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At 2/3/10 02:05 AM, SadisticMonkey wrote: why? Why shouldn't they have the right to have more money than other people? Why are you acting like it's the government's job to ensure that the amount of money people have, regardless of how they obtained it, is "fair"?

Of course not! Because people with lots of money don't really deserve it, or need it. The fact that they probably worked damn hard to earn it is irrelevant.

An idiot wrote:

Well, then we need a higher tax bracket on the other side of them for corporate fuckups and oil tycoons. Duh.

A smart man wrote:

taxing corporations raises the cost of living for everyone else

Exactly. Put taxes on grocery stores, and guess what happens? Cost of a potato shoots to $3. Put tax on oil companies? No problem, they just raise the price accordingly.

It's a pretty dimwitted opinion to believe that businesses won't raise their rates in accordance with taxes to keep the profit margins the same.....

Besides, why bother taxing them, when you just turn around and bail them out of debt anyways?

At 2/2/10 03:05 PM, Der-Lowe wrote:

At 2/2/10 02:03 PM, Saxturbation wrote: People who are in the higher bracket need to have more taxed to them because they hold more of the money in circulation.

I fail to see the logic here.

The money will be taken from somewhere for "the good of the public." The people who are most negatively affected by taxes are the poor and middle class. The rich will still have more money, but since they've decided to overcompensate themselves, they can also pay a little more.

And yes, I know plenty of you will take offense at the remark that the rich are over compensated. But oh well, they are.

At 2/3/10 11:33 AM, Imperator wrote: A smart man wrote:

taxing corporations raises the cost of living for everyone else

Exactly. Put taxes on grocery stores, and guess what happens? Cost of a potato shoots to $3. Put tax on oil companies? No problem, they just raise the price accordingly.

It's a pretty dimwitted opinion to believe that businesses won't raise their rates in accordance with taxes to keep the profit margins the same.....

Besides, why bother taxing them, when you just turn around and bail them out of debt anyways?

Depends on what kind of tax you're talking of. It seem to me that you mean a corporate tax (X% of profits) then the effect on prices is very much disputed. Stiglitz spends literally chapters of his Public Policy book explaining the different views on the effect of this kind of tax. Is it on salaries that the company pays? Is it on prices (Krzyzaniak & Musgrave)? Is it on profits (Harberger & Mieszkowski)?
Now, if we're talking of a classic ad valorem tax (ie X% of the price of the good sold), it depends on several factors, but wages and profits fall, (wages may not fall if we're talking of a good that does not employ a relatively important amount of labor), and prices increase.

If however, you're talking about a personal income tax, the only effect is on the reduction of income.
That's why the personal income tax pwns :D

At 2/3/10 12:59 PM, Der-Lowe wrote: Depends on what kind of tax you're talking of. It seem to me that you mean a corporate tax (X% of profits) then the effect on prices is very much disputed. Stiglitz spends literally chapters of his Public Policy book explaining the different views on the effect of this kind of tax. Is it on salaries that the company pays? Is it on prices (Krzyzaniak & Musgrave)? Is it on profits (Harberger & Mieszkowski)?
Now, if we're talking of a classic ad valorem tax (ie X% of the price of the good sold), it depends on several factors, but wages and profits fall, (wages may not fall if we're talking of a good that does not employ a relatively important amount of labor), and prices increase.

Well don't those three possibilities have a common ground in that the burden of the tax is passed on? Genuine question, I'm not much of an economist.

What type of tax seems irrelevant for the company, but relevant for other groups, based on what you're telling me here. The employees get hit (reduced salaries), the customers get hit (increased prices). If the profits get hit, for the company to survive, it has to turn the burden around on the customers or the employees, or the business winds up failing, correct?

Bottom line, I'm not seeing how taxing the company burdens the company, so to speak. I can see it burdening employees with pay cuts, and customers with higher prices.

If however, you're talking about a personal income tax, the only effect is on the reduction of income.
That's why the personal income tax pwns :D

I think we're discussing corporate taxes in this instance, unless I misread something somewhere. The premise was we tax the "big businesses", like banks and oil companies as a "solution" to our economic woes. SMs point being "shit rolls downhill", and the burden ultimately falls on everyone else, rather than the companies themselves.

Twas my understanding anyways.

I would also like to add that increasing the corporate income tax is simply raising the hurtle for smaller less 'powerful' companies to enter the status of a Corporation. With Corporation Status, obviously, comes certain benefits on the part of the company, and the extent to which you have a massive corporate income tax requirement is the extent to which only a portion of all of the potential companies in the united States could enjoy corporate status.

