bailout dead

@nimh,

I think we have different definitions of what it takes to be a jerk.

Feel free not to discuss the matter with me if I hurt ya'll's feelings, though.

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@Robert Gentel,

Robert Gentel: "Why right do they have to decide on ceilings for everyone?"

The same could be asked about Congressional power to establish floors for everyone, i.e., minimum wages. This question was settled over 70 years ago. The government has the power to restrict the terms of private contracts when protecting the welfare of its citizens.

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Can ya'll tell me at what point CEO salaries are considered unreasonable?

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@DrewDad,

When they aren't reflected by what's happening to the bottom line.

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@Debra Law,

Debra Law wrote:

Robert Gentel: "Why right do they have to decide on ceilings for everyone?"

The same could be asked about Congressional power to establish floors for everyone, i.e., minimum wages. This question was settled over 70 years ago. The government has the power to restrict the terms of private contracts when protecting the welfare of its citizens.

Is there a point where CEO salaries become harmful to the general welfare? What would that point be?

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@JTT,

JTT wrote:

When they aren't reflected by what's happening to the bottom line.

Er... could you be a little more explicit?

That might be an argument for the stockholders to take action....

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@Cycloptichorn,

Cycloptichorn wrote:

The real question is, would Jobs be doing the same work under an environment which restricted his earning potential to a greater degree than the current one?

Cyclo I was responding to your argument that these folk don't create jobs. Now you say that's not the "real question"?

Make up your mind. If every time you are wrong it's just not the "real question" then by all means get there. I've asked you repeatedly what the purpose of limiting everyone's income is.

I get the purpose of punishing bad corporate policy and individuals who let that happen. I think a better way to address that is through more financial regulation and with punishments (financial as well as hard jail time) for these irresponsible people. But you've never made the case for what the purpose of a blanket limit for honest people and dishonest people alike is and if you'd like to get to the real question I've been asking you to do so for a while.

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And the answer is not at all clear. He certainly returned to work for potentially less money then he was making before. According to various theories put forth here, he would not have done so.

Nonsense Cyclo, his earnings were never capped so the fact that he just went elsewhere to create multi-million dollar companies doesn't say anything about whether capping his earnings would change his economic output.

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I don't propose outright Socialism, because I do not support it, any more than I support outright Capitalism.

What are your arguments against outright Socialism?

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The drive to innovate and succeed will never die, and having upper boundary limitations upon the financial compensation of entrepreneurs will not stop them from going about their business...

No it won't they'll just take it elsewhere. And let me use a small scale to illustrate it.

If you cap their income in one company do you find it likely that they'll just work for another company? Probably.

Now you guys are right in that doing it nationwide brings a higher switching cost, it's not as easy to just move the business overseas but you guys ignore that it's still not much of a barrier.

The problem with Socialism is that it doesn't work well if it competes with Capitalism. If the whole world used your proposal it would work just fine.

But it's becoming easier and easier to just move to business friendly places. And what you don't seem to take into account is that regions are competing for them.

I incorporated in Delaware instead of California for a reason, and am considering incorporating another company in Panama for an even better reason. It's all very easy to do Cyclo (incorporating in Panama would cost less than $1,000 for me for example).

And this is only going to get easier and easier with globalization. I think it's great because I see no reason for Americans to hold nearly half the world's wealth and if others can be more competitive bully for them.

But capping growth potential will curb growth on some level Cyclo (we can disagree on scale but I don't think we disagree with the fundamental way it works), and you haven't even made an argument toward a single benefit of doing so.

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@OCCOM BILL,

Quote:

You're fooling no one with your bob and weave. The simple truth is; most people's motivation to work is to better their own lot in life. If this isn't so; please state what the motivation is or admit you can't.

(You're behaving like Foxy again.)

If I were behaving like Fox, Bill, I would be bitching about non-existent personal attacks and then fleeing the argument; I am doing neither, in fact, though we do disagree.

I believe that people work for several reasons; 'bettering their lot in life' is one of them. Another is to make a positive difference in the world around them and the lives of others. And another, what I consider to be the actual primary driver? To have something to do all day.

