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Oh boy, another Yale, LSE, and Oxford graduate lecturing us on "structural inequalities" -- yawn. He's also decided to double-dip and is now back at Yale Law te

by dvt 7y ago

Oh boy, another Yale, LSE, and Oxford graduate lecturing us on "structural inequalities" -- yawn. He's also decided to double-dip and is now back at Yale Law teaching after clerking for a federal judge. Excuse me while I roll my eyes a full 720 degrees. How exactly, sir, are you better than Pete Buttigieg? This is the pot calling the kettle black to the n-th degree. My main problems with the article, apart from the above: 1. The connection between consulting firms like McKinsey and dwindling union memberships is tenuous at best. I'm not sure that there's any causal link, and the article just kind of shoehorns it in. 2. Wait, why are we talking about CEO salaries? What does this have to do with anything? Oh, I get it -- it's going to get The Atlantic a bunch of "controversy clicks" on Facebook and Twitter. 3. "Whereas a century ago, fewer than one in five of America’s business leaders had completed college, top executives today typically have elite degrees" -- a century ago, we also didn't have little boxes that could access the entirety of human knowledge in about 30 milliseconds. A millennia ago, most of us were illiterate. Times change. I'm genuinely not sure what the point is here. 4. "This is a dangerous belief. Technocratic management, no matter how brilliant, cannot unwind the structural inequalities that are dismantling the American middle class.." -- but Yale & Oxford educated lawyers can. Got it.