At 2/3/10 12:14 PM, gumOnShoe wrote:

At 2/2/10 03:05 PM, Der-Lowe wrote:

At 2/2/10 02:03 PM, Saxturbation wrote: People who are in the higher bracket need to have more taxed to them because they hold more of the money in circulation.

I fail to see the logic here.

The money will be taken from somewhere for "the good of the public." The people who are most negatively affected by taxes are the poor and middle class. The rich will still have more money, but since they've decided to overcompensate themselves, they can also pay a little more.

Exactly. They have more money, whether they worked hard for it or not, so they should pay more tax to save those in the middle or lower class, who again work hard for their money or not. I guess it's all on your view of taxing and all that but I just think since the rich have more, why not give more?

At 2/4/10 12:21 AM, Saxturbation wrote: Exactly. They have more money, whether they worked hard for it or not, so they should pay more tax to save those in the middle or lower class, who again work hard for their money or not.

It's called freedom.

I guess it's all on your view of taxing and all that but I just think since the rich have more, why not give more?

Since when has GIVING money meant having the money TAKEN from you with the use of force?

At 2/4/10 12:21 AM, Saxturbation wrote:

Exactly. They have more money, whether they worked hard for it or not, so they should pay more tax to save those in the middle or lower class, who again work hard for their money or not. I guess it's all on your view of taxing and all that but I just think since the rich have more, why not give more?

Not that the super-rich haven't managed to shield themselves from taxation and pass on taxes to the nouveau riche, some high ranking manager or professional that only earns close to 1 million dollars a year because he works 14-18 hours a day. Or underwrite their income or put their money in a foreign bank account, or simply leave the country for another country with more reasonable levels of taxation.

But why is it that one persons need becomes a claim on another persons life.

And why is it that the poor and middle class can't seize the income of the rich on their own terms? If we are saying, normatively, that people of higher income should pay a certain, fairly large portion of their fairly large income, why is only the government justified in performing the wealth transfer.

At 2/4/10 07:35 AM, SmilezRoyale wrote: why is only the government justified in performing the wealth transfer.

because they are allowed to use force

At 2/4/10 07:35 AM, SmilezRoyale wrote: But why is it that one persons need becomes a claim on another persons life.

A good question, are you your brother's keeper?

And why is it that the poor and middle class can't seize the income of the rich on their own terms? If we are saying, normatively, that people of higher income should pay a certain, fairly large portion of their fairly large income, why is only the government justified in performing the wealth transfer.

Perhaps the government isn't the only body that could justly perform it, but then this isn't a wealth transfer. I know, I know, its your term. And you love it oh so much, but do the rich use roads? Do the rich rely on the other people to do work for them? Do the rich not pay well enough for the services others provide? Do the rich often set the salaries of those below them? Do they transfer wealth for work, and if they do, do they transfer enough?

If we really want to look at this properly, if the middle and lower classes were paid what they were due, the rich wouldn't need to be taxed heavier. The companies and resources are the source of wealth, and the rich could easily pump more money into the system if they wanted to do so.

I also find it funny that you assume the average millionaire works 14-18 hours a day. They'd be sleep deprived fat diabetics if this were the case. I'm quite sure, however, that they often work less than the typical 40 hours.

And the proof's in the pudding:

http://sociology.ucsc.edu/whorulesameric a/power/wealth.html

At 2/4/10 08:31 AM, gumOnShoe wrote:

Do the rich rely on the other people to do work for them? Do the rich not pay well enough for the services others provide? Do the rich often set the salaries of those below them? Do they transfer wealth for work, and if they do, do they transfer enough?

If we really want to look at this properly, if the middle and lower classes were paid what they were due, the rich wouldn't need to be taxed heavier.

Thank you, you finally put it into perspective. The rich use everything else that the middle and lower classes use, yet they hold most of the money and let it trickle down to the other classes. But the problem with the "trickle down theory" is that the businesses who receive these tax cuts don't use it properly. Instead they put it towards bonuses and who else knows what.

At 2/4/10 08:31 AM, gumOnShoe wrote:

At 2/4/10 07:35 AM, SmilezRoyale wrote: But why is it that one persons need becomes a claim on another persons life.

A good question, are you your brother's keeper?

No, and I don't believe morality, period. Some atheists do, and they have to bend over backwards to invent insane philosophies to justify their ethics.