Even those who don't have to work, in many cases do, just to have something to do... they certainly do not fit your model of 'bettering their lot in life.' Actually, strike that; they are doing exactly what you said, but not in financial ways.

I submit that limiting executive pay would neither A) cause any significant number of executives to flee America, or B) limit people's desires to become executives. There is a satisfaction that comes along with being the boss that is unconnected to questions of pay. I further submit, C) that limiting executive pay would provide a net boon of millions if not billions of dollars per year that could be re-invested into growing the companies in question, as that money could be better spent.

Cycloptichorn

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@OCCOM BILL,

OCCOM BILL wrote:

The simple truth is; most people's motivation to work is to better their own lot in life. If this isn't so; please state what the motivation is or admit you can't.

- You're making an ex cathedra claim here without backing it up. You'd be the one who would have to back up your argument.
- If we were to accept that most people's motivation to work was "to better their own lot in life", how would that translate into "making more money"? It is not at all clear that having more money available makes for a happier, better life.

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@Robert Gentel,

I havde read this entire thread. Although I am not an economist or as astute as Nimh or Cyclopitchorn, I am dead set against Adam Smith type Capitalism.
I do know that the upper class elitists have always tried to block progress for the common people. Go back into history. The plutocrats were opposed to the Income Tax in 1913, to Women's Suffrage, the Social Security, to Equal Rights, to Medicare.

I would like to see a revival of the 90% tax on incomes over a million! That would bring in a great deal of money that could be redistrubuted to the poor and downtrodden who have been sysgtematically deprived of their equal rights.

I think that you and Occom Bill will have to agree that Cyclopitchorn( who is obviously very very well read in Economics and works at Berkeley) and Nimh( a well known figure in his own right in Economic circles in Budapest) have made arguments that appear to be unassailable.

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@nimh,

nimh wrote:

The idea that if one wants to do any tinkering with the supply and demand market mechanisms of establishing financial rewards, one might as well be a socialist, seems like another appeal to extremes.

That's not the point I'm trying to make (why don't you just argue with yourself if you want to be able to play both sides?). I was pretty sure (and he confirmed this) that Cyclo doesn't advocate pure socialism. And I asked him to explain why he doesn't because doing so would give us some common ground to work with.

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I mean, wanting to introduce a cap that would merely bring the excess disparities at the very top back to standards of ten or fifteen years ago doesnt exactly equate with wanting to, say, nationalise key industries, does it? Or with wanting to do away, in principle, with income disparity per se?

Did I say any of that nimh? Or are you just making up my side of the argument in addition to yours?

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Caps are a radical solution, yes, but they hardly suddenly make for a socialist economy.

Did I say they did nimh or are you making a straw man?

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There's nothing inherently contradictory in favouring a market system to determine prices and incomes, but only up to a point, with restrictions set up at the very fringe outer limits.

Did I say there was nimh? Or are you making another straw man?

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Considering that the minimum wage also sets an artificial wage for a class of employees, who, left to pure supply and demand, would have earned less, isnt that also a question of what you call "capitalism for some, socialism for others"?

Yes, but like I said I don't think Socialism is a dirty word. I grew up a communist (both literally in a community practicing communism and in ideology that I personally held).

I'm not certain that the minimum wage is a good thing for the people earning it, but if it is I'm all for it.

I see reasons for it to exist, to prevent tyranny of wealth. I still don't see you giving any reasons for placing caps on what anyone (as opposed to those who act to the society's detriment) can make. What's the benefit of that?

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It's the mirror image of caps on the stratosphere wages, after all, where you'd set an artificial wage for a class of employees who, left to pure supply and demand, would have earned (even) more.

So what's the mirror benefit if these are so very identical? I see a benefit for not paying people starvation wages, I don't see a benefit in limiting everyone's potential.

Are you ever going to make the case for the benefit of your proposal? Here's the two basic questions I've asked you again: what benefit does society derive from limiting everyone's earning potential and how would that work in practice?

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@Cycloptichorn,

Cycloptichorn wrote:

I further submit, C) that limiting executive pay would provide a net boon of millions if not billions of dollars per year that could be re-invested into growing the companies in question, as that money could be better spent.

