Fiscal Inequality (formerly Cable TV)

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November 19th, 2014 at 4:28:44 PM permalink
Evenbob
Member since: Oct 24, 2012
Threads: 146
Posts: 25010
Quote: Pacomartin
I've looked at a lot of books. A lot of profit makes it into executive bonuses.


I heard a Dem today say that in 1965 the
typical big company CEO made 20 times
what the average worker made. Today
it's 350 times more. Is that possible?
If you take a risk, you may lose. If you never take a risk, you will always lose.
November 19th, 2014 at 4:37:56 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 1068
Posts: 12569
Quote: Evenbob
I heard a Dem today say that in 1965 the
typical big company CEO made 20 times
what the average worker made. Today
it's 350 times more. Is that possible?


I can't vouch for the exact numbers, but it sound correct. It was actually a change under the Clinton administration. In 1993, a change to the U.S. tax code capped deductions for executive pay at $1 million. But a loophole to the change allows “performance-based" income (pay packages like stocks that are directly tied to company's share performance, earnings or market share) to exceed the $1 million limit.

It is now the stock options which primarily contribute to that ratio.
November 20th, 2014 at 3:09:44 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 135
Posts: 18136
Quote: Pacomartin
I can't vouch for the exact numbers, but it sound correct. It was actually a change under the Clinton administration. In 1993, a change to the U.S. tax code capped deductions for executive pay at $1 million. But a loophole to the change allows “performance-based" income (pay packages like stocks that are directly tied to company's share performance, earnings or market share) to exceed the $1 million limit.

It is now the stock options which primarily contribute to that ratio.


This is very correct and actually a good thing. It gets rid of the "agency problem" thing which is when management own <100% of the stock in a company. So their pay should be tied to making the owner's richer.

If workers think what the CEO makes compared to them is too high then they should try and find a CEO job.
The President is a fink.
November 20th, 2014 at 10:07:25 AM permalink
TheCesspit
Member since: Oct 24, 2012
Threads: 23
Posts: 1929
Quote: AZDuffman
This is very correct and actually a good thing. It gets rid of the "agency problem" thing which is when management own <100% of the stock in a company. So their pay should be tied to making the owner's richer.

If workers think what the CEO makes compared to them is too high then they should try and find a CEO job.


Everyone's pay should be tied to making the owner's richer. The wage gap growth is a problem. I don't think there needs to be government regulation of top wage earners (a maximum wage, or excessive taxation), but I do think when wealth grows into the hands of the few there is a problem coming. Trickle down economics where a rising tide lifts all boats only works for those living on a boat. And on the water.

CEOs are paid what the market affords, so as long the market is relatively efficient, then it is what it is. I am not convinced the market is that efficient, but I have little evidence to dispute it, so it's a gut feeling.

(Taxation on the rich and corporations is screwy in the US anyways, and tax increases on the top earnings is definitely NOT the answer, whatever some of Democratic brain trustees think... they won't ever promote the need to increase taxation in the middle and low end, as it won't get them votes, even if it would fix some of the long term economic problems)
It is said that your life flashes before your eyes just before you die.... it's called Life
November 20th, 2014 at 2:39:50 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 135
Posts: 18136
Quote: TheCesspit
Everyone's pay should be tied to making the owner's richer. The wage gap growth is a problem. I don't think there needs to be government regulation of top wage earners (a maximum wage, or excessive taxation), but I do think when wealth grows into the hands of the few there is a problem coming.


If more people were paid that way then more would make more money themselves.

Quote:
CEOs are paid what the market affords, so as long the market is relatively efficient, then it is what it is. I am not convinced the market is that efficient, but I have little evidence to dispute it, so it's a gut feeling.


Thing it doesn't matter. If a CEO is getting paid too much sell your stock if you are a small investor. Otherwise it is NOYB.
The President is a fink.
November 24th, 2014 at 12:52:05 PM permalink
TheCesspit
Member since: Oct 24, 2012
Threads: 23
Posts: 1929
Quote: AZDuffman
If more people were paid that way then more would make more money themselves.


We agree then, but many companies don't pay 'stock' options or equivalent. The success of the company is divorced from their pay packets. It's binary... you either have a job, or you don't.

Quote:
Thing it doesn't matter. If a CEO is getting paid too much sell your stock if you are a small investor. Otherwise it is NOYB.


Wealth accumalation into the hands of the very few does matter. I'm not talking the 1%... I'm talking the 1% of the 1%. When economic wealth can and IS used as weapon to take rights away from others, then it does matter. And that is not a right/left liberal/conservative thing... the right is just as upset when their rights are taken by government or private enterprise working through government.

