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> Yes, I think that companies should be obligated to pay for employees that they thought they wanted or needed and then changed their minds Wait, how do you de

> Yes, I think that companies should be obligated to pay for employees that they thought they wanted or needed and then changed their minds Wait, how do you determine this criterion? Take, for example, Trump's tariffs on Chinese manufactured goods. Retaliatory tariffs by China have made Tesla's cars far more expensive. That's not Tesla whimsically changing its mind about its employees, that's the financial and global politically situation rapidly changing. You think Elon Musk is morally obligated to pay for employees Tesla can no longer afford because Trump pulled the rug out from under him?

geofft 8y ago
A little subtler than that, but somewhat yes. The global financial / political / market situation can change for the better or for the worse, unrelated to the quality of the company's own work. Musk is exposed to the upside of these changes. We could have had, for instance, a president who cracked down firmly on fossil fuels and made electric cars much more competitive. (Or leave the US out; the rest of the world could have driven up the prices of fossil fuels.) He should be exposed, in turn, to the downside of these changes beyond the company's control. That's how investments and gambles and ventures work. (Alternatively, if we think it's good as a society for him not to be exposed to the downsides, we should find a productive means to insulate / insure him; transferring the risk onto low-level employees seems like a pretty unproductive approach IMO!) Given that this employee was compensated significantly in bonuses and not in base pay ("it was okay that @Tesla didn't pay much because the bonuses were going to make up for it over time"), if he was compensated significantly in stock, then I think it's fine for him to be exposed to the risk because he's also exposed to reward if the company does well. But in such a case, a) they should not have canceled his existing stock grants and b) there should have been no need to lay him off immediately, they should have budgeted his base pay based on forecasts of possible not-great 2018s, and given him the option to continue working for base pay + weaker stock. But if he was compensated in cash, I think Musk should be obligated - not "morally" obligated (I have strong opinions informed by my religious beliefs on moral employment agreements, but that's a different argument entirely), just obligated in the sense of logically necessary to produce robust outcomes that make effective use of the market and place appropriate incentives to maximize long-term productivity for society - to bear the risk of things going unexpectedly wrong in the market.

geofft 8y ago

A little subtler than that, but somewhat yes. The global financial / political / market situation can change for the better or for the worse, unrelated to the quality of the company's own work. Musk is exposed to the upside of these changes. We could have had, for instance, a president who cracked down firmly on fossil fuels and made electric cars much more competitive. (Or leave the US out; the rest of the world could have driven up the prices of fossil fuels.) He should be exposed, in turn, to the downside of these changes beyond the company's control. That's how investments and gambles and ventures work. (Alternatively, if we think it's good as a society for him not to be exposed to the downsides, we should find a productive means to insulate / insure him; transferring the risk onto low-level employees seems like a pretty unproductive approach IMO!) Given that this employee was compensated significantly in bonuses and not in base pay ("it was okay that @Tesla didn't pay much because the bonuses were going to make up for it over time"), if he was compensated significantly in stock, then I think it's fine for him to be exposed to the risk because he's also exposed to reward if the company does well. But in such a case, a) they should not have canceled his existing stock grants and b) there should have been no need to lay him off immediately, they should have budgeted his base pay based on forecasts of possible not-great 2018s, and given him the option to continue working for base pay + weaker stock. But if he was compensated in cash, I think Musk should be obligated - not "morally" obligated (I have strong opinions informed by my religious beliefs on moral employment agreements, but that's a different argument entirely), just obligated in the sense of logically necessary to produce robust outcomes that make effective use of the market and place appropriate incentives to maximize long-term productivity for society - to bear the risk of things going unexpectedly wrong in the market.