No, really he isn't. That's not what communism is about.

I think the point in his hypothetical is that the whole economy pays more for unskilled workers (or at least underskilled), not just one business. This kind of artificial wage increase might destabilize things on short term, but long term there's no reason to think it wouldn't bolster the economy even more than giving rich folks more money (though it should be pointed out that it would give a steroid injection to the manufactured goods side of our economy, and not much of anything to the service side).

Spexxvet, details aside, I think you've got the right idea. Of course it helps the economy to allow competition, but why must the competitors be so bloodthirsty all the damned time? There's more than one way to help out the economic state.

Why can't we take a step back and realize when so much is plenty? That the money for my 12th car could just as well be spent on someone else's 1st? <southernhickvoice> My poppa always said if you aren't acting out of love, you shouldn't act at all. </southernhickvoice>

Don't tase me, bros!

Jesu le Criste, man, it all depends on what the business calls for. If you're running a traditional grocery store, then no, you really have no opportunity to raise your checkers' salary by 50%, because there's no advantage, your profit margin is near zero, and the additional costs mean the competition will ream the living shit out of you. The only way you can raise salaries is if you trick people into paying more for their cans of peas.

Costco, on the other hand, redefined checker pay by changing the entire model of what they do. Part of their game was tricking people into buying much larger cans of peas than they need, confusing people's usual price comparison. But there you have it.

At new types of grocery stores, such as Trader Joes and Whole Foods, the market is deciding -- just as you say -- that it prefers a different style of checker pay, and doesn't mind paying double for peas to get it.

But ironically, the people you are trying to help reject the Trader Joes/Whole Foods model, and buy their groceries at the big supermarkets. Why: they pay half for a can of peas.

...you sped right past my point. I said his hypothetical (that being the key word, because this would never happen without someone pointing a gun a Joe Americanbusinessowner's head) was that everyone raised the wages at the same time, be it in small increments (wiser) or all at once (hello 2nd depression). It no longer becomes an issue of competition.

And besides this whole idea is based on giving up most of your excess, not more than what you have to give. It's about trickle up (if that were possible) instead of trickle down (what a load of horse shit that was). Of course, this is still in hypothetical (even parenthetical... (I gotta lay off these)), because you're right there ARE companies with very small profit margins, and their employees would suffer because they can't afford a big pay hike.

Which is why ((I)) support socialism!! :D

It's really hard to understand, but... their lifestyles won't change if we do make their salaries more equitable.

Just giving people more money doesn't work, you have to give them more wealth, more purchasing power.

A famous economics study looked at a small system in a prison, where cigarettes were used as money. Let's say the price of a new pair of shoes was 200 cigarettes.

Overnight, a new supply of cigarettes came into the prison. Suddenly twice as many cigarettes were available. Was the result that every prisoner could now afford two pairs of shoes? No! The result was that the price of shoes doubled to 400 cigarettes.

The increase in money supply does not produce, magically, more goods and services to become available. It just changes the price of what is being bought.

One place to see how this principle works is in the price of college. For the last few decades, more and more money has gone to gummint grants and cheap loans -- to help the people who are worse off, so they can afford to go to college. But what has happened, at the same time, is that college tuition has risen at more than twice the rate of inflation... making it less and less available. Excellent post on this phenomenon

If more money is made available for a thing, the price of that thing increases. You can't fight this; it is a very powerful force doing what it does best.

Now you can argue, well, the inequity is a larger social problem than the lack of purchasing power of the poor. But what you're really doing is arguing for a less efficient economic system. Which will not really help the poor, in the long run.

I understand that, I have (as you advised others) taken econ 101. The point is, if the entire top crust gives up their excess wealth and uses it to pay the middle to lower crust, there is no freshly printed money or anything, they're actually giving the lower class more wealth at the expense of themselves.

And the idea that it's a less efficient system is something that is hotly debated. Would you rather have the majority of the purchasing power in the upper, middle or lower class? It used to be largely in the middle class, but it's crept higher and higher until now <distribution of wealth blah blah blah, we've all heard it>.