So there is nothing holy or sacrosanct about charitable deeds. Though i will say that there is a general tendency among humans who live peaceably with one another to ALREADY have a demand for a humane society. Most people would donate a portion of their money to have that sort of humane society. And if people really were universally depraved there is very little the government could do to solve that problem; the mere fact that government welfare exists suggests people are willing to vote for politicians that are "Charitable". Rational ignorance about the nature of welfare and the perverse incentives, both for the politicians and the people who receive the charity, that are created keeps them from realizing that they are better off donating their own money but never the less, the same 'thought' is behind it.

And i would also say that the desire for individuals to be liked and respected by their fellow man is an evolutionary trait that allows for many people to get personal pleasure out of charitable deeds and volunteer work. That people feel 'good' about themselves is a selfish motivator for altruistic behaviour , realistically, charity of this kind is of a selfish nature. True sacrifice would involve the kind of charity for those that you personally hate.

That being said there is not necessarily a correlation between a desire for state welfare and a personal compassion level. I've heard self described conservatives donate as much or more of their money to charitable causes as self described liberals.

I don't apply value judgments to matters of charity. Charity is not immoral, as Ayn Rand might argue, but it is not moral in the least either.

And why is it that the poor and middle class can't seize the income of the rich on their own terms? If we are saying, normatively, that people of higher income should pay a certain, fairly large portion of their fairly large income, why is only the government justified in performing the wealth transfer.

Perhaps the government isn't the only body that could justly perform it, but then this isn't a wealth transfer. I know, I know, its your term. And you love it oh so much, but do the rich use roads? Do the rich rely on the other people to do work for them? Do the rich not pay well enough for the services others provide? Do the rich often set the salaries of those below them? Do they transfer wealth for work, and if they do, do they transfer enough?

I do not see why illegal acts of expropriation are not considered wealth transfers whereas legal acts of expropriation are.

If we really want to look at this properly, if the middle and lower classes were paid what they were due, the rich wouldn't need to be taxed heavier. The companies and resources are the source of wealth, and the rich could easily pump more money into the system if they wanted to do so.

I also find it funny that you assume the average millionaire works 14-18 hours a day. They'd be sleep deprived fat diabetics if this were the case. I'm quite sure, however, that they often work less than the typical 40 hours.

That article deals on income distribution and i was unable to find any statistics about how LONG they actually work, and by they i am referring to CEOs and highly paid professionals such as Surgeons. Now CEOs earn signifigantly more than surgeons, but most people would regard a half million dollar salary as pretty generous.

http://www.inc.com/magazine/20040301/tre nds.html
http://www.binarygirl.com/jobs/ceo.shtml

As for increases in the deviation of wealth, I personally do not care how much wealthier one person is than another in a society, only how much wealthier the median society income earner receives. note that i say median because averages would be skewed by high or low outliers, whereas medians are largely uneffected by them. Maximizing the incomes, correlated to wealth, of the median income earner is more important to me than making people equal in terms of income.

But i do find it interesting that in spite of the fact that the state hasn't gotten any smaller and certainly the level of influence the government has over the economy hasn't changed the fact that, apparently, the rich are getting richer and the poor poorer. I guess if a particular medicine, even in increasing doses, isn't effective at curing one's illnesses, the obvious solution is to continue to increase the dosage.

At 2/4/10 10:37 AM, SmilezRoyale wrote: I do not see why illegal acts of expropriation are not considered wealth transfers whereas legal acts of expropriation are.

Legality has very little to do with it, wouldn't you admit? Anyways.

A wealth transfer implies, on your part I'm assuming, that the money is being taken without just cause. Because, for there to be a transfer of wealth, an individual has to have lost something and another individual has to have gained something, otherwise the people remain the same.

Well, then isn't a person who overcharges for products of necessity, or underpays for labor transferring wealth unto themselves, and isn't this far worse for the good of all?

That article deals on income distribution and i was unable to find any statistics about how LONG they actually work

That's because I was pointing out that the money actually does mostly reside in the hands of the wealthy and disproportionately so. Even if the average person works 40 hours a week and the rich person 60 (which is not the case), you'd expect that a rich person would only make on average 1.5 dollars for every dollar another man makes. This is if we're valuing work equally and the time of an individual.

