Economics

[DSully1995]

Your all very doom and gloom, but just look back, imagine being told in the 50s we wouldnt need bank tellers, newspapers deliveries, milk deliveries. We're better off then back then and its because of technological progress, it will shift work butimprove everyone in LR.

 

[Bogtrotter07]

That's quite the broad brush there. So all CEO's care about is tricking investors?

No, that isn't exactly what I was saying. My message was more about what a company produces, than about what a CEO is paid. Is growth rapid? Is it measured and safe? Or is it stagnant?

My post was to address the irony that those that built American wealth were not rewarded as well as those that "collect" it. (For lack of a better idiom.)

Today I think many companies "collect" their wealth. Instead of better things, increase market, produce or create it.

 

[EddytoNow]

That's laughable I have employees right now that are worth 100 times more than others. Its about way more than just when you show up.

No offense but anyone that would respond in that way to what I said will never understand. seriously not trying to be a dick when I say that. There are all kinds of people and all kinds of workers. It takes all kinds.
Note for the record I only make 10 percent more than one guy that works for me. And do not make 3 times more than any full timer.

Are you paying them 100 times more? Are they 100 times as productive as the others? Do they really make 100 times as many widgits for every 1 made by your average worker? Do their sales generate 100 times the income for your company? I would guess you probably aren't paying them 100 times what the others are being paid, and that's my point. It isn't just about time on the job. That is just one factor to consider. I assume you are paying them a fair salary for the work they do, but you aren't paying them 100 times or 500 times what your average worker makes. If they are more productive, they deserve to be paid more, but I seriously doubt they are 100 times or 500 times or 5000 times as productive as the average Joe that works for you.

Yes, there are all kinds of workers, including college-educated, hard-working people that work minimum wage jobs and live below the poverty level. People that work for corporations that make billions. They are not lazy. They are not lacking in ambition. They are lacking opportunities.

There are also people making hundreds of millions of dollars while doing very little and people who work very hard for their huge salaries.

I understand more than you care to admit. I understand that the suffering of the poor and the greed of many (but by no means all) of the wealthy co-exist to the detriment of our society.

 

[tussin]

No, that isn't exactly what I was saying. My message was more about what a company produces, than about what a CEO is paid. Is growth rapid? Is it measured and safe? Or is it stagnant?

My post was to address the irony that those that built American wealth were not rewarded as well as those that "collect" it. (For lack of a better idiom.)

Today I think many companies "collect" their wealth. Instead of better things, increase market, produce or create it.

What are you talking about? Those who build / create new American wealth are almost ALWAYS universally more rewarded than the average CEO. Rather than speaking in broad generalizations, please provide examples that prove what you say is the norm and not the extreme minority.

Generally speaking, markets are pretty efficient long-term at rewarding innovative companies and penalizing those that you describe as "collecting" wealth.

 

[tussin]

Are you paying them 100 times more? Are they 100 times as productive as the others? Do they really make 100 times as many widgits for every 1 made by your average worker? Do their sales generate 100 times the income for your company? I would guess you probably aren't paying them 100 times what the others are being paid, and that's my point. It isn't just about time on the job. That is just one factor to consider. I assume you are paying them a fair salary for the work they do, but you aren't paying them 100 times or 500 times what your average worker makes. If they are more productive, they deserve to be paid more, but I seriously doubt they are 100 times or 500 times or 5000 times as productive as the average Joe that works for you.

Yes, there are all kinds of workers, including college-educated, hard-working people that work minimum wage jobs and live below the poverty level. People that work for corporations that make billions. They are not lazy. They are not lacking in ambition. They are lacking opportunities.

There are also people making hundreds of millions of dollars while doing very little and people who work very hard for their huge salaries.

I understand more than you care to admit. I understand that the suffering of the poor and the greed of many (but by no means all) of the wealthy co-exist to the detriment of our society.

You're missing the point. The productivity of the average worker on an assembly line is gauged by how efficiently he does what he is told to do. He is a cog in the machine and has no real impact on the company beyond producing at an efficient rate.

The CEO of a public company is responsible for every single employee of the company. It is like being the parent of 5,000 kids. Every single decision that person makes can potentially affect millions of people (i.e. investors). The CEO has 1,000+ times the impact on the company of your average worker.

 

[Bogtrotter07]

You're missing the point. The productivity of the average worker on an assembly line is gauged by how efficiently he does what he is told to do. He is a cog in the machine and has no real impact on the company beyond producing at an efficient rate.