My personal opinion, and that of a fair share of economists, is that having such a overbalance of wealth in the hands of the enormously wealthy makes the economy unstable, in that it produces more service goods and fewer ACTUAL goods, which we outsource to other countries. While many debate whether a service or a physical product behave the same, I'm of an opinion they don't. SO, more wealth in the middle class equates to a more durable economy... IMHO.

Monkey wrench. The Fed just dropped interest rates by 0.5%. Now more money is made available to the economy. Therefore the prices of everything will only increase? How does throwing more money in the economy make more wealth? After all, the Fed is supposedly lowering interest rates only to stave off recession - the manufacturing of fewer goods. OK you Econ 101 experts. Explain that one.

hmmm.. maybe the

That in itself is no argument for your intellectual honesty, though. Tw is also pretty consistent throughout, and no one accords that dealer in half-truths a reputation for integrity.

This kind of economic argument is a nonstarter, though: no two people economically independent each of the other would likely have either quite agree with the other's assessment of what is enough for themselves, and they'd be reluctant to assess "enough" for the other party. A program intended to determine "enough" is merely stillborn -- everyone subject to it would recognize it as completely arbitrary and resent its inevitable strictures. Do it the way it's done now and be content.

Your whole statement is a straw man argument. Stop insinuating that I've proposed ideas that I haven't. I've never said anything about someone telling you what is enough. Nor have I said anything about a "program". I've saidd that you know what enough wealth is, and when you reach enough, you should voluntarily stop accumulating
more wealth.

The spirit behind Spexxvet’s post is too accurate. Greenspan in repeated interviews on his book tour, again repeats what he considers America's two greatest threats. 1) An education system that is not graduating sufficiently educated students. 2) An increasing disparity of wealth - the concentration of too much wealth among too few people. Last time this happened, America then ended up in the Great Depression. With too much money concentrated among too few, then the economy did not have liquidity necessary for growth. A major depression resulted much later.

Whereas the top man once made 14 times more money than his average employee, today, that number is in the hundreds - approaching 1000 times more money. There is no justification for that disparity. The free market system broke down when top management salaries has no relationship to free market forces. An elite simply bids up each other's salaries with no regard to value.

Ironically, the most poorly run companies were paying most for their top executives. Nardelli of Home Depot is a perfect example. Nardelli was running Home Depot slowly downward. Finally Home Depot paid him about $150 million just to leave. When do you get paid for being incompetent and fired?

Hey Griff- what's that? I'm not allowed to stream.

Dammit, that's the word I was looking for, liquidity. And I just heard it on the radio, too.

The Conchords singing The Humans are dead. hmmm... seemed like a good idea when I did it....

This thread sucks...sorry I started it.

:lol:

The lastest number I've seen is 365.

how is the CEO's pay relevant to what the average american's pay? the only relevant category to compare a CEO's pay with is the category filled with people that can step in and do the CEO's job.

FWIW, i agree that the pay disparity is obscene, but if a CEO can convince a board he is worth something, I don't blame the CEO for taking it.

It's relevant in this way: the disparity is obscene.

Another relevance is that you can't run a successful business without both indians and chiefs.

true. but if i can replace an indian with someone off the street without a lot of fuss, then that indian is going to demand a much lower wage than the chief.

But one three-hundred-sixty-fifth?

I have to agree with tw here. The value is not in proportion to the compensation.

i agree with you, it isn't. but it doesn't have to be. if every grocery store raises the price of the product you need to make your favorite recipe to $20/can, you have two options. pay $20 for the can, regardless of what you think it is worth, or go without.

this is no different. if you can find someone well qualified for the top job that will work for less then hire them. if you can't, quit complaining that the market has decided they are worth that amount.

I really don't care what other people make. I can only figure out my own situation: if they pay me enough to do a job, I will do it; if they don't, I will not.