trentdk 7y ago
This reply seems overly aggressive; am I missing something?
- dvt 7y ago
  Yeah, I'm allergic to bullshit and click-bait. And this article has plenty of both.
rohitb91 7y ago
...Do you work for McKinsey?
samcal 7y ago
I don't expect to change your mind, but I had a very different reading of this article than you did and here are my thoughts on the 4 points that you raised: 1. I don't think it's a big secret that stamping out unions is a key part of modern management. If McKinsey and other consulting firms were management consultants, they should be even more aware of that strategy and would have been in a key position to effect that change over a large number of companies. 2. CEO salaries are certainly relevant to the working middle class, since they are commonly seen as tremendously too high and the extra money could contribute to the middle class' wage. 3. I think the point of that sentence is more like "the amount of effort it takes to become successful is significantly greater than it was when the system worked better." 4. He's not trying to be the technocratic management, he's literally arguing against its existence.
- dcolkitt 7y ago
  > the extra money could contribute to the middle class' wage. Aggregate CEO pay at the largest 350 firms in the US was $6 billion in 2018[1]. Let's quadruple that to account for the remainder of large firms and other C-suite executives. Let's assume all of CEO compensation is entirely rent-seeking, CEOs don't add anything of economic value, and we can just redistribute their compensation to every man, woman and child in the US with no loss of GDP. In total that would represent an income gain of only $72 per year for the median person. CEO pay may be symbolically important, but it's simply inconceivable that rising CEO compensation has had any meaningful impact on middle class wages. [1] https://www.epi.org/publication/ceo-compensation-2018/ https://www.epi.org/publication/ceo-compensation-2018/
  - rayiner 7y ago
    A average CEO pay in the Fortune 500 is 14.5 million: https://aflcio.org/paywatch https://aflcio.org/paywatch. That’s $7.2 billion total. The Fortune 500 employs 26 million people. If you paid CEOs zero and redistributed it all, everyone would get a raise of about $277 per year.
    - dcolkitt 7y ago
      The median annual compensation for the median Fortune 500 company is $72,000 per year.[1] So total redistribution would represent an increase of 0.3% to the take-home pay of the average big company worker. Again, no matter how you want to slice it, aggregate CEO pay is simply too small in magnitude relative to aggregate American salaries to have any meaningful impact. At most you could say something about it being symptomatic of a larger problem, but CEO pay is absolutely not the direct cause of slow growth in wages. [1] https://www.usatoday.com/story/money/business/2018/05/25/ceos-11-million-year-salary-just-middle-pack/643823002/ https://www.usatoday.com/story/money/business/2018/05/25/ceo...
      - AstralStorm 7y ago
        I'd say lobbying and voting with money is, and CEOs are responsible for it. The richer they are, the less they care about wage or product, the more they care about extracting rent - via investment or cuts, causing stock market reactions, which ignore all those things. They tend to also lose the common touch, just like the aristocracy that preceded them.
travisoneill1 7y ago
And those boxes you refer to in 3 make those elite degrees, and McKinsey itself, obsolete. They persist now only by inertia.
LanguageGamer 7y ago
1. With complex social phenomena like this, we're not going to have rock-solid scientific demonstration. Doesn't mean it's not worth considering the possibility of a connection and what implications that would have. 2. Because it's a disturbing (to many) aspect of inequality in the U.S. today. 3. Yes. Times change. The point of articles like this is to make observations about those changes, their significance, and sometimes to make some value judgements about them. I'm not sure what your point is. 4. Is the author claiming that they alone can unwind structural inequalities? When participants in an institution can be critical of their and associated institutions' role in a social problem, and be honest about the limits of said institutions in addressing those problems, that seem useful.
cameldrv 7y ago
More than CEO salaries themselves, due to tax laws and McKinsey style advice, CEOs have huge incentive pay schemes. Most of these are tied to the stock price. This does two things: 1. The stock market effectively becomes the CEO. The stock market is not a very good CEO because it doesn't have access to all of the detailed information that the CEO and the board do, and so it must go based on the numbers it receives and obvious metrics. A CEO of a private company can explain himself and his strategy at length to a board of directors who can give a lot of time and has access to private company information. This lets them potentially act at a much longer time horizon. This is essentially the Berkshire Hathaway thesis, and it's worked well for them. 2. The natural balance of interests between the stockholders, the workers, and the community, enforced by social norms, is disrupted, and only the stockholders interests are respected, because the CEO has a much stronger personal interest in the stock under an incentive scheme.
- WalterBright 7y ago
  A long time ago, Bill Gates was asked if he adjusted things to make the stock rise. He said he didn't pay any attention to the stock price - he concentrated on making profits and the stock price took care of itself. It reminds me of when Senna (Formula 1) was asked what his strategy for winning was. He replied: "start in the pole position, and stay in front."
  - jariel 7y ago
    His Finance Team 100% made adjustments to the finances, that's their job. Mostly though it's to 'smooth' earnings and match expectations. The market really likes predictability and consistency.