Where do you think that money goes now? I don't imagine these business-savvy CEOs are stuffing it into their mattresses. I imagine they're investing it in stocks... which grows multiple businesses....

Your argument seems to come down to the idea that these companies are too stupid for their own good, and that Cycloptichorn knows better how they should spend their money.

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@Robert Gentel,

Robert Gentel wrote:

All of us aspire to success and if we allow someone to violate the rights of any of us in our pursuit of happiness then we weaken all of our rights.

Oh, come on. Restricting the pay of the top 0,01% of society to, I dunno, 400 times average wage instead of 600 times does not hamper our "pursuit of happiness". That's just silly.

I mean, whose pursuit of happiness relies on making 1,000 times average wage rather than just a measly 500 times average wage? Who would be cast into unhappiness when deprived of the possibility to make 25 million a year instead of 15 million? What are we even talking about?

Yes, I guess there will always be a couple, for whom happiness will forever remain unattainable because they cant earn that 7th or 14th or 21st million $ a year. So that leaves us with the notion that any hampering by society of any single person's goal, no matter how outlandish the goal or how few people have it, is an attack on all of us, and any of our aspirations. Well, count me sceptical. There's rules and regulations hampering lots of individuals' particular preferences in seeking happiness. Target shooting with Uzis for example. Polygamy. When a certain kind of excess is deemed as detrimental to society, it can be and is restricted. You will obviously disagree about whether the corporate excesses of the last decade count as such a detriment, and that's fine. But it's silly to say that if this particular excess is deemed so and restrictions are put in place, that suddenly constitutes a threat to all of our dreams, rights and pursuits of happiness.

I mean, you declare that limiting excess CEO pay at some high-up level that used to be the max and has now been surpassed is "the tyranny of the masses" that will "limit all of our dreams". That's just rhetorical overdrive. All of our dreams? Seriously, whose dream is it to earn , say, I dunno, 9,000,000 $ a year, instead of "just" 6,000,000 $? Or 20 million instead of just 10 million? How can such a declaration be made about "all of us"?

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@DrewDad,

You really must be kidding or else you don't read the same magazines I do. The CEO'S have multiple residences( like McCain); a fleet of expensive automobiles and big yachts. With the golden parachutes they don't need to invest their yearly income in stocks.

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@Robert Gentel,

I'll try and skip forward a bit and respond to some clarifying questions.

Quote:

Here's the two basic questions I've asked you again: what benefit does society derive from limiting everyone's earning potential and how would that work in practice?

First, it would save a considerable amount of money for our corporations, who currently are locked into a never-ending spiral of higher and higher compensation for top CEOs and others. As in many cases, the rate of pay for a job is based upon what OTHERS of a similar stature are getting paid, a situation is created in which there is no negative pressure on the salaries of those at the top. Thanks to the fact that the business community gets progressively smaller at the top, and so many people sit on multiple BoDs, it is unlikely that this situation will change anytime soon, outside of failure of the market (which we are seeing currently, but trying our damndest to not allow to happen, so scratch that) or governmental regulation.

If company X, with 1000 employees, pays out a total in salaries, counting all employees and their perks, of 150 million per year and 100 million of that is concentrated amongst the top 40 employees; and that number, on the top end was reduced to 75 million for the top 40 employees; wouldn't that in effect give the company 25 mill more in profits to play with, every year? And at what cost? Several millionaires wouldn't be quite as rich as they were before. No big loss there.

Second, it would recognize the value of work at all levels, and not just pretend that those at the top are the 'earners.' This is an important social concept and one that I wish to see spread further through my lifetime. Employees of businesses, at the lower levels, are still important, and recognizing this fact by indexing salaries at the top to those at the bottom would definitely increase the sense of worker happiness and participation in the core goals of the company, even if their salaries are not increased.

As to how it would work in practice, who can say? I have given a few thoughts: that we could index it to other employees in the company. That we could allow shareholders to vote upon it. That we could impose federal mandates to either effect.

--

One of the common counter-arguments to this is that, since the rich have access to accountants, they would just 'get around' any sort of limits we want to put on them. That they would simply change what they are doing to accommodate. That they would incorporate abroad in order to avoid taxation. I believe these are false arguments, the idea that regulators will never be able to keep up with the innovation of those who run the companies. We could regulate these activities, and if people threaten to move abroad, let them. It would be better in the long run to do what is right, than to simply accept that we are not able to police activity, and just give in to those who would buck all attempts at regulation.