The burden would be on the rich to prove that the time they invest and the product they deliver is actually worth the amount of money they make more than the rest of society.

and by they i am referring to CEOs and highly paid professionals such as Surgeons. Now CEOs earn signifigantly more than surgeons, but most people would regard a half million dollar salary as pretty generous.

And most people value a surgeon's work more, yet they make less. You don't find this odd? CEOs are the power holders and set their own rates, surgeons don't.

http://www.inc.com/magazine/20040301/tre nds.html

So less than 30% of CEOs overwork themselves. And many think they deserve millions for 20 hours of work and hiring the right people to work normal hours.

http://www.binarygirl.com/jobs/ceo.shtml

A single case example. Ok?

As for increases in the deviation of wealth, I personally do not care how much wealthier one person is than another in a society, only how much wealthier the median society income earner receives. note that i say median because averages would be skewed by high or low outliers, whereas medians are largely uneffected by them. Maximizing the incomes, correlated to wealth, of the median income earner is more important to me than making people equal in terms of income.

Well, the median income, I read was around $25,000 for an individual, which is still relatively close to the poverty line, and that's the median. I'd like to see a mean which neglects factoring in the top 1% or even 5% into its calculation. The numbers together would likely mean a little a more.

But i do find it interesting that in spite of the fact that the state hasn't gotten any smaller and certainly the level of influence the government has over the economy hasn't changed the fact that, apparently, the rich are getting richer and the poor poorer. I guess if a particular medicine, even in increasing doses, isn't effective at curing one's illnesses, the obvious solution is to continue to increase the dosage.

You're generalizing one policy to all policies. I can't help it if you can't distinguish between actions. I also can't understand you're continued assurances that individuals are rationally selfish and that people should be given freedom to do what they want with their property. If what you say is true, its absolutely not in most people's interests to allow those who have money to take advantage of them.

For one, to the person that called me an idiot : You don't know me. Don't insult people you don't know. It's a bad habit that lands people in hospitals after bar fights, and you never know if you're going to run into me out some night drinking.
For two, and more on topic... Personally, I think that at a certain point money becomes ridiculous. I'm in favor of a limitation on how much you're allowed to earn in a single year. What I make in excess of that amount would role over to the next year, so if I make seven million this year, I keep 5 million. WAY, WAY MORE THAN ANY PERSON SHOULD EVER EVER EVER NEED. Two million gets put away for me to collect next year, if I make less than five million. So you make unsightly amounts of money each year? You're only saving it up for old age and your kids. It encourages people to not jack their prices up sky high just so they can make 30 million a year in profits. It encourages you to pass the difference in what you could be making and what is fair for a human to own on to your employees, or to cut back on the cost of your products to pass it on to your patrons/clients/customers.

Bank, Lazard, transfered an amount of wealth equal to $1,150,000,000 amongst its 2,300 employees in year end bonuses (500,000 average, but "support" staff weren't actually given large bonuses). The excuse, they need to maintain high wages in order to keep talent. The reality, no one is hiring right now and most businesses aren't giving out bonuses. The ramifications, shareholders were payed less, the company made less and resistance to financial reform is rooted in this kind of thought process. The amount of money they gave away as a bonus, here's the kicker, was 73% of their yearly revenue, a majority going to business executives.

Why is this related to a 1.9 trillion dollar deficit? Well, if wealth needs be transfered into the government and it needs to cut back its spending, this is only more proof that the upper echelon's of society hold no respect for their shareholders or the common man. This is one of the many reasons I support taxing these super rich much more directly on their pay checks & bonuses. That's over a billion dollars wasted that could have been invested in businesses which power this country.

At 2/3/10 01:13 PM, Imperator wrote:

At 2/3/10 12:59 PM, Der-Lowe wrote: Depends on what kind of tax you're talking of. It seem to me that you mean a corporate tax (X% of profits) then the effect on prices is very much disputed. Stiglitz spends literally chapters of his Public Policy book explaining the different views on the effect of this kind of tax. Is it on salaries that the company pays? Is it on prices (Krzyzaniak & Musgrave)? Is it on profits (Harberger & Mieszkowski)?
Now, if we're talking of a classic ad valorem tax (ie X% of the price of the good sold), it depends on several factors, but wages and profits fall, (wages may not fall if we're talking of a good that does not employ a relatively important amount of labor), and prices increase.

Well don't those three possibilities have a common ground in that the burden of the tax is passed on? Genuine question, I'm not much of an economist.

One of them is not, if profit falls then the owner gets screwed. Generally, it's a combination of the three.
And I was talking ad valorem taxes on a good, not corporate tax.