  - manigandham 7y ago
    Same thing Jeff Bezos says with Amazon. Focus on the business and the stock price will follow.
  - techslave 7y ago
    i’ve not found this senna quote. is it on video or in print somewhere? would love to see it in context
SpaceManNabs 7y ago
For number 4, he isn't proposing a solution, just identifying a potential problem, which is very significant nonetheless. Also, a number of graduates from elite universities can talk about structural inequalities, given that many have lived them. Ivy's very often offer need-based opportunities to their students. Not saying the author lived anything like that, but this is a baseless criticism. And the continued point about clerking for a federal judge doesn't seem related at all the criticism of consulting management. Anyways, there is a lot of points here, and they seem overly aggressive, and I don't want to the negative energy by addressing each one (and it would be redundant to do so at this point).
unlinked_dll 7y ago
I think it's a good thing to have a voice within the academic and social circles of these people voicing concerns about the status quo and effects it has on greater society outside that circle. People listen to other people in their vicinity. As tech workers we tend to discard concern by people outside our community. Yet when a member of our community voices the same concerns we give it more weight. It's not hypocritical to be critical of the environment that brought you success. I'd argue it's a very good thing for people within a community to be a voice for those outside it who wind up reaping what they sow.
- Reedx 7y ago
  That often just smacks of playing status games while living large. Which I think is what the OP is getting at.
  - deleted 7y ago
    [deleted]
  - afthonos 7y ago
    If we require people to be perfect, or even consistent, before we consider their ideas and whether they have merit, we are both enshrining ad hominem discussions as the only standard and giving the keys to the world to the most immoral psychopaths among us, who will simply refuse any moral obligation, rules, and aspirations, and therefore be the only ones “worthy” to be listened to. Personally, I find that repugnant. And no, I’m not always 100% consistent with this. Guess no one should listen to me, either.
keiferski 7y ago
I have no real horse in this race and didn't attend such an institution, but why is a [member of group] not allowed to criticize [group]? The Ivy League / Oxbridge set acknowledging their role in increasing inequality and recognizing that it is an issue seems like a good thing to me. Otherwise, what would you have them do? Self-immolate?
starpilot 7y ago
"I'd rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University."
cm2187 7y ago
Agree with all your points, I think the author is barking up the wrong tree. But it is true that structural inequalities are emerging. There is a floor (until your home butler robot can fix your plumbing problems), but by and large blue collar jobs have absolutely melted to outsourcing in Asia and automation and aren’t coming back. Now even traditionally white collar job are following the same direction. I work for a large bank and software development is being shifted all oversee, and increasingly we are demanding programming skills for what used to be pure business management jobs, as everything needs to be automated, either by IT or on the side of a desk. As long as you have an imbalance between the supply and demand of workforce, salaries will adjust. It is a healthy phenomenon for society, it forces people to get out of their area of confidence and adjust to the demand. If they can. But I see nothing that suggest more wage equality in the future.
oggadog 7y ago
Yeah agreed. This whole thing reads more like someone trying to find a reason to drag Buttigieg's name and deciding to use his past at the big bad McKinsey.
Mvandenbergh 7y ago
If this person had attended a community college and directional state U, it would be equally easy for someone to say: "Oh, what a surprise, a resentful loser is bitter that the economy is run by well educated people".
Spooky23 7y ago
McKinsey and their peers represent modern management theory and practice. The answers they provide are never a surprise. The core guiding principle is that shareholders are the only stakeholders that matter, which wasn’t the case in earlier times. Unionism can’t function in that mindset because for a union to be productive, it is a stakeholder at the table.
javajosh 7y ago
>lecturing us on "structural inequalities" -- yawn Well, I mean something is going on. I personally don't get recruited to be a CEO, do you? And I think the way you get on those lists is to know people, which is predicated on contact, which requires proximity. Neighborhoods, country clubs, elite universities, ski trips to the Swiss alps - this is where the winners hang out, and where they get to know each other, and keep each other winning. EDIT: or maybe its TED Talks and Davos and South by Southwest and Burning Man. I'm not really sure.
- manigandham 7y ago
  The majority of major CEOs worked their way up. Connections aren't set for life, you can go meet people yourself just like they did.
MockObject 7y ago
> Wait, why are we talking about CEO salaries? What does this have to do with anything? Oh, I get it -- it's going to get The Atlantic a bunch of "controversy clicks" on Facebook and Twitter. For some reason, extreme CEO salaries garner more envious rage than extreme salaries of musicians, actors, screenwriters, or sports players. Is it because we're in awe of their impressive skills, but we think we ourselves could all be amazing CEOs but for unfair systems of birth and networking?
GoodJokes 7y ago
It is almost like you are bad at reading comprehension. The myth of the “smart” tech worker never ceases to amaze.
woodandsteel 7y ago
The article was about what McKinsey does and what impact it has on businesses and society. What is your analysis of these matters?

