3 ms·

Do you believe that the rise in executive pay we've been over the last few decades reflects a rise in executive competence?

edanm 8y ago
I have no idea. It could be a rise in competence - it could be a rise in the size of businesses, bringing a commensurate rise in productivity (the average worker is also more productive, not sure if their salary reflects that though). It could be simply "fashion", or everyone making a mistake, or some kind of weird market condition that will fix itself. I don't think anyone truly knows, just like no one knows if stocks are overpriced right now. Or if compensation for e.g. programmers is also overpriced. It's really, really hard to second-guess the market and get the right answer, and I hesitate to trust people who a) don't know much about the specifics here (not saying that's you), and/or b) don't actually have skin in the game. If the people who are choosing how much to pay executives, and putting their money where their mouth is, are choosing this - well, they could definitely be choosing wrong, but its their money to lose for the most part.
- Joakal 8y ago
  Someone told me that salary transparency of these executives are the reason for high pay. Make it private and execs have less power due to less information.
- bambataa 8y ago
  - I have no idea. It could be a rise in competence - it could be a rise in the size of businesses, bringing a commensurate rise in productivity (the average worker is also more productive, not sure if their salary reflects that though). Actually median salaries have been relatively flat for the same time period (in the UK and US, at least) [0]. Where do you think the wealth created by the workers' increased productivity is going, since it's clearly not going to the workers? I'm not sure that people "with skin in the game" are really the best people to ask, since their justifications are likely to be local (as in, "our competitor is offering $X so we must beat that") without much insight into wider economic conditions. 0 - http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...
  - edanm 8y ago
    The standard story is that salaries have remained flat. I've seen some people claim to the contrary (e.g. Russ Roberts) but I think that's too complicated for a non-economist like me to get at the truth, so I'll just stick to the general consensus here. There are some stories that make sense to me about where the increased productivity is going - into healthcare, into more leisure time, etc. But again, I'm not at all qualified to make any judgements here. > I'm not sure that people "with skin in the game" are really the best people to ask, since their justifications are likely to be local (as in, "our competitor is offering $X so we must beat that") without much insight into wider economic conditions. Well, kind of the basis for the whole idea of capitalism is that you can trust people to make local decisions that are totally selfish to them, without having to consider wider economic conditions, and that it will end up working out for everyone. The great value of capitalism, in my opinion, is that given appropriate conditions, this is usually true. It's not true in the case of some market failures, like monopolies, etc, but it's usually true. And in this specific case, again, it's totally in the interest of the people who have money, to give less of it to executives. Sure, there are lots of reasons why it's more complicated and people don't always behave in their best interest, but are you really so sure that this is the case here? Why? Why are people choosing to fork over extra money here, and what makes you think you can improve the economy by changing that?
    - lovich 8y ago
      >The standard story is that salaries have remained flat. I've seen some people claim to the contrary (e.g. Russ Roberts) but I think that's too complicated for a non-economist like me to get at the truth, so I'll just stick to the general consensus here. No need to bring up this side note if you're not going to use it as an argument or back it up then >And in this specific case, again, it's totally in the interest of the people who have money, to give less of it to executives. As another poster stated elsewhere in this thread, the observed behavior of boards and executives negotiating has not been of two independent parties. The executives are now not only socially connected but have a direct incentive to constantly increase pay for their friends, so that their friends return the favor. This is not using the shareholders money well, but just quid pro quo favors that fuck everyone outside of this in group[1]. Capitalism doesn't just work unregulated because parties quickly acquire power and then subvert the rules of capitalism to funnel even more power to themselves. We are directly observing executives of modern corporations doing this via their web of board seats and increasing each other's pay ad infinitum at the expense of shareholders, employees, and society [1]https://www.wsj.com/articles/who-wins-when-ceos-sit-on-multiple-boards-not-investors-1506418202 https://www.wsj.com/articles/who-wins-when-ceos-sit-on-multi... https://en.m.wikipedia.org/wiki/Interlocking_directorate https://en.m.wikipedia.org/wiki/Interlocking_directorate