Just my opinion....

Cycloptichorn

1 Reply

@DrewDad,

DrewDad wrote:

Cycloptichorn wrote:
I further submit, C) that limiting executive pay would provide a net boon of millions if not billions of dollars per year that could be re-invested into growing the companies in question, as that money could be better spent.

Where do you think that money goes now? I don't imagine these business-savvy CEOs are stuffing it into their mattresses. I imagine they're investing it in stocks... which grows multiple businesses....

Your argument seems to come down to the idea that these companies are too stupid for their own good, and that Cycloptichorn knows better how they should spend their money.

This is A) an inability to read my arguments correctly, and B) just an argument for trickle-down economics. You're making the same arguments that Republicans have been making forever, stating that giving all the money to the rich folks is a good thing. It is no more valid in terms of business finance than it is in terms of tax finance.

Cycloptichorn

1 Reply

@Debra Law,

Debra Law wrote:

In your first sentence, you falsely claim you NEVER ONCE made that allegation. Then, in your second sentence immediately following your denial, you make the same allegation that you denied making. How ludicrous is that?

It's only ludicrous if you don't understand that Congress can change the constitution.

Me pointing out that the Constitution says something is thusly not the same as saying Congress lacks the power to do so. After all, they have the power to change the Constitution.

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You have REPEATEDLY alleged that Congress doesn't have the power...

No I haven't. See above.

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...because you erroneously think that it is UNCONSTITUTIONAL for Congress to pass laws impairing the obligation of contracts.

Ok, then why don't you explain what Article I, section 10, clause 1 means then.

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Your allegation is without merit and I have told you so several times.

You think mere repetition will make you right? No it won't. No it won't. No it won't.

(just in case it does work that way)

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You don't understand that the federal Constitution GRANTS to Congress the power to retroactively modify contracts by and through the bankruptcy clause.

Really? Well it must have been dumb luck when I repeatedly asserted that through bankruptcy Cyclo can get what he wanted but that bankruptcy itself was an undesirable scenario.

Call it pulling a Homer, showing understanding on accident, if you will.

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Also, you fail to understand that constitution grants to Congress the power of the federal purse.

Now this is just silly, I understand this perfectly well. If it helps you to pretend I don't then that's fine with me but it doesn't do much to make a case against anything I said.

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Thus, Congress may constitutionally place conditions on federal funding. Take or leave it.

I've already agreed with this at least 2 or 3 times, do you have a point?

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No one is forcing any CEO to take federal money to bail out his/her failing companies.

Can you show me where I said that?

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If the CEO doesn't like the conditions placed on the federal money, the CEO doesn't have to take the federal money.

Debra I made this very point, and was saying that fixating on their compensation is risky for us because we need the bailouts to happen.

Can you try reading what I said again and seeing if there's something I actually said that you can disagree with? This is the point I was making to Cyclo in that focusing too much on the punitive part of the bailout makes it more risky.

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The CEO can allow the company to fail and march his ass into into bankrupcy court. A bankruptcy court will not allow the CEO to walk away with millions of dollars while the company creditors stand there empty-handed.

Where did I say anything that this straw man purports to correct? I've said time and again that part of the problem with trying to make them accountable is that we'd have to accept scenarios that aren't that great for the rest of us.

I'm perfectly aware what can be done if they go bankrupt, but given that I'd rather they not go bankrupt (even if they deserve it ) it's just not something I find that useful of a tool in this crisis.

I would love to see all the people who bought the bubble take the lumps for it but I believe that doing so would punish everyone more than it is worth to do so.

I've never made any argument that bankruptcy does not allow for these things, just that in some of the biggest cases isn't that desirable a means to the end of punishing the irresponsible, because they can take others down with them.

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I have addressed all of your statements.

If by "addressed" you mean just making stuff up about them yes. If you think you addressed what I actually said how about answering the questions I ask above about where you think I said it?

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I haven't fabricated anything.

See above.

