by need. So your argument does not address my point, which is that CEO and other executive pay and corporate distribution of profits is not "unfair"--it is
unjust. Unfair implies that one has more than the other, but sometimes life is unfair.
Unjust implies that someone has wronged another. And that is what is happening here.
People have used extortion to demand higher and higher salaries that
go above their contribution to the profitability of the enterprise.
That is what I oppose.
And this highlights a key difference between them and people who have actual talent. Let's take athletes because I'm pretty convinced that the highest paid entertainers are not the most talented artists. In fact I'm almost positive. Most sports require an intelligence combined with physical prowess that is extremely rare. And indeed, we do see continued improvement in athleticism
coming from the athletes themselves.
Contrast this with CEO pay--my partner has a patent to his name and I have one, and we both make jack bunny, whereas the CEO of his company does not have an individual patent to his name but makes way, way, oh god so much more than us. The workers who cannot bargain face two challenges. First, as a worker, they need food, shelter, and clothing, which are running out as we speak (we are talking about renters with children) whereas the CEO needs nothing compared to the amount of wealth they are sitting on.
So the workers'/producers' bargaining power is limited: they cannot walk away from an offer. Athletes and new actors/singers are actually in this situation with the "regular people" at first. The CEO can continue selling an inferior product (in fact I'm 100% sure that Comcast does so on purpose, i.e. no pay per view on the Internet for sports, just as one example of how they could provide better service for less) because there's no competition for improvement. So he can say, "No thanks, don't need your great analytics / IT skills. My customers have to deal with me no matter what since I already bought the lawmaker who will prevent competition."
With sports it's somewhat different because the competition is built into the business model. They need the best athletes to get ratings. They can't all go ho-hum because the game stops improving. So I'm actually kind of okay with celebrity athletes though I do think a salary cap is a good think to keep the game evolving and support new talent. Still you could say that a player is playing 20 times better than the janitor could, or even 1,000 times better.
With mass media performing arts, there is yet a different force at work, which is that people want to look at pretty young things. And youth fades. So they always need to find the
next big thing, the zeitgeist. Madonna's over, Britney's here. Britney's pregnant, Lady Gaga's here. So the youth demand their money while they can. This model, however, is fading now that media is fragmenting to some extent. That's very important because it shows that it is the
lack of competition that causes centralization of power and wealth-- not some amazing centralization of talent, effort, and time put in.
Sure there are differences between talent, effort, and time, but they don't end up in 1,000 or 2,000 times the pay for a CEO and a working person.
Now let's look at what the CEO contributes to the company that could possibly justify his wages.
There are some CEOs, incidentally, who I find quite compelling.
Starbucks comes to mind. I worked at Starbucks and I hated it. I also was bad at my job, make a mistake with the till, and got fired, and I deserved it. I cried, because I was sad, but I didn't complain, and I learned my lesson, which was that I'm somewhat dyslexic and I shouldn't be working with numbers when I can't check my work. I thank Starbucks for the opportunity.
Howard Schultz deserves quite a lot of money, in my opinion. First of all, he has offered cheap stocks to associates since Starbucks started. He started with a cafe and turned it into a business. Not the world's best coffee, and many don't like how they operate, but he worked within the law and he achieved his goals. He also spread the wealth around, paying up to $2 more than the minimum wage even in the places in the country with the highest minimum wages. He is always looking to reward the people who make and serve the coffee with the fruits of their labor. He's not giving charity but recognizing that without the people to pick, roast and serve the coffee, he has nothing.
I am not opposed to Schultz being wealthy. I think he deserves it. What I am opposed to is the way the profit is divided between people working 6.5 hours per day (because Starbucks keeps them at part-time) and people like him who are probably working much more, and who take greater risks, but probably not a thousand times more effectively than their workers. Schultz earned, in salary only (this does not includes stocks, let him keep his stocks), over $21m. Assuming a 60-hour week with only two weeks of vacation per year, this is about 950 times more
per hour than the people who serve the coffee.
I will not even start on how much the people who
produce the coffee make. And speaking of risks, it is the coffee producers, without a doubt, that have the greatest risk in this game. Schultz, who does a great job organizing and marketing the product, is making about a million times more (if you include his stocks) in some cases than those who grow and pick the coffee he sells.
http://www.fews.net/sites/default/fi...14_02_en_0.pdf
The average Ethiopian coffee farmer earns
$900 cash / year.
The World Food Program is feeding the workers of coffee magnates. These farmers take on huge risks. Where are their bonuses when they produce a lot? There is no bonus: only extremely rich people saying, "Well, you guys all improved your production method and had a good year we get to choose from whom to buy, so you get less money."
Does that seem just to you?
Demanding a wage that depends on the production of one's labor is not begging. It is free trade and should be respected as such.
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