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> 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

by creato 7y ago

> 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. This may be how they are "commonly seen", but is it correct? Walmart pays 5 of its executives a total of ~$70m/year [1]. Walmart employs 2.2m people [2]. Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. The bigger issue with wealth inequality is the investor class and favorable treatment of capital (low capital gains tax rates, carried interest, shady real estate business, etc.), not salaries/wages, even extremely high salaries like those of executives. Even talking about "management" as relevant to this issue is a distraction. 1. https://www1.salary.com/WALMART-INC-Executive-Salaries.html https://www1.salary.com/WALMART-INC-Executive-Salaries.html 2. https://corporate.walmart.com/newsroom/company-facts https://corporate.walmart.com/newsroom/company-facts

rayiner 7y ago
> The bigger issue with wealth inequality is the investor class and favorable treatment of capital (low capital gains tax rates, carried interest, shady real estate business, etc.) It’s not that either. Total realized capital gains income in 2017 was $660 billion. 30% of that went to the bottom 99%. So you’re talking about $462 billion to the top 1%. Even totally confiscating that income and redirecting it to the bottom 99% would only increase income for the bottom 99% by 5.5%. People see eye popping CEO pay but divvying up a few very high incomes doesn’t go far. 60% of all income is earned by the top 60-99%. 40% is earned by the top 20%. A lot of income inequality is driven not by CEOs and billionaires, but educated urban professionals. College administrators, programmers, doctors, IT managers, etc.
- asdff 7y ago
  Even 5.5% would be a big deal for many people. Minimum wage is about to hit $15 in california, so 30k/yr netting you another $1650. 4/10 americans can't come up with $400 without selling something or incurring debt; this would at least be breathing room. I agree that parceling it out piecemeal might not be the best way to spend that sum. $462b could be put into an education or infrastructure trust, and pay dividends towards our schools, public housing, roads, and transit networks. And that would be $462b per year dumped into this trust.
  - roenxi 7y ago
    > ...this would at least be breathing room. It might just be the analogy talking; but that sounds like the plan to fix a problem that does not actually fix the problem. It may be a bad plan. > $462b could be put into an education or infrastructure trust, and pay dividends towards our schools, public housing, roads, and transit networks. If you think about it, you may discover you are describing what already happens. Your proposed solution is the fund managers are ... y'know, some bureaucrat ... and some % of the fund goes to government coffers. The current situation is the 1% are fund managers and the withdrawal rate is linked to their taxes paid. At a very high level all that proposal does is fiddle around the edges with what the effective rate of withdrawal and what gets invested in and it is entirely possible the total take will drop. The wealthy currently invest in housing, education & transit very visibly. It is very unlikely that a government fund would survive without attracting a serious wave of leeches; the incentives to raid the fund and waste the money would be huge. The process is fraught. It would be far safer and probably more effective to look to incentives rather than subject investment to the erratic outcomes of government voting.
  - rhino369 7y ago
    It probably doesn't have to said, but there would be huge repercussions if it was no longer possible to make income on capital investment. 5% is if you magically redistributed the money. But if that happened, every small business in America would cease to operate immediately. Corporations would be instantly worthless.
- sangnoir 7y ago
  > Even totally confiscating that income and redirecting it to the bottom 99% would only increase income for the bottom 99% by 5.5%. Your unstated assumptions are that capital gains are the entirety of value and this is a zero-sum game. I posit that CEOs and the 1% are playing[0] a negative-sum game by shipping jobs overseas and underpaying their workers. Even though it is a net-loss to the system, their incentives are such that they defect at every turn since they gain more from a "loss". [0] All shareholders benefit, not just the 1% - but the lower segments don't gain as much, and lose in their non-shareholding, employee roles
  - logicchains 7y ago
    >Your unstated assumptions are that capital gains are the entirety of value and this is a zero-sum game. I posit that CEOs and the 1% are playing[0] a negative-sum game by shipping jobs overseas and underpaying their workers. Even though it is a net-loss to the system, their incentives are such that they defect at every turn since they gain more from a "loss". It's not a net loss to the hundreds of millions of Chinese and Indians who have been lifted out of poverty in the past couple decades. Their gain has vastly outweighed what the American working class lost.
- pytester 7y ago
  >realized capital gains so, the amount of wealth they convert into yachts, but not the amount of wealth that they actually accrue which is usually many multiples of that...
  - rayiner 7y ago
    Unrealized wealth is just a number on a ledger. To actually do anything with the wealth (not just buying yachts or New York investment properties, but paying for lobbyists or campaign contributions) you have to realize those gains.
    - pytester 7y ago
      >Unrealized wealth is just a number on a ledger. Be serious.
      - rayiner 7y ago
        I’m completely serious. Jeff Bezos’s billions mostly just represents the right to receive a share of Amazon’s profits in the future. If AMZN goes up, he gains billions in “wealth.” But to actually have any impact on the external world with that wealth, he has to either receive dividends, which are taxed as income, or realize the gain. Even if he takes a loan with Amazon stock as collateral, at some point he has to realize some gain somewhere to have cash to pay back the loan. Even to the extent we should care how rich a billionaire gets, surely we only care to the extent they can actually do things with that wealth. Bloomberg has to realize gains to pay for his campaign ads. Bezos has to realize gains to buy WaPo (in his personal capacity). Why on earth should we care about illiquid wealth that can’t be used to do anything?