What type of tax seems irrelevant for the company, but relevant for other groups, based on what you're telling me here. The employees get hit (reduced salaries), the customers get hit (increased prices). If the profits get hit, for the company to survive, it has to turn the burden around on the customers or the employees, or the business winds up failing, correct?

Not if it's a global tax, there's just nowhere to go for the owners of capital. (saying capitalists sounds too marxy).

Bottom line, I'm not seeing how taxing the company burdens the company, so to speak. I can see it burdening employees with pay cuts, and customers with higher prices.

If however, you're talking about a personal income tax, the only effect is on the reduction of income.
That's why the personal income tax pwns :D

I think we're discussing corporate taxes in this instance, unless I misread something somewhere. The premise was we tax the "big businesses", like banks and oil companies as a "solution" to our economic woes. SMs point being "shit rolls downhill", and the burden ultimately falls on everyone else, rather than the companies themselves.

Empirical and theoretical data is not conclusive in that assertion, there are models and data that do point to a reduction in profits, harberger's.

the hole "number of hours" thing is a load of crap.

CEO's get paid a lot because their skills are valuable

other people get paid less because their skills aren't as valuable

meh i'm not worried. i'm just hoping we can sell alaska to china and call it even. maybe we can get sarah palin with it. win-fuckin'-win.

At 2/4/10 10:37 AM, SmilezRoyale wrote: I don't apply value judgments to matters of charity. Charity is not immoral, as Ayn Rand might argue,

yeah that's an oversimplification of her position on charity

At 2/6/10 01:54 AM, SadisticMonkey wrote: hours

Hours worked do matter. If you aren't putting in the same time as everyone else it looks bad. And if you aren't needed that often you can't be too valuable to the company. You probably delegated too much away.

CEO's get paid a lot because their skills are valuable

other people get paid less because their skills aren't as valuable

There's a lie in that sentence, but I'll get to it.

Even if you argue that a CEOs skills are more valuable, they aren't 10xs more valuable than any other worker. They on average make 360,000 a year (but again only some of them really make the big bucks. There's lots that make less and drag that number down.).

CEOs are responsible, in a large coorperation, for setting goals and managing upper management. Sure, this is important, but they also get to decide how much they are paid. So the real reason they are paid more is because they set policy and say they should be. Its just general greed, there's no way around it.

They aren't more valuable than the IT guy. If you don't have the IT guy the company falls apart when the computer breaks. If you don't have an accountant, no one gets paid people stop working. Etc etc etc. Each employee is just as valuable if not more so than the CEO as they actually determine what a company does and does not do. Any argument that you make does not justify 70% of revenue going to the execs of a company at the expense of the company & shareholders.

At 2/6/10 09:03 AM, gumOnShoe wrote: They aren't more valuable than the IT guy. If you don't have the IT guy the company falls apart when the computer breaks. If you don't have an accountant, no one gets paid people stop working. Etc etc etc. Each employee is just as valuable if not more so than the CEO as they actually determine what a company does and does not do. Any argument that you make does not justify 70% of revenue going to the execs of a company at the expense of the company & shareholders.

Um, no.

You see, there are thousands of competent IT guys going around, and they only need to perform satisfactorily. If you call in an IT guy to set up your office's network, even if he's a brilliant IT guy, he's still just setting up a network the same way any other competent IT guy would do.

When it comes to executives, however, only a few individuals(relatively speaking) have the necessary skills to competently perform as a company's CEO, and there is (essentially) no limit to how good they can be at their jobs, because they can use their skills to make decisions that make their company large amounts of profit that would not have otherwise been made for example, whereas at the end of the day the IT guy is still just setting up a network the way that you're supposed to set up a network.

I mean valuable in the same way a talented basketball player is valuable to his team. His skills are in short supply so a large amount of money is necessary to secure access to them.

And don't act like CEO's are fatcats whose jobs are actually easy. If you replaced the board and CEO with "workers", the company would be run into the ground.

At 2/6/10 01:54 AM, SadisticMonkey wrote: CEO's get paid a lot because their skills are valuable

other people get paid less because their skills aren't as valuable

How are you reasoning this? So you're saying that a farmer has no value to America compared to a CEO? Without farmers there is no food yet a farmer's salary is about $43,000 while a CEO's is about $300,000. I'm just saying, without those lower people, CEO's would never be up where they are.

