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>Oh wait, let's talk nurses and schoolteachers. They pretty clearly contribute very heavily to society, and they get paid pretty poorly. Are they really contrib

>Oh wait, let's talk nurses and schoolteachers. They pretty clearly contribute very heavily to society, and they get paid pretty poorly. Are they really contributing less, by factors of tens or hundreds, than Larry Ellison? I've been thinking about this lately. A schoolteacher generates huge value for dozens of people per year. A CEO of a big firm may generate tiny value for millions or billions of people per year. If the schoolteacher is generating a thousand times more value for each of their students than the CEO does for each of their customers, then the CEO still generated a ton more value to humanity. My napkin math is that teachers make about $200B/year in the U.S. (3.2M teachers * $60k/year). The top 0.01% seems to make about $100B/year (16k families * $7M/year). So we're in a situation where yes teachers make more value than the 0.01%, but they also earn almost twice as much. (To be fair, it seem reasonable that teachers should earn more than 2x more, but that's a separate conversation). The scale factor is a weird one for fairness. If someone's value to others is the value per person (X) times the number of people (Y), it seems like our society or technology or something is set up so that it's much easier to maximize X*Y by making Y huge and lowering X than it is to make X huge and lower Y. You can make your firm serve a million times more people, but you can't teach a million times better. Framed this way, no wonder a "value" maximizing world is getting less personal and more corporate as people lower X wherever they can to explode Y.

lostdog 7y ago
You are giving the CEO credit for everything positive that the company does. Shouldn't some of the credit go to the workers? Not to mention, many companies are a net negative to society.
- 6gvONxR4sf7o 7y ago
  No I'm not giving the CEO credit for everything positive that the company does. I said the CEO may generate tiny value for millions or billions of people. As a thought experiment, imagine a CEO of company making $5B/year of nebulous undefined "value" with 250M customers (roughly Spotify-ish?). That company's "value" per customer is about $20/year. Compared to a teacher, I think this company's impact per "customer" rounds basically to zero. Suppose the CEO is able to raise that "value" by 0.14%. Compared to the workers, it's still basically zero. Being less than three cents per customer per year, it's truly absurd compared to any teacher's impact per student per year. But it increases the company's $5B/yr by about $7M/yr. This is a CEO who creates (relatively speaking) practically none of the value of the firm, which in turn creates (relatively speaking) practically no value per customer, and yet because they just have so many customers the CEO has created $7M/year of value in this thought experiment. That's the average 0.01% household income. Small value over many people just seems to have more range than large value over few people.
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- m0zg 7y ago
  Left to their own devices even the most talented of workers will not be able to make forward progress. Leadership structures must emerge, and compensation structures will emerge with them. It's up for debate whether CEOs deserve $100M/yr, but it's not up for debate that they can make or break a company.
blunte 7y ago
One problem with using Oracle as an example is that they are well known for using lock-in tactics and even intentionally overcharging governmental customers (because they got away with it for some time until they got caught). I find it hard to believe that Ellison didn't know this was all happening. I find it more likely to believe that he, like Gates, orchestrated those tactics. So does it count as generating tiny value for millions or billions if you're actually forcing a customer to stay with your overpriced product when there are actually plenty of equal or better cheaper solutions? I get what you're saying, but I think it would be a struggle to find many corporations whose actions are enough net-positive to society to justify their CEOs' compensations.
Arnt 7y ago
The top 0.1% make an infinite amount of money... in the sense that above a certain level, more income makes no difference because there's only so much you can really spend, so x+1=x, ie. x is infinite. But is that a problem, really? Is it a problem if 0.1% of society have absolutely no lack of money whatsoever? It sounds rather small to me, particularly since most of the money is a valuation of someone's job (or some other productive resource). Taking away the money is also taking away that someone's job.

lostdog 7y ago

You are giving the CEO credit for everything positive that the company does. Shouldn't some of the credit go to the workers? Not to mention, many companies are a net negative to society.

6gvONxR4sf7o 7y ago
No I'm not giving the CEO credit for everything positive that the company does. I said the CEO may generate tiny value for millions or billions of people. As a thought experiment, imagine a CEO of company making $5B/year of nebulous undefined "value" with 250M customers (roughly Spotify-ish?). That company's "value" per customer is about $20/year. Compared to a teacher, I think this company's impact per "customer" rounds basically to zero. Suppose the CEO is able to raise that "value" by 0.14%. Compared to the workers, it's still basically zero. Being less than three cents per customer per year, it's truly absurd compared to any teacher's impact per student per year. But it increases the company's $5B/yr by about $7M/yr. This is a CEO who creates (relatively speaking) practically none of the value of the firm, which in turn creates (relatively speaking) practically no value per customer, and yet because they just have so many customers the CEO has created $7M/year of value in this thought experiment. That's the average 0.01% household income. Small value over many people just seems to have more range than large value over few people.
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m0zg 7y ago
Left to their own devices even the most talented of workers will not be able to make forward progress. Leadership structures must emerge, and compensation structures will emerge with them. It's up for debate whether CEOs deserve $100M/yr, but it's not up for debate that they can make or break a company.

blunte 7y ago

One problem with using Oracle as an example is that they are well known for using lock-in tactics and even intentionally overcharging governmental customers (because they got away with it for some time until they got caught). I find it hard to believe that Ellison didn't know this was all happening. I find it more likely to believe that he, like Gates, orchestrated those tactics. So does it count as generating tiny value for millions or billions if you're actually forcing a customer to stay with your overpriced product when there are actually plenty of equal or better cheaper solutions? I get what you're saying, but I think it would be a struggle to find many corporations whose actions are enough net-positive to society to justify their CEOs' compensations.

Arnt 7y ago

The top 0.1% make an infinite amount of money... in the sense that above a certain level, more income makes no difference because there's only so much you can really spend, so x+1=x, ie. x is infinite. But is that a problem, really? Is it a problem if 0.1% of society have absolutely no lack of money whatsoever? It sounds rather small to me, particularly since most of the money is a valuation of someone's job (or some other productive resource). Taking away the money is also taking away that someone's job.