        xyzzyz 7y ago
        Why on earth should we care about illiquid wealth that can’t be used to do anything? You can watch here[1] how Larry Summers asks Emmanuel Saez, the leading proponent of wealth taxes, how liquid wealth gives individuals power in their personal capacity. Given how extremely underwhelming Saez's response is, I can't imagine any of the wealth taxes proponents having a good answer for the illiquid situation. [1] - https://youtu.be/oUGpjpEGTfE?t=3869 https://youtu.be/oUGpjpEGTfE?t=3869
- makomk 7y ago
  Which is why American populist politicians have to invoke unrealized on-paper wealth in order to convince supporters that the populists could give them everything they wanted by taxing the uber-wealthy. This wouldn't work, of course; those figures are just current stock price * total holding, and if you make everyone sell at once whilst disincentivising holding American companies that paper wealth will just vanish.
- davinic 7y ago
  But what's important is what that redistributed money is doing. It would flowing into local economies and getting spent many times over (until it gets back to the top and repeats the process). It would not be sitting in safe investments. It would not be wreaking havoc on the housing markets. It would not be funding the WeWorks of the world. It would be driving demand from the ground up.
samcal 7y ago
Right, the relevant part is that there are 5 people whose annual salary totals $70 million. That is tremendously too high, and allows those 5 people to have undue influence on the society that allowed them to get such power. I'm sorry that I implied that the only benefit of this point was the redistribution part.
superbaconman 7y ago
> Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. I don't understand why this is even brought up? Surely the line worker who failed high school can't contribute the same value as a software engineer automating away 20 line workers? All the studies I've seen compare the highest to the lowest salaries, while a more comprehensive look across all employee positions would provide a better data set for setting pay levels.
- WalterBright 7y ago
  As Steve Jobs proved, the CEO can make decisions that transform a company from near bankruptcy to the biggest market cap in the world. It's hard to get more productive than that, and would be foolish to begrudge Jobs a penny of his compensation. He earned it many, many times over. CEO decisions have enormous leverage over a company's fortunes, both good and bad. CEO pay is the least of those concerns. It's not hitting the pipe with a hammer, it's knowing where to hit the pipe.
  - thulecitizen 7y ago
    ““There is not a single key technology behind the iPhone that has not been state funded,” says economist Mazzucato. This includes the wireless networks, “the Internet, GPS, a touch-screen display, and … the voice-activated personal assistant Siri.” Apple has recombined these technologies impressively. But its achievements rest on many years of public-sector investment. To put it another way, do we really think that if Jobs and Musk had never come along, there would have been no smartphone revolution, no surge of interest in electric vehicles?“ Source: https://www.technologyreview.com/s/539861/techs-enduring-great-man-myth/ https://www.technologyreview.com/s/539861/techs-enduring-gre...
    - janhenr 7y ago
      The question if somebody else would have made the smartphone is besides the point. Apple made the iPhone under the leadership of Steve Jobs, meaning the company profits enormously and thus the company can reward Steve Jobs enormously.
ddebernardy 7y ago
> Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. But that's besides the point. What on earth do they need to get paid that much for? Even if you assume they're contributing 100x what line workers are doing, they'll do just fine earning under $1M/year. Plus, you then pinpoint the bigger issue. Yeah, the investor class exists because, you know, someone shaved $32 off of everyone's salary so 5 people could get paid a total of ~$70M/year.
- ekianjo 7y ago
  > But that's besides the point. What on earth do they need to get paid that much for? Companies decide. It is their prerogative. If you dont like it nothing prevents you from having your own billion dollar company where everyone earns the same.
  - pytester 7y ago
    There have been a number of shareholder fights over executive pay (it is their money, after all, so it's only natural they should try to claim it). They often end up losing thanks to the trend of passive investors and fund managers (principal/agent problem) with unhealthily close relationships with executives.
  - FabHK 7y ago
    > Companies decide. It is their prerogative. Yet it is also a legitimate target for outside regulation, if there are indicators of market failure (monopoly, externalities, asymmetric information, etc.).
    - ekianjo 7y ago
      Asymmetric information is in the nature of business. This is where value emerges.
- austhrow743 7y ago
  Its not beside the point. It directly refutes the other commenters point. You don't get to jump in to a discussion between others and retroactively decide what the point was. How rude.
spodek 7y ago
> Walmart pays 5 of its executives a total of ~$70m/year [1]. Walmart employs 2.2m people [2]. Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. A calculation Louis XVI likely made in 1791.
nwah1 7y ago
The big issue surrounding inequality is plutocracy and rent-seeking. You hinted at that, but that is the real problem and we should address it from that perspective.
sudosysgen 7y ago
If the executives were paid as much as the workers, they would have very very different interests and concerns compared to nowadays.
mekane8 7y ago
From TFA: > from 1939 to 1950, hourly workers’ wages rose roughly three times faster than elite executives’ pay. This seems like it would be a good place to get back to.