At 2/6/10 10:19 AM, SadisticMonkey wrote: You see, there are thousands of competent IT guys going around, and they only need to perform satisfactorily. If you call in an IT guy to set up your office's network, even if he's a brilliant IT guy, he's still just setting up a network the same way any other competent IT guy would do.

IT guys are valuable though. They aren't reduced in value because there are more of them, you still need them.

When it comes to executives, however, only a few individuals(relatively speaking) have the necessary skills to competently perform as a company's CEO, and there is (essentially) no limit to how good they can be at their jobs, because they can use their skills to make decisions that make their company large amounts of profit that would not have otherwise been made for example, whereas at the end of the day the IT guy is still just setting up a network the way that you're supposed to set up a network.

This isn't really true. There are many different ways to set up a network, and many IT guys do it wrong all the time, just like many CEOs fail all the time. If you computer network goes down for a day, you could lose thousands of dollars. IT guys are the life's blood of a modern corporation. And no, not all networks are set up the same.

And, anyone can be a CEO. Its a learned skill, just like IT. You CAN be taught how to be a CEO. It isn't some divine right passed down to a select few.

I mean valuable in the same way a talented basketball player is valuable to his team. His skills are in short supply so a large amount of money is necessary to secure access to them.

No it isn't. If everyone decided as a group to pay basket ball players less, they'd have to work for lower wages, and they would do it too. Trust me, the things a CEO does are not in short supply. They have to know how to raise money and set responsible goals for a company. Its not easy, but its not hard when you know the business.

And don't act like CEO's are fatcats whose jobs are actually easy. If you replaced the board and CEO with "workers", the company would be run into the ground.

This just feels like the old Monarchy vs Democracy theories that have been disproved. I think you're talking out your ass.

At 2/6/10 09:03 AM, gumOnShoe wrote: Even if you argue that a CEOs skills are more valuable, they aren't 10xs more valuable than any other worker. They on average make 360,000 a year (but again only some of them really make the big bucks. There's lots that make less and drag that number down.).

CEO payment is determined by the size of the company he directs. Even if he is a mediocre CEO, and can only increase revenue by 1%, but the company has a total revue of 10B, he's worth 100 million a year. THat's why CEOs make so much money. Capping theirsalaries would create an incentive for them to take other jobs, that are less profitable to society.
Dr. Frank explains it in the NY Times

Ever heard the phrase "Don't owe a guy a dollar, owe him a million."

It applies here, at this stage they've so much debt that the world bank can't really say no. They've invested so much in the revival if the US that they can't back out now.

Even if they do suck

At 2/6/10 05:50 PM, Der-Lowe wrote: CEO payment is determined by the size of the company he directs. Even if he is a mediocre CEO, and can only increase revenue by 1%, but the company has a total revue of 10B, he's worth 100 million a year.

There's a difference between how much an individual makes for a company and how much they earn. My billing rate is 8 times my pay rate (hourly), for instance. Even if this was a min wage job that'd be a huge difference. But the point is that the CEO doesn't increase revenue by 1%. They manage people who increase revenue. A CEO is nothing on his own. So he's never worth that 100 million you claim he is.

THat's why CEOs make so much money. Capping theirsalaries would create an incentive for them to take other jobs, that are less profitable to society.

What other jobs? The guy in your article is speculating that they'd be lawyers or hedge fund managers, but that's not necessarily true. The article itself admits CEOs in other countries make a fifth of what our CEOs make and still do an excellent job.

Besides, do you want a guy working only because he's making a shit ton of money or because he wants the job and wants the company to do well?

There are hundreds of arguments for pay caps. And again, I'm not swayed by your article. I've read just as many in the times and in Time magazine that laugh at that particular article you're quoting.

And seriously, 70% of revenue in executive bonuses? That doesn't make you wince?

At 2/4/10 11:29 AM, gumOnShoe wrote:
A wealth transfer implies, on your part I'm assuming,

Gah i have philosophy. Wealth transfer as i define it is a transfer of wealth from one person / group of people to another person / group of people. the Justice of such an action is, as i see it, a question of utility. But unless you can prove there is some special utility in having a monopoly being granted the priviledge of the wealth transfer, I see no utilitarian justification for having it so that only the government can seize wealth by force at will.

Well, then isn't a person who overcharges for products of necessity, or underpays for labor transferring wealth unto themselves, and isn't this far worse for the good of all?