edanm 8y ago

I have no idea. It could be a rise in competence - it could be a rise in the size of businesses, bringing a commensurate rise in productivity (the average worker is also more productive, not sure if their salary reflects that though). It could be simply "fashion", or everyone making a mistake, or some kind of weird market condition that will fix itself. I don't think anyone truly knows, just like no one knows if stocks are overpriced right now. Or if compensation for e.g. programmers is also overpriced. It's really, really hard to second-guess the market and get the right answer, and I hesitate to trust people who a) don't know much about the specifics here (not saying that's you), and/or b) don't actually have skin in the game. If the people who are choosing how much to pay executives, and putting their money where their mouth is, are choosing this - well, they could definitely be choosing wrong, but its their money to lose for the most part.

Joakal 8y ago
Someone told me that salary transparency of these executives are the reason for high pay. Make it private and execs have less power due to less information.
bambataa 8y ago
- I have no idea. It could be a rise in competence - it could be a rise in the size of businesses, bringing a commensurate rise in productivity (the average worker is also more productive, not sure if their salary reflects that though). Actually median salaries have been relatively flat for the same time period (in the UK and US, at least) [0]. Where do you think the wealth created by the workers' increased productivity is going, since it's clearly not going to the workers? I'm not sure that people "with skin in the game" are really the best people to ask, since their justifications are likely to be local (as in, "our competitor is offering $X so we must beat that") without much insight into wider economic conditions. 0 - http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...
- edanm 8y ago
  The standard story is that salaries have remained flat. I've seen some people claim to the contrary (e.g. Russ Roberts) but I think that's too complicated for a non-economist like me to get at the truth, so I'll just stick to the general consensus here. There are some stories that make sense to me about where the increased productivity is going - into healthcare, into more leisure time, etc. But again, I'm not at all qualified to make any judgements here. > I'm not sure that people "with skin in the game" are really the best people to ask, since their justifications are likely to be local (as in, "our competitor is offering $X so we must beat that") without much insight into wider economic conditions. Well, kind of the basis for the whole idea of capitalism is that you can trust people to make local decisions that are totally selfish to them, without having to consider wider economic conditions, and that it will end up working out for everyone. The great value of capitalism, in my opinion, is that given appropriate conditions, this is usually true. It's not true in the case of some market failures, like monopolies, etc, but it's usually true. And in this specific case, again, it's totally in the interest of the people who have money, to give less of it to executives. Sure, there are lots of reasons why it's more complicated and people don't always behave in their best interest, but are you really so sure that this is the case here? Why? Why are people choosing to fork over extra money here, and what makes you think you can improve the economy by changing that?
  - lovich 8y ago
    >The standard story is that salaries have remained flat. I've seen some people claim to the contrary (e.g. Russ Roberts) but I think that's too complicated for a non-economist like me to get at the truth, so I'll just stick to the general consensus here. No need to bring up this side note if you're not going to use it as an argument or back it up then >And in this specific case, again, it's totally in the interest of the people who have money, to give less of it to executives. As another poster stated elsewhere in this thread, the observed behavior of boards and executives negotiating has not been of two independent parties. The executives are now not only socially connected but have a direct incentive to constantly increase pay for their friends, so that their friends return the favor. This is not using the shareholders money well, but just quid pro quo favors that fuck everyone outside of this in group[1]. Capitalism doesn't just work unregulated because parties quickly acquire power and then subvert the rules of capitalism to funnel even more power to themselves. We are directly observing executives of modern corporations doing this via their web of board seats and increasing each other's pay ad infinitum at the expense of shareholders, employees, and society [1]https://www.wsj.com/articles/who-wins-when-ceos-sit-on-multiple-boards-not-investors-1506418202 https://www.wsj.com/articles/who-wins-when-ceos-sit-on-multi... https://en.m.wikipedia.org/wiki/Interlocking_directorate https://en.m.wikipedia.org/wiki/Interlocking_directorate