by creato 7y ago

rayiner 7y ago

> The bigger issue with wealth inequality is the investor class and favorable treatment of capital (low capital gains tax rates, carried interest, shady real estate business, etc.) It’s not that either. Total realized capital gains income in 2017 was $660 billion. 30% of that went to the bottom 99%. So you’re talking about $462 billion to the top 1%. Even totally confiscating that income and redirecting it to the bottom 99% would only increase income for the bottom 99% by 5.5%. People see eye popping CEO pay but divvying up a few very high incomes doesn’t go far. 60% of all income is earned by the top 60-99%. 40% is earned by the top 20%. A lot of income inequality is driven not by CEOs and billionaires, but educated urban professionals. College administrators, programmers, doctors, IT managers, etc.

asdff 7y ago
Even 5.5% would be a big deal for many people. Minimum wage is about to hit $15 in california, so 30k/yr netting you another $1650. 4/10 americans can't come up with $400 without selling something or incurring debt; this would at least be breathing room. I agree that parceling it out piecemeal might not be the best way to spend that sum. $462b could be put into an education or infrastructure trust, and pay dividends towards our schools, public housing, roads, and transit networks. And that would be $462b per year dumped into this trust.
- roenxi 7y ago
  > ...this would at least be breathing room. It might just be the analogy talking; but that sounds like the plan to fix a problem that does not actually fix the problem. It may be a bad plan. > $462b could be put into an education or infrastructure trust, and pay dividends towards our schools, public housing, roads, and transit networks. If you think about it, you may discover you are describing what already happens. Your proposed solution is the fund managers are ... y'know, some bureaucrat ... and some % of the fund goes to government coffers. The current situation is the 1% are fund managers and the withdrawal rate is linked to their taxes paid. At a very high level all that proposal does is fiddle around the edges with what the effective rate of withdrawal and what gets invested in and it is entirely possible the total take will drop. The wealthy currently invest in housing, education & transit very visibly. It is very unlikely that a government fund would survive without attracting a serious wave of leeches; the incentives to raid the fund and waste the money would be huge. The process is fraught. It would be far safer and probably more effective to look to incentives rather than subject investment to the erratic outcomes of government voting.
- rhino369 7y ago
  It probably doesn't have to said, but there would be huge repercussions if it was no longer possible to make income on capital investment. 5% is if you magically redistributed the money. But if that happened, every small business in America would cease to operate immediately. Corporations would be instantly worthless.
sangnoir 7y ago
> Even totally confiscating that income and redirecting it to the bottom 99% would only increase income for the bottom 99% by 5.5%. Your unstated assumptions are that capital gains are the entirety of value and this is a zero-sum game. I posit that CEOs and the 1% are playing[0] a negative-sum game by shipping jobs overseas and underpaying their workers. Even though it is a net-loss to the system, their incentives are such that they defect at every turn since they gain more from a "loss". [0] All shareholders benefit, not just the 1% - but the lower segments don't gain as much, and lose in their non-shareholding, employee roles
- logicchains 7y ago