The CEO of a public company is responsible for every single employee of the company. It is like being the parent of 5,000 kids. Every single decision that person makes can potentially impact millions of people (i.e. investors). The CEO has 1,000+ times the impact on the company of your average worker.

I don't think anyone is. I just think that people are saying it isn't worth the salary, bonuses, and benefits that some of these guys are getting.

You are however missing the point that all "machines" that need "cogs" need them, and need to maintain them. Except that humans aren't cogs, or inanimate objects. And that that assumption is one of the key issues in this conversation. And by the way the efficiency of the American worker is through the roof, and has been climbing.

 

[tussin]

I don't think anyone is. I just think that people are saying it isn't worth the salary, bonuses, and benefits that some of these guys are getting.

And I'm saying they generally are. Markets determine salaries, not individuals.

When you look at CEO salaries the top paid ones generally break down into three categories:
1. Titans of industry. Companies that are the leaders of their markets with CEOs responsible for 10,000+ employees and P&Ls of tens of billions of dollars.
2. Tech leaders of companies that are at the forefront of innovation.
3. Founders of highly successful companies that have created thousands of jobs.

This all makes sense to me and I think in almost all cases that salary is well deserved. All of those people took major risks throughout their career and worked much harder to get where they are than the average worker. To the victor go the spoils.

Also, what a lot of people are ignoring is that the top paid CEOs are generally the best ones. They drive the most value and create the most jobs. If they weren't the absolute best at their job then they wouldn't make so much and they'd likely be fired.

 

[T Town Tommy]

It's a good thing the government doesn't have the same responsibilities as that evil CEO when it comes to employee compensation. If so, they would all be fired. Bottom line... one entity is designed to spend the money with little to no accountabiltiy and the other entity is designed to create a profit for it's shareholders and have a high degree of accountability when they don't. That's why a CEO makes what they do. And that's why they are shown the door when they don't.


Employer Costs for Employee Compensation news release text

Private industry employers spent an average of $29.63 per hour worked for total employee
compensation in December 2013, the U.S. Bureau of Labor Statistics reported today. Wages and salaries
averaged $20.76 per hour worked and accounted for 70.1 percent of these costs, while benefits averaged
$8.87 and accounted for the remaining 29.9 percent. Total compensation costs for state and local
government workers averaged $42.89 per hour worked in December 2013.

 

[Bogtrotter07]

And I'm saying they generally are. Markets determine salaries, not individuals.

When you look at CEO salaries the top paid ones generally break down into three categories:
1. Titans of industry. Companies that are the leaders of their markets with CEOs responsible for 10,000+ employees and P&Ls of tens of billions of dollars.
2. Tech leaders of companies that are at the forefront of innovation.
3. Founders of highly successful companies that have created thousands of jobs.

This all makes sense to me and I think in almost all cases that salary is well deserved. All of those people took major risks throughout their career and worked much harder to get where they are than the average worker. To the victor go the spoils.

Also, what a lot of people are ignoring is that the top paid CEOs are generally the best ones. They drive the most value and create the most jobs. If they weren't the absolute best at their job then they wouldn't make so much and they'd likely be fired.

Okay.

But the fact of the matter is not everyone does, including the boards of some of these companies.

 

[tussin]

Okay.

But the fact of the matter is not everyone does, including the boards of some of these companies.

What is this in reference to?

 

[Bogtrotter07]

What is this in reference to?

Movement within companies to eliminate chief officers from positions on the board of directors. This is the first way to reign in outrageous bonus incentives. It is a move among shareholders (among many) to address the composition of the board, and positively affect the direction and profit of a number of companies.

 

[Irish Houstonian]

Movement within companies to eliminate chief officers from positions on the board of directors. This is the first way to reign in outrageous bonus incentives. It is a move among shareholders (among many) to address the composition of the board, and positively affect the direction and profit of a number of companies.

Bogtrotter, per SEC rule, executives aren't allowed to be on the Board Compensation Committee. Each executive's compensation is always set by a committee of independents.

 

[Bogtrotter07]

Bogtrotter, per SEC rule, executives aren't allowed to be on the Board Compensation Committee. Each executive's compensation is always set by a committee of independents.

Let us both not be naïve at the same time.

 

[wizards8507]

Movement within companies to eliminate chief officers from positions on the board of directors. This is the first way to reign in outrageous bonus incentives. It is a move among shareholders (among many) to address the composition of the board, and positively affect the direction and profit of a number of companies.

Bogtrotter, per SEC rule, executives aren't allowed to be on the Board Compensation Committee. Each executive's compensation is always set by a committee of independents.

