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> It's also not a fact of nature so it's something we could prevent if we decided as a society to do so If by that you mean "let's convince other people to use

• lovich 8y ago
  If the shareholders were the only ones with money at risk and society wasn't through having to help take care of the employees after the execs walk away with all the cash, I'd be fine leaving it entirely up to them. I'd want the law to not allow executives to get their massive payouts while at the same time they arent meeting their agreements with other employees such as in Sears case here where the employees aren't getting bonuses/severance while execs are. That's where they are privatising gains in the form of bonuses but making the losses public when society has to come in and help support the safety net for a bunch of employees who just got shafted. Letting shareholders and execs set up a "tails I win, heads you lose" situation in every single major corporation isn't good for having the economy actually put money towards useful ideas, and degrades the rule of law that binds society together. The biggest issue wasn't just that execs are getting paid more, it's that it was decided that agreements with regular employees can be ignored but we still have to do right by the execs I believe this situation shows a basic divide between conservative and liberal viewpoints where conservatives look at this situation and believe it's only involving the shareholders and execs making the agreement where liberals look at it and see it as agreement between two people that is affecting everyone around them and society. We probably won't get much further discussing it if we are looking at the same event and seeing entirely different situations
  • edanm 8y ago
    > I believe this situation shows a basic divide between conservative and liberal viewpoints where conservatives look at this situation and believe it's only involving the shareholders and execs making the agreement where liberals look at it and see it as agreement between two people that is affecting everyone around them and society. I'd probably call it more a difference between a libertarian viewpoint than a conservative one. And IMO, as soon as you stipulate that they are "making the losses public when society has to come in and help support the safety net for a bunch of employees who just got shafted.", then you'll probably get agreement from most libertarians that this is a lose lose situation. And I tend to agree - if the government is bailing companies out, it can definitely impose conditions on it.
    • lovich 8y ago
      The bailing the company out here that I see is needing to provide benefits to the regular employees now, because as a society we have decided to not let people just die in the streets. When the executives make choices that require giving more benefits to many people, so that they can keep their high pay in spite of their own mistakes, I see that as making the costs public and profits private. It does not need to be the government handing out cash as a bailout to companies before the costs are becoming a public cost
  • closeparen 8y ago
    Intuition about fairness is not a useful guide to questions like this. It's all about the incentives and the outcomes they'll produce. I agree that the difference in outcome between executive and worker should be smaller, but how you get there matters. One obviously wrong approach is to print money and hand it to the workers until they are all getting the same millions as the execs. This simply gets you inflation. Prices will reflect that retail clerks can now afford hundred-thousand-dollar t-shirts, and executive compensation will soar accordingly. A more subtly broken approach is to regulate wages, so that you cannot pay an executive too much or an employee too little. Blocking the transactions that would do so destroys value. In this particular case, if Sears can't get anyone to administer a controlled descent and recovery, it will crash and burn. Then a worker's risk of layoff goes from likely to guaranteed. You could imagine something similar if we heavily penalized layoffs: less risk-taking, fewer positions available in the first place. An economist would tell you to steepen the progressive tax curve and expand the EITC, or even run a Negative Income Tax that isn't conditional on work. This isn't free either, but it's generally regarded as the "least worse" option that achieves the social goal while minimizing perverse incentives. The idea of a paternal responsibility from corporation to employee is intuitive and emotionally resonant, but not necessarily useful. You can say we are socializing the costs of business's risk-taking. You can also say we are purchasing flexibility as a public good, and making a profit on the value it creates in the tax base. I'd like to see us go even further into this "corporate welfare" by eliminating the employer's healthcare obligations in favor of a public option.