So yeah, CEO pay is not my business directly, but a widening gap IS. And no, taxing the rich more is NOT the solution. As I've said many times, may be not here, the US taxation system is a total shambles (flat tax is not the answer either). Everyone earning above a certain (but low amount) should pay some level of tax. Contributing is as important as taking (see example above of everyone having skin in the game).
It is said that your life flashes before your eyes just before you die.... it's called Life
November 24th, 2014 at 2:58:59 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 135
Posts: 18136
Quote: TheCesspit
We agree then, but many companies don't pay 'stock' options or equivalent. The success of the company is divorced from their pay packets. It's binary... you either have a job, or you don't.


It need not be stock options. In fact it is better if it is not options and is just at the local/store level. Stock options are best for officers. Line people give a sales goal or profit goal and pay them based on that. The reason it is so divorced is that so most employees prefer the guarantee than the chance to profit. They would rather have a 100% chance of $15 an hour than a 50% chance of $14 and a 50% chance of $18.


Quote:
Wealth accumalation into the hands of the very few does matter. I'm not talking the 1%... I'm talking the 1% of the 1%. When economic wealth can and IS used as weapon to take rights away from others, then it does matter. And that is not a right/left liberal/conservative thing... the right is just as upset when their rights are taken by government or private enterprise working through government.


Still there is no explanation WHY. What I make and what Mary Barra makes have zero to do with each other. Wealth is not zero-sum, more can and does get created. What does it matter?
The President is a fink.
November 25th, 2014 at 12:49:12 PM permalink
TheCesspit
Member since: Oct 24, 2012
Threads: 23
Posts: 1929
Quote:

Still there is no explanation WHY. What I make and what Mary Barra makes have zero to do with each other. Wealth is not zero-sum, more can and does get created. What does it matter?


Economic power concentrated in the hands of the few was the situation during most of human history.... the kings and lords and leaders of nations had immense wealth, while the rest had none. If you think this happening again won't cause a long term problem, then I hope I am mistaken and it'll all be fine. I don't claim it's a zero sum game. I know that Joe Bloggs in his two bedroom suburban house has in many ways more wealth than your average lord in the 1500's. That's not the problem. The problem is the distribution. Hugely unequal systems will lead to tension, division and eventually violence. What that results in, is unknown.

Wealth can be used to protest wealth. Has always been so, and those who earned it fairly may not be the ones to keep it. Wealth creators are valuable... but many who have wealth did not create it, they inherited it. Many who would like to create do not have the same opportunity as others.

What you earn and what Mary Barra are linked. Indirectly. It's unimportant on the micro scale. On the macro scale, I'm pretty sure it's a problem.
It is said that your life flashes before your eyes just before you die.... it's called Life
November 25th, 2014 at 4:22:21 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 135
Posts: 18136
Quote: TheCesspit
Economic power concentrated in the hands of the few was the situation during most of human history.... the kings and lords and leaders of nations had immense wealth, while the rest had none. If you think this happening again won't cause a long term problem, then I hope I am mistaken and it'll all be fine. I don't claim it's a zero sum game. I know that Joe Bloggs in his two bedroom suburban house has in many ways more wealth than your average lord in the 1500's. That's not the problem. The problem is the distribution. Hugely unequal systems will lead to tension, division and eventually violence. What that results in, is unknown.


There are differences today. The peasants had no chance to own much. Some owned small plots but many more did not. The peasants could not move up the social scale and even the middle class was locked out of the political system. Today you can move between classes. The threat I see is not from wealth concentration, it is from the greed of entitlement. Too many people thinking they have a "right" to have their needs met by the labor of others.

For a simple example of this, look at "living wage" laws. People demand a wage based on what they say they need, not what they produce.


Quote:
What you earn and what Mary Barra are linked. Indirectly. It's unimportant on the micro scale. On the macro scale, I'm pretty sure it's a problem.


Uh, no they are not. I work in the oil and gas industry and she is in the auto industry. I will never buy one of her products as I believe her firm was stolen from its rightful owners. We do not even live in bordering states. Sorry, no connection.
The President is a fink.
November 25th, 2014 at 5:08:08 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 1068
Posts: 12569
Quote: TheCesspit
Hugely unequal systems will lead to tension, division and eventually violence.

What you earn and what Mary Barra are linked. Indirectly.


An interesting choice ! The daughter of a die maker, she worked her way up the ladder in Human Resources, traditionally the one avenue of corporate America that women tend to rise. So from a very middle class background she quickly moved in the last few years to CEO.

She would possibly be the most sterling example for defenders of inequality (as long as anyone has the possibility of climbing to the top).
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