Yup. Plus, academic research indicates that regulations regarding executive compensation actually harm companies.

http://leeds-faculty.colorado.edu/Bhagat/SOX-CEO-Compensation-Investment.pdf

We hypothesize that firms will respond to the additional liability imposed by SOX on corporate executives by altering the mix of incentive compensation to fixed salary awarded to them in order to provide insurance. Consistent with this claim, we find that there was a significant decline in the ratio of incentive compensation to salary after the passage of SOX. We also hypothesize and find that there was a significant decline in research and development expenses and capital expenditures made by CEOs after the passage of SOX. This result is obtained after controlling for the effects of the economic environment and changes in compensation structure on CEOs’ action choices. We interpret the above as evidence of some of the potential costs of this new regulation.

 

[Wild Bill]

Certain current CEO's yes. Cody, respectfully, who posted here is definitely not.

My grandfather was underpaid. He took a Fortune 500 manufacturer out of the Depression and expanded them by a factor of 150X in eighteen months starting within days of the beginning of WWII. And then he converted production to non war specialty, and industrial products after the war without missing a beat and grew the company every year through his retirement. Think about it, two retooling's, not just changing the dies, but gutting the factories for producing new products, and not missing a beat. He made more than most, but it was nothing compared to these schmucks today. They don't have to be tough, innovative, or imaginative. They don't have to sweat and bleed for their companies. They just have to find ways to inflate the value of their company to justify bigger bonuses.

Of course none of us are greedy, it's only the other fella that's greedy.

 

[wizards8507]

Let us both not be naïve at the same time.

Bogs you're running yourself in intellectual circles. It's naive to trust the rules we have in place, but you want to make all sorts of NEW rules and then trust that THOSE will be obeyed?

 

[wizards8507]

Of course none of us are greedy, it's only the other fella that's greedy.

Yup. Any car nicer than mine is too nice of a car, and anyone who drives it is a bad Christian.

 

[Bogtrotter07]

Okay in order :

Wizards, you missed Whiskey . . . Bubba's comments earlier. You can make anything work with integrity if you want. You don't have to argue for social and moral impotence.

As far as my grandfather, he has been dead for nearly fifty years, over forty-five. I was not arguing he should have been paid more; I was tactfully comparing what he and his generation did, and maybe even why, to what these people today have done. And trying to point out that on no level was the value of todays "managers" as great.

The circularity is you all trying to run around me. For all the days of this thread people have been trying to explain the difference between market rules and morality. The artificial nature of what we call the market, (and therefor its "rules") and the overall needs for our society, and how different they are. You don't get it.

And as far as tying Christianity into car ownership, how nice a car do you have? One has nothing to do with another.

 

[chicago51]

Clearly these greedy bloodsucking corporations dont agree, they value the CEO at 500x, and unfortunately, its their decision.

Yes it is there decission. You can have incentives to pay workers.

Although from the 1950s through 1970s they didn't take salaries much more than 30 to 1 because they started hitting the high tax brackets and would have to pay insane tax rates on that income. So they said $1.5 million (in 1965 $) is good enough for me and they paid their workers.

Unfortunately this was not good enough for American workers and organized labor took it far which sparked Reagan revolution.

Corporate elites now have proceded not only restore corporate profits which where lacking in the late 70s but have since gone to way far themselves on their assault on workers.

Yup. Any car nicer than mine is too nice of a car, and anyone who drives it is a bad Christian.

If you think this how poor people in America think you out of touch with reality.

 

[wizards8507]

Although from the 1950s through 1970s they didn't take salaries much more than 30 to 1 because they started hitting the high tax brackets and would have to pay insane tax rates on that income. So they said $1.5 million (in 1965 $) is good enough for me and they paid their workers.

No, no, no, no, no. They DIDN'T "pay their workers" with all this magical extra cash. More cash means more profits. More profits means stock prices rise. Stock prices rising means more incentive-based compensation (i.e. stock options). All they were doing was shifting their income from salary (taxed at 70% in 1965) to incentive stock options (25% in 1965).

 

[wizards8507]

If you think this how poor people in America think you out of touch with reality.

Did I say that's how poor people think? That's how YOU think, for sure (as evidenced by every non-football post you've ever written...ever). Envy is an evil thing, regardless of the economic status of the envious.

 

[Veritate Duce Progredi]

If you think this how poor people in America think you out of touch with reality.

I don't mean to speak out of turn, but I believe the point was, 'most people think like this'. I've seen it in various forms throughout this thread.

 

[tussin]

This conversation is going nowhere.