What the CEO gets paid is so much rumor to me. I don't care. I think he's a good one. The previous one, from what I hear, nearly killed the company. I'll go ahead and guess this one is worth more. I hope he is paid more. It's worth it if he improves the company.

As tw notes, he is responsible for 85% of any problem that comes up. So his actions and decisions will affect many more people than mine. In fact he has the ability to grow a $10M company (that's a guess) into a $20M company. If he can do that, I think he should be paid a great deal. Of course a smart board would do that with bonuses and would avoid an incentive package that grants the CEO any kind of golden parachute, unless he's hired specifically to manage a downcycle or something.

One difference is that, if you fuck up you'll get fired. If he fucks up he'll get quietly shuftied off the scene with a golden handshake to keep him warm. Given how many lives his decisions affect, and the high rewards he is given for coping with that responsibility, he should be made to fully carry its weight: paying the price when his decisions were in error.

is that a step or down from a golden shower?

Depends on your particular predilections :P

Do you feel the same way about doctors?

At all jobs I've ever worked, the CEO is just as likely to lose his/her job as I am. I've outlasted a few, actually.

In the companies I've worked for, it has been the opposite. Regular employees are put on probation, demoted, moved to another department... but I've seen, let's see--three different CEO's get fired from various places, and in two cases I felt they were taking the hit for things that were partly, but not entirely, their fault.

shut up, everyone knows that 85% of all problems are directly traceable to the top.

Maybe it doesn't happen so much over there. There's a tendency in very large, very powerful companies/quangos over here, that if the guy at the top fucks up, he leaves with a very handsome bank balance.

Yes.

If a doctor makes a very bad error of judgment he can be reported to the medical association and if necessary struck off to prevent a repeat of a potentially deadly mistake. It's not easy to get a doctor struck off, they have to have made errors of judgement serious enough to suggest that they may endanger their patients if they continue to practise.

And this enormous weight of responsibility, surely it places a strain on this person, yes? Loss of time with the family, constant stress leading to health issues, and the knowledge that if any one part of a massive machine slips out of balance, the axe hanging over your head will drop, even if it wasn't even remotely your fault. But that's the job, to be omniscient, and to bear the responsibility for the whole organization (not just one project, one department, or one facility).

How much would you expect to be paid for that job? Would you even accept the job if it was offered to you? Could you do the job if you took it?

I used to know this guy who would yell at athletes on television, and claim that he could do a better job, if they paid him that much.

Or, they pass the buck and blame it on underlings.

You're right, a lot of people wouldn't want the job of CEO; those who are CEOs are not always there because they're so damn good at it, but rather they like (live for) the stress, the politics, the hours, the power, and don't mind a little poopin' on the underlings. Or having the underlings throw poo at you (behind your back of course.)

A good CEO does not blame others for mistakes he/she makes, but does hold them responsible for their actions as the relate to the duties assigned to him/her.

I report directly to the CEO at my company and he has always been fair. Actually, he is a pretty good mentor. He takes time to discuss with me why he makes some decisions he makes and how it will affect employees and the bottom line. I know that not all CEOs are like him, but I feel certain he is not in the minority.

And now confront the term 'perspective'. A relation between you and the CEO, you are responsible for your responsibilities. A good CEO does little work. He defines a strategic objective and delegates the tasks - sometimes to you.

But to the rest of the world, that CEO is responsible for your screwups. After all, HE provided the necessary knowledge - ie the good mentor. He defined the strategic objective. His job is to make sure you have everything necessary so that you don't screw up. Why? Because his ass is on the line if you do screw up - and he cannot and must not be doing the work. Well that is what happens when a company is responsible and productive.

Notice the different perspectives of a same relationship between your and your boss.

The man who was responsible for everyone else - must provide the attitude and knowledge - must confirm that everyone has what is needed to perform the tasks - must define a strategic objective that can be accomplished (Deming's famous bead experiment); that top man is the CEO. So we once gave him 10 and 20 times more money for doing almost no work while providing direction - attitude and knowledge.