In the context of wealth transfer by a state, a decision on the part of the state to expropriate wealth is a matter of direct coercion. And in such cases no compensation need be made. It is true that the state pays for services provided to tax payers, but generally speaking those two are not perfectly tied togeather the same way, for example, subscribing to version Wireless directly ties the fees you pay to the services Verison provides.

But whether or not a person chooses to engage in an act of trade, either trading goods/services or in trading labor for wages. There is the giant gaping line between voluntary trade and coerced transfers.

If you can point to examples of obscene wealth transfers that exist in a voluntary society, that serve no long term positive function (provided they do not go on for too long) then that is something that would warrant some sort of counter transfer. But the key is that most examples i get do not fit this criteria... For example

You can say that instances where labor is "underpaid" (Which i ask you to elaborate on, because labor being underpaid implies that there is some sort of special wage rate in the universe that someone OUGHT be paid... which sounds to me like you believe in the completely fantasmagorical labor-theory of value) is a wealth transfer from the laborer to the employer, Which the only example i can imagine where the very low wage rates are not a product of changing structures of production, would be If some capitalist opened a factory in a developing country.

Since Welfare Statists often argue (Ex social utility, ability to pay principle) That wealth transfers, even if they are anti-social in the sense that they are admittedly violently imposed, are laudable because they benefit social utility, And likely you would do the same, I too shall to the same.

In the case of the low wages of this sort, the Capitalist experiences a heavy profit as a result of the fact that There are fewer job opportunities available in a geographic area than the number of potential laborers there are, and so wages get bid down. Assuming there are no barriers to entry, these profits are the only mechanism by which other entrepreneurs will be attracted to build their own factories in persuit of those 'mega profits'. Eventually when you have more people waiting employees and a smaller surplus workforce, the profits will fall and the wages will be bid up. But we can conclude that during this process, assuming the employement was not coerced, that the people entering those factories did so because they offered a better situation than what existed prior, even before wages began to get bid up.

The low wages are not REALLY a wealth transfer though you could argue they are a potential wealth transfer. The wage earners are earning more than they did before, but they are technically not getting paid the maximum they could POTENTIALLY be getting if wages were closer to the equilibrium rate, but the only way to achieve that equilibrium rate while solving the surplus worker problem at the same time is by temporarilly allow for those profits. So i argue the wealth transfer is fine since, in the long run, it benefit both laborer and capitalist.

The same thing applies to profits. You can either make them by cutting unnecessary costs or by innovating on something and charging more for it until others come in and bid the price down. As for 'products of necessity' if free competition exists in already well established industries that provide those goods, I do not imagine that such a thing could happen. If you have a disaster scenario, then this video might explain why profits are still a good thing.

http://www.youtube.com/watch?v=E74itK6yL JY -skip ahead a bit

That article deals on income distribution and i was unable to find any statistics about how LONG they actually work

you'd expect that a rich person would only make on average 1.5 dollars for every dollar another man makes. This is if we're valuing work equally and the time of an individual.

So you do believe in the labor theory of value! The value of a person's labor has no relation to how many hours you work. I can spend 10 hours punching a wall, the value of my labor is not equal to my mom spending 10 hours rating insurance policies.

Now the reason that the CEO 'sets their own wages' is because they are in a very negotiating position because the people who pay them

If you believe that CEOs, with the exception of cases of Nepotism, are paid exorbitantly high wages above what their assessed value is, You're basically saying that the Board of directors and the stock holders of corporations enjoy throwing their money away. Take for example, Michael Eisner was paid hundreds of millions by Disney during the 80s, 90s, and first half of this decade, which would be obscene if one ignored the fact that during this time, Disney's new worth increased by several billion more than Eisner was ever paid. The only reason a CEO can 'pay themselves', or rather, have the board of directors on their knees willing to throw huge amounts of money to get them to work another year for them because that is how highly they value their management. Another example would be cornelius Vanderbilt, not a CEO but a robber baron, Edward Actinson (See late 19th century boston activist) Calculated that for the 14 cents of profit Vanderbilt made shipping flour, but his consumers saved 2.75 cents per barrel.

If any company could run itself properly without having to pay a CEO that much money, perhaps paying them no more than 10 times the lowest paid worker in a company, They would have an advantage and be more competitive than a company that 'wasted' money on a CEO. Certain companies do not have CEOs, as you understand them. And i am thinking of companies such as agriculture and other settled industries where changes in consumer preferences and management can be handled by someone with less talent, and so need not be paid nearly as much.