 

[wizards8507]

This conversation is going nowhere.

So is the economy.

 

[Buster Bluth]

This conversation is going nowhere.

I think it's been pretty fantastic on some levels. There is the whole "how much does a CEO deserve?" conversation that is entirely useless though.

 

[Buster Bluth]

Your all very doom and gloom, but just look back, imagine being told in the 50s we wouldnt need bank tellers, newspapers deliveries, milk deliveries. We're better off then back then and its because of technological progress, it will shift work butimprove everyone in LR.

The difference is that those were jobs/tasks and we're talking entire industries, start to finish. I have no disagreements over it all being progress, I am simply raising the red flag and suggesting that if we approach societal problems the way we always have been that it might not "improve everyone in the long run."

Screw manufacturing, which is already toast...

(Seen here:

Shockingly steady decline in the percentage of the workforce is needed in the field, due to globalization and automation. The industry needs fewer and fewer people to make more and more things.)

...but what about outside of the factory, with industries like education and medicine?

Education: I can't see a "replacement" at the grade school/high school level, but it's not hard to see an efficiency boom that turns instructors of 20 kids into managers of 40 kids. At the college level, do I need to go to Yale/Harvard/Stanford/MIT/etc when I have these:

(Yale's PLSC 270)
https://www.youtube.com/watch?v=M3aw2ih626s&list=PLxfW-dO1hjb8Mxs15T_Ge7UK0z9uhR3ls

Or even a few dozen from Notre Dame: Free Online Courses Offered by the University of Notre Dame

This list is two years old, but look at the free knowledge that you don't need to pay anyone for anymore! It's automated!: List of Colleges and Others Offering Free Courses Online

It's not hard to see perfect lectures on every subject being available. Of course people will have questions that their video can't answer, but over time FAQs questions will be compiled and answered, and/or the lecture will be reshot. Version 1.0 becomes 10.0 and over time it'll be perfected and automated. Karl Marx would say that recording an individual's lectures eliminates his ability to sell his worth, as now the university or website has it and he is...unskilled and useless more and more often.

Medicine: Doctors can't be replaced. Right? RIGHT? Wrong:. IBM's supercomputer Watson knows everything and thanks to smart technology, it understands your speech: IBM Watson supercomputer turns to medicine - CBS News

We won't need 1000 doctors in a hospital, we'll need 900. Then 800. Then 700. The accuracy and costs will be greatly improved, but at the cost of employment. This is progress, but when a guy in 2014 would get his MD, fewer of those positions will be available and he'll go get his RN. Or be a dental hygienist.

 

[chicago51]

I think it is time to reduce the work week from the current 40 hour week.

If a 35, 32, or a 30 hour work week gets the nation to full employment why not do it. There was a time when going the 40 hour work week seemed insane but it ended up being a great thing. I think with the advances in productivity the 40 hour work week has run its course.

Maybe the basic income that has been discussed can be phased in. Maybe if we go to a 32 hour work week it gets us close to full employment so the basic income can start as a rebate on given a sliding scale based on income that would account for the loss work hours.

As the automation revolution cuts more and more job hours we just cut the work week and increase the basic income. After productivity is creating more and more wealth we as a society should be able to afford it.

 

[Rack Em]

I think it is time to reduce the work week from the current 40 hour week.

If a 35, 32, or a 30 hour work week gets the nation to full employment why not do it. There was a time when going the 40 hour work week seemed insane but it ended up being a great thing. I think with the advances in productivity the 40 hour work week has run its course.

Maybe the basic income that has been discussed can be phased in. Maybe if we go to a 32 hour work week it gets us close to full employment so the basic income can start as a rebate on given a sliding scale based on income that would account for the loss work hours.

As the automation revolution cuts more and more job hours we just cut the work week and increase the basic income. After productivity is creating more and more wealth we as a society should be able to afford it.

That's just hand waving. Reducing the number of hours in a full work week to increase full employment doesn't put more money in the pockets of employees. It also decreases the tax base for payroll taxes.

 

[pkt77242]

Bogtrotter, per SEC rule, executives aren't allowed to be on the Board Compensation Committee. Each executive's compensation is always set by a committee of independents.

The CEO can't be on the compensation committee but most boards today are hardly independent in the true sense especially with it being common for the CEO to be the chairman of the board of directors. I would feel much better if the chairman of the board of directors was independent.

 

[Whiskeyjack]

I think it is time to reduce the work week from the current 40 hour week.

A shortened work week would just be a stop-gap measure. We're still headed toward a massive unemployable underclass, probably subsisting on a Basic Income.