Having lost market share, diminishing stock price, and paid one of the highest salaries in the nation; what did Home Depot do to Nardelli? They gave him a $145million bonus. His starting salary was $123 in 2000. In those seven years, he did nothing to empower innovation; to improve the stores. But he did concentrate power in Atlanta. He lost significant market share to Lowes. The stock dropped from an average $60 per share to $32 per share. Company value dropped to half under Nardelli's rein. So what do we do? We give him a massive bonus? Well we (the stockholders) don't do that. We have no say.

Companies no longer have top management accountable to the owners. It has become a neat little club of Presidents also operating as Directors for other companies. A wink and a smile; and they run up each other's salaries. He destroyed half the value of Home Depot. So they gave him a $145million bonus. And some even here say that is good.

The boss is responsible for all while doing almost no work. The people who make that possible are the little people. Once that top man got 14 times more money than the average employee. The average employee made all that possible. All the boss had to do is make sure everyone knew their job. Now many top executives cannot even do that - and make 365 times more money?

The top man at GM could not even drive a car? Top men in the airlines had no grasp of what happened inside airliners or those support functions. Top executives at American steel companies never worked where the work gets done. Top executive at First Energy who created the NE blackout knew nothing about utilities, electricity, or company operations. In each case, they took record salaries and drove their companies down. Why are some of the highest top executive salaries in some of the poorest growth companies? Why do some here just know this is good? Even Greenspan is cautioning; this as one of the two greatest threats to the American economy.

The situation tw describes there is similar to the way things work in many of the larger companies/organisations in the UK.

I have no objection to the head of a company earning significantly more than the people s/he employs. I completely agree that they have a huge weight of responsibility and if that responsibility is a genuine one it must weigh heavily indeed. My problem lies with the fact that in several well documented instances (and one wonders how many not so well documented instances exist), the people who should have been bearing that weight and who were being paid hundreds of times more than their employees because of it, were not held to be responsible. Instead they were rewarded for their failure.

In some of these cases, the knock on effect of their incompetence was job losses amongst the workforce. People who did their jobs competantly and were paid an average wage lost their jobs because of the incompetance of the person in charge; whilst the person who'd caused their job loss and compromised the health of the entire organisation were rewarded with record bonuses. Bonuses that made the lifetime earnings of their employees look like pocket money.

Okay the size of the responsibility is greater. But, the level or work and expertise required to fulfil that responsibility is not necessarily as unique within the company as their role may be.

My dad was a maintenance electrician in a mid-size bakery for twenty-odd years. He was the chief electrician so it was his responsibility to make sure everything kept running. The maintenance crew did most of their overhauls and upkeep at night so Dad was primarily a night-worker (which impacted on family life). If there was a major breakdown the cost implications to Mellings were severe. Everything is on a smaller scale than the large companies we've been talking about, but it takes a lot less to sink a smaller company.

Dad didn't bear the whole responsibility for the company, but he bore full responsibility for keeping the company's factory running. If you think that wasn't high stress, think again. The amount of times Dad had to jerry-rig or invent some wild solution to keep production going when a machine broke and the right part wsn't available.

The CEO of a large company is responsible for the whole thing. He has to be omniscient...except that he doesn't. He has to be wholly responsible, but I doubt the CEO actually looks at individual stationery orders, he has other people to look and filter the relevant information through to him.

Dad was only looking after one factory of machines, ovens, timers and conveyers. But he had to be aware of every screw. The potential consequences to his little world if he screwed up, or got very unlucky, were just as great as the consequences to the CEO's much bigger world if he screws up or gets unlucky: production problems, logistic and financial consequences, the potential for destabilising a business which is operating within tight margins and ultimately, if the mistake was big enough and particularly badly timed, a need for cost-cutting exercises leading to job losses.

My Dad never earned above £20k.

The CEO may be a great guy, but in most large companies/organizations, the majority of the employees have no contact with the CEO. In the layers of middle management, too often made up of idiots, the message from the top, as well as the information from the bottom, gets garbled.