Surgeons, are viewed as more valuable to consumers because the services they render are more easilly visible, this is undeniable. But the board of directors must have some reason for thinking that the opportunity cost of not hiring a CEO is greater than the amount of money they pay them. Ceos do not work directly for consumers and so the benefits (and even the detriments) imposed by certain kinds of management elude most people who are not well aware of company function and policy.

If what you say is true, its absolutely not in most people's interests to allow those who have money to take advantage of them.

Which is why i expect that, though imperfect, individuals will be cautious to some degree when entering contracts with one another. Voluntary society generally erects solutions to social problems between individuals where it is in both party's interests to keep to their own side of the bargain. i.e. order comes from reciprocity.

What disturbs this reciprocity is when you have institutions that can act in ways individuals cannot because they veiw that institution different from any other (Church, godking, state, w/e) And can externalize their costs on to others (i.e. taxes) which enables them to act in ways which would finacially ruin anyone else. (Ex Fanny and freddie)

I'd say more but i'm out of characters.

At 2/6/10 09:49 PM, gumOnShoe wrote:

At 2/6/10 05:50 PM, Der-Lowe wrote: CEO payment is determined by the size of the company he directs. Even if he is a mediocre CEO, and can only increase revenue by 1%, but the company has a total revue of 10B, he's worth 100 million a year.

There's a difference between how much an individual makes for a company and how much they earn.

Obviously, otherwise, there would be no profit. The equalization comes from the marginal product of labor, and not the average product. Erh, nevermind.

My billing rate is 8 times my pay rate (hourly), for instance. Even if this was a min wage job that'd be a huge difference. But the point is that the CEO doesn't increase revenue by 1%. They manage people who increase revenue.

Semantics. If I tell you (and you of course, believe me) that I can increase your revenue by 1% and that revenue is 10B, and I demand a yearly salary of 50 million you'd be willing to pay me that salary, you wouldn't care if I did so by working 24/7 directly or managing people or simply being lucky at the lottery. And that's why CEOs earn so much. Ex ante, 10Billion, expost 1% more (or X%).

THat's why CEOs make so much money. Capping theirsalaries would create an incentive for them to take other jobs, that are less profitable to society.

What other jobs?

Any other qualified job.

The guy in your article is speculating that they'd be lawyers or hedge fund managers, but that's not necessarily true.

Precisely, he was giving examples.

The article itself admits CEOs in other countries make a fifth of what our CEOs make and still do an excellent job.

Precisely because the economic theory behind their pay is correct; if the company's revenue were 1 Billion instead of 10, then their salary would be 1/10th of what they are. This is the case in other countries, because other countries have smaller companies, which in turn have less revenue.

Besides, do you want a guy working only because he's making a shit ton of money or because he wants the job and wants the company to do well?

Why are there more lawyers than sociologist? Because the market indicates its needs through the price mechanism (wages). What would happen if sociologists start making more than lawyers? There would be more sociologist? What would happen if CEOs make less than hedge fund managers?

Probably the most important lesson one can learn about Microeconomics, is that incentives matter. And those incentives are revealed through the price mechanism.

That's why Friedman called his Microeconomics book "Price theory", but nevermind.

There are hundreds of arguments for pay caps.

And yet the only one you have stated is that you find it morally incorrect. But that argument crashes against practical issues, as it is common with moral arguments.

And again, I'm not swayed by your article. I've read just as many in the times and in Time magazine that laugh at that particular article you're quoting.

Well, link to it and we shall see.

And seriously, 70% of revenue in executive bonuses? That doesn't make you wince?

You have not linked to the case you are discussing, therefore it is my obligation as a critical thinker to suspend my judgement on the issue.

Here's one: http://www.crainsnewyork.com/article/201 00203/FREE/100209948

Feel free to google for more, its pretty much everywhere.

At 2/8/10 06:26 AM, gumOnShoe wrote: Here's one: http://www.crainsnewyork.com/article/201 00203/FREE/100209948

Feel free to google for more, its pretty much everywhere.

That's 70% in total compensation, not just executive bonuses.

And for an investment firm, that does sort of make sense. It's not like the manufacturing sector where profit one year means you can ship more units next year. Personally I think the fact that they still turned a profit over the full year in this economy without ditching what they had already promised to their employees is a pretty good sign. The article mentions that a lot of what they paid out was deferred cash awards from previous years.

Honestly, if you're in the financial sector and have been consistently turning annual profits in the past few years, you don't want to lose the people who are working for you right now.