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Your theory is not based upon sound economics. If everyone was colluding in the way you describe to pay themselves more, then a situation would emerge where com
by thehardsphere 9y ago
Your theory is not based upon sound economics. If everyone was colluding in the way you describe to pay themselves more, then a situation would emerge where companies that didn't comply with this conspiracy would be significantly more profitable than those that did.
Note that, although managers may wish to throw money around because it's not theirs, shareholders view every penny spent on salaries as an expense that eats into their profits. They have an incentive to insist on lower employee salaries whenever possible, and they're typically the ones who make the rules in most firms.
Also, if situations like that could exist, you wouldn't only see them in the US.
- tensor 9y agoApparently Apple pays less than average for silicon valley: http://bgr.com/2016/01/04/steve-jobs-answer-apple-engineer-salary/ http://bgr.com/2016/01/04/steve-jobs-answer-apple-engineer-s...
- mercutio2 9y agoDid you read that story to the end? There’s a bunch of editorializing not backed up by the actual details. Who do you think knew more about compensation at Apple, Steve Jobs, or the random employee? Or perhaps your argument is Steve Jobs was just lying?
- lmm 9y agoOn the contrary, it's mainstream economics that a lot of internal corporate decisions are made for the welfare of employees/managers rather than shareholders.
- thehardsphere 9y agoSure, that's an example of principal/agent problems. Those happen all the time and are very real. But to claim that, there would be a vast conspiracy tobtake all of that money on a wide enough scale to make everyone in the USA overpaid is where the thing breaks down.
- lmm 9y agoNot one vast conspiracy. Just many people in similar positions with similar incentives acting in similar ways.