by dvt 7y ago

trentdk 7y ago

This reply seems overly aggressive; am I missing something?

dvt 7y ago
Yeah, I'm allergic to bullshit and click-bait. And this article has plenty of both.

rohitb91 7y ago

...Do you work for McKinsey?

samcal 7y ago

I don't expect to change your mind, but I had a very different reading of this article than you did and here are my thoughts on the 4 points that you raised: 1. I don't think it's a big secret that stamping out unions is a key part of modern management. If McKinsey and other consulting firms were management consultants, they should be even more aware of that strategy and would have been in a key position to effect that change over a large number of companies. 2. CEO salaries are certainly relevant to the working middle class, since they are commonly seen as tremendously too high and the extra money could contribute to the middle class' wage. 3. I think the point of that sentence is more like "the amount of effort it takes to become successful is significantly greater than it was when the system worked better." 4. He's not trying to be the technocratic management, he's literally arguing against its existence.

dcolkitt 7y ago
> the extra money could contribute to the middle class' wage. Aggregate CEO pay at the largest 350 firms in the US was $6 billion in 2018[1]. Let's quadruple that to account for the remainder of large firms and other C-suite executives. Let's assume all of CEO compensation is entirely rent-seeking, CEOs don't add anything of economic value, and we can just redistribute their compensation to every man, woman and child in the US with no loss of GDP. In total that would represent an income gain of only $72 per year for the median person. CEO pay may be symbolically important, but it's simply inconceivable that rising CEO compensation has had any meaningful impact on middle class wages. [1] https://www.epi.org/publication/ceo-compensation-2018/ https://www.epi.org/publication/ceo-compensation-2018/
- rayiner 7y ago
  A average CEO pay in the Fortune 500 is 14.5 million: https://aflcio.org/paywatch https://aflcio.org/paywatch. That’s $7.2 billion total. The Fortune 500 employs 26 million people. If you paid CEOs zero and redistributed it all, everyone would get a raise of about $277 per year.
  - dcolkitt 7y ago
    The median annual compensation for the median Fortune 500 company is $72,000 per year.[1] So total redistribution would represent an increase of 0.3% to the take-home pay of the average big company worker. Again, no matter how you want to slice it, aggregate CEO pay is simply too small in magnitude relative to aggregate American salaries to have any meaningful impact. At most you could say something about it being symptomatic of a larger problem, but CEO pay is absolutely not the direct cause of slow growth in wages. [1] https://www.usatoday.com/story/money/business/2018/05/25/ceos-11-million-year-salary-just-middle-pack/643823002/ https://www.usatoday.com/story/money/business/2018/05/25/ceo...
    - AstralStorm 7y ago
      I'd say lobbying and voting with money is, and CEOs are responsible for it. The richer they are, the less they care about wage or product, the more they care about extracting rent - via investment or cuts, causing stock market reactions, which ignore all those things. They tend to also lose the common touch, just like the aristocracy that preceded them.

travisoneill1 7y ago

And those boxes you refer to in 3 make those elite degrees, and McKinsey itself, obsolete. They persist now only by inertia.

LanguageGamer 7y ago

1. With complex social phenomena like this, we're not going to have rock-solid scientific demonstration. Doesn't mean it's not worth considering the possibility of a connection and what implications that would have. 2. Because it's a disturbing (to many) aspect of inequality in the U.S. today. 3. Yes. Times change. The point of articles like this is to make observations about those changes, their significance, and sometimes to make some value judgements about them. I'm not sure what your point is. 4. Is the author claiming that they alone can unwind structural inequalities? When participants in an institution can be critical of their and associated institutions' role in a social problem, and be honest about the limits of said institutions in addressing those problems, that seem useful.

cameldrv 7y ago

More than CEO salaries themselves, due to tax laws and McKinsey style advice, CEOs have huge incentive pay schemes. Most of these are tied to the stock price. This does two things: 1. The stock market effectively becomes the CEO. The stock market is not a very good CEO because it doesn't have access to all of the detailed information that the CEO and the board do, and so it must go based on the numbers it receives and obvious metrics. A CEO of a private company can explain himself and his strategy at length to a board of directors who can give a lot of time and has access to private company information. This lets them potentially act at a much longer time horizon. This is essentially the Berkshire Hathaway thesis, and it's worked well for them. 2. The natural balance of interests between the stockholders, the workers, and the community, enforced by social norms, is disrupted, and only the stockholders interests are respected, because the CEO has a much stronger personal interest in the stock under an incentive scheme.

WalterBright 7y ago
A long time ago, Bill Gates was asked if he adjusted things to make the stock rise. He said he didn't pay any attention to the stock price - he concentrated on making profits and the stock price took care of itself. It reminds me of when Senna (Formula 1) was asked what his strategy for winning was. He replied: "start in the pole position, and stay in front."
- jariel 7y ago
  His Finance Team 100% made adjustments to the finances, that's their job. Mostly though it's to 'smooth' earnings and match expectations. The market really likes predictability and consistency.
- manigandham 7y ago
  Same thing Jeff Bezos says with Amazon. Focus on the business and the stock price will follow.
- techslave 7y ago
  i’ve not found this senna quote. is it on video or in print somewhere? would love to see it in context

SpaceManNabs 7y ago

For number 4, he isn't proposing a solution, just identifying a potential problem, which is very significant nonetheless. Also, a number of graduates from elite universities can talk about structural inequalities, given that many have lived them. Ivy's very often offer need-based opportunities to their students. Not saying the author lived anything like that, but this is a baseless criticism. And the continued point about clerking for a federal judge doesn't seem related at all the criticism of consulting management. Anyways, there is a lot of points here, and they seem overly aggressive, and I don't want to the negative energy by addressing each one (and it would be redundant to do so at this point).

unlinked_dll 7y ago

I think it's a good thing to have a voice within the academic and social circles of these people voicing concerns about the status quo and effects it has on greater society outside that circle. People listen to other people in their vicinity. As tech workers we tend to discard concern by people outside our community. Yet when a member of our community voices the same concerns we give it more weight. It's not hypocritical to be critical of the environment that brought you success. I'd argue it's a very good thing for people within a community to be a voice for those outside it who wind up reaping what they sow.