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The problem, however, is that YOU don't have any idea what you're talking about (i.e., the Constitution), therefore YOU don't understand the merits of an informed response when you receive one.

When such a response comes along I'll be sure to give it a try.

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@Debra Law,

Debra Law wrote:

Robert Gentel: "Why right do they have to decide on ceilings for everyone?"

The same could be asked about Congressional power to establish floors for everyone, i.e., minimum wages. This question was settled over 70 years ago. The government has the power to restrict the terms of private contracts when protecting the welfare of its citizens.

That's a good point and one that nimh already brought up. But how does restricting everyone's potential earnings do so?

(I'm not sure if you believe it would do so, or if you even advocate earnings caps but for a person that advocates it some kind of societal benefit should be established to invoke that right)

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@OCCOM BILL,

OCCOM BILL wrote:

The simple truth is; most people's motivation to work is to better their own lot in life.

Right. And Cyclo's pretty obvious point is that "bettering your lot in life" means something else for all of us. For some it means being able to work fewer hours. For others it means being able to afford that extra holiday. For others it means getting a job that doesnt bore your eyes out of your sockets, or that has you working with cool colleagues. For others it means being promoted to a position with more prestige. To reduce everyone's motivations of bettering one's lot in life to getting the max $$ possible is silly.

Moreover, to the real enough extent that financial betterment does drive people's ambitions, how in hell's name would capping the max possible financial reward at the stratospheric end -- say, $9,000,000 a year, or $14,000,000 a year, or whatever such top-of-the-top of excess payments you think of when conceptualising caps -- suddenly stifle people's incentive to move up? If 10 mil a year is the top you can get in society, there will be people working their ass off and putting everything on the line to get there. It would be no different from what society looked like pretty recently, when people weren't devoid of incentive to better themselves, work hard and innovate either, even though there wasn't the kind of escalated top corporate CEO pay we have today.

This notion that if top pay wouldnt escalate from 10 mil last year to 20 mil today to 30 mil in ten years, people would lose the willpower to work, achieve and improve is just silly on its face to me. It's like ideological dogma that's sung loose from what real people act on.

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@OCCOM BILL,

I'm learning from this thread (thanks, dys, and thanks to all participants) and am not so much at this point on one side or the other. It's a natural inclination for me to agree with nimh, yes, and I see Robert's points. Wretchedly, I see something so far in virtually all of your expressed points.

I'll pipe in to say that my motivation for work in my long life has been to have money to eat and have shelter - but most of my employment or self employment choices have had to do with personal satisfaction re doing what interests me. I missed the wanting to be a millionaire gene. I once was asked to be lab manager in an early version of what became an international med lab - well, it was already international but only in the beginning few stages of its eventual growth to the major facility it became. I didn't take the job because I didn't like the way the owner treated some employees. The owner, basically a knowledgeable and good man, was generous and thoughtful to employees re compensation and profit participation, just a rager on some one to one bases. I sometimes sided with the fired people, as did others who quit along with the fired, but mostly I didn't like the chaos.

I ended up choosing to quit, go to school for years for a less well earning profession (generalizing) because it fascinated me and I got to design all the time - a whole new realm of fun and fascination that I continue to appreciate. I have designed a bunch for free: it's just plain old interesting.

Some limiting choices I've made have been related to a certain disability I deal with, but they were primarily re places I could work re travel time/hours to drive in dim light for part of the year. However - I could keep on being creative for decades after that, though never bringing in much dollar bacon, whatever the so-called hourly fees. I don't regret my choice, I have just loved designing.

So, that's an anecdote, but I think many have similar complexity to their work choices. Carpenters can crave working with wood, or at least projects that involve real craft. Mechanics can live and breathe cars while swearing a blue streak at one or another. Some people just love sales. Lots are fascinated by technology. Point, job satisfaction is very important, if not the main decider when you have a mortgage and a family.

Many women craved to move from the role of mother-housekeeper-nurse-teacher in my early lifetime to something that would interest them otherwise.
As we all know, that role still has value, perhaps even more regard than it did back then, but women also got to play in the fields of law and medicine and much else after the civil rights act.... because they were interested in law and medicine, movie production, whatever. Uh, also for the money, but not only.

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