Reedx 7y ago
That often just smacks of playing status games while living large. Which I think is what the OP is getting at.
- deleted 7y ago
  [deleted]
- afthonos 7y ago
  If we require people to be perfect, or even consistent, before we consider their ideas and whether they have merit, we are both enshrining ad hominem discussions as the only standard and giving the keys to the world to the most immoral psychopaths among us, who will simply refuse any moral obligation, rules, and aspirations, and therefore be the only ones “worthy” to be listened to. Personally, I find that repugnant. And no, I’m not always 100% consistent with this. Guess no one should listen to me, either.

keiferski 7y ago

I have no real horse in this race and didn't attend such an institution, but why is a [member of group] not allowed to criticize [group]? The Ivy League / Oxbridge set acknowledging their role in increasing inequality and recognizing that it is an issue seems like a good thing to me. Otherwise, what would you have them do? Self-immolate?

starpilot 7y ago

"I'd rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University."

cm2187 7y ago

Agree with all your points, I think the author is barking up the wrong tree. But it is true that structural inequalities are emerging. There is a floor (until your home butler robot can fix your plumbing problems), but by and large blue collar jobs have absolutely melted to outsourcing in Asia and automation and aren’t coming back. Now even traditionally white collar job are following the same direction. I work for a large bank and software development is being shifted all oversee, and increasingly we are demanding programming skills for what used to be pure business management jobs, as everything needs to be automated, either by IT or on the side of a desk. As long as you have an imbalance between the supply and demand of workforce, salaries will adjust. It is a healthy phenomenon for society, it forces people to get out of their area of confidence and adjust to the demand. If they can. But I see nothing that suggest more wage equality in the future.

oggadog 7y ago

Yeah agreed. This whole thing reads more like someone trying to find a reason to drag Buttigieg's name and deciding to use his past at the big bad McKinsey.

Mvandenbergh 7y ago

If this person had attended a community college and directional state U, it would be equally easy for someone to say: "Oh, what a surprise, a resentful loser is bitter that the economy is run by well educated people".

Spooky23 7y ago

McKinsey and their peers represent modern management theory and practice. The answers they provide are never a surprise. The core guiding principle is that shareholders are the only stakeholders that matter, which wasn’t the case in earlier times. Unionism can’t function in that mindset because for a union to be productive, it is a stakeholder at the table.

javajosh 7y ago

>lecturing us on "structural inequalities" -- yawn Well, I mean something is going on. I personally don't get recruited to be a CEO, do you? And I think the way you get on those lists is to know people, which is predicated on contact, which requires proximity. Neighborhoods, country clubs, elite universities, ski trips to the Swiss alps - this is where the winners hang out, and where they get to know each other, and keep each other winning. EDIT: or maybe its TED Talks and Davos and South by Southwest and Burning Man. I'm not really sure.

manigandham 7y ago
The majority of major CEOs worked their way up. Connections aren't set for life, you can go meet people yourself just like they did.

MockObject 7y ago

> Wait, why are we talking about CEO salaries? What does this have to do with anything? Oh, I get it -- it's going to get The Atlantic a bunch of "controversy clicks" on Facebook and Twitter. For some reason, extreme CEO salaries garner more envious rage than extreme salaries of musicians, actors, screenwriters, or sports players. Is it because we're in awe of their impressive skills, but we think we ourselves could all be amazing CEOs but for unfair systems of birth and networking?

GoodJokes 7y ago

It is almost like you are bad at reading comprehension. The myth of the “smart” tech worker never ceases to amaze.

woodandsteel 7y ago

The article was about what McKinsey does and what impact it has on businesses and society. What is your analysis of these matters?