  >Your unstated assumptions are that capital gains are the entirety of value and this is a zero-sum game. I posit that CEOs and the 1% are playing[0] a negative-sum game by shipping jobs overseas and underpaying their workers. Even though it is a net-loss to the system, their incentives are such that they defect at every turn since they gain more from a "loss". It's not a net loss to the hundreds of millions of Chinese and Indians who have been lifted out of poverty in the past couple decades. Their gain has vastly outweighed what the American working class lost.
pytester 7y ago
>realized capital gains so, the amount of wealth they convert into yachts, but not the amount of wealth that they actually accrue which is usually many multiples of that...
- rayiner 7y ago
  Unrealized wealth is just a number on a ledger. To actually do anything with the wealth (not just buying yachts or New York investment properties, but paying for lobbyists or campaign contributions) you have to realize those gains.
  - pytester 7y ago
    >Unrealized wealth is just a number on a ledger. Be serious.
    - rayiner 7y ago
      I’m completely serious. Jeff Bezos’s billions mostly just represents the right to receive a share of Amazon’s profits in the future. If AMZN goes up, he gains billions in “wealth.” But to actually have any impact on the external world with that wealth, he has to either receive dividends, which are taxed as income, or realize the gain. Even if he takes a loan with Amazon stock as collateral, at some point he has to realize some gain somewhere to have cash to pay back the loan. Even to the extent we should care how rich a billionaire gets, surely we only care to the extent they can actually do things with that wealth. Bloomberg has to realize gains to pay for his campaign ads. Bezos has to realize gains to buy WaPo (in his personal capacity). Why on earth should we care about illiquid wealth that can’t be used to do anything?
      - xyzzyz 7y ago
        Why on earth should we care about illiquid wealth that can’t be used to do anything? You can watch here[1] how Larry Summers asks Emmanuel Saez, the leading proponent of wealth taxes, how liquid wealth gives individuals power in their personal capacity. Given how extremely underwhelming Saez's response is, I can't imagine any of the wealth taxes proponents having a good answer for the illiquid situation. [1] - https://youtu.be/oUGpjpEGTfE?t=3869 https://youtu.be/oUGpjpEGTfE?t=3869
makomk 7y ago
Which is why American populist politicians have to invoke unrealized on-paper wealth in order to convince supporters that the populists could give them everything they wanted by taxing the uber-wealthy. This wouldn't work, of course; those figures are just current stock price * total holding, and if you make everyone sell at once whilst disincentivising holding American companies that paper wealth will just vanish.
davinic 7y ago
But what's important is what that redistributed money is doing. It would flowing into local economies and getting spent many times over (until it gets back to the top and repeats the process). It would not be sitting in safe investments. It would not be wreaking havoc on the housing markets. It would not be funding the WeWorks of the world. It would be driving demand from the ground up.

samcal 7y ago

Right, the relevant part is that there are 5 people whose annual salary totals $70 million. That is tremendously too high, and allows those 5 people to have undue influence on the society that allowed them to get such power. I'm sorry that I implied that the only benefit of this point was the redistribution part.

superbaconman 7y ago

> Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. I don't understand why this is even brought up? Surely the line worker who failed high school can't contribute the same value as a software engineer automating away 20 line workers? All the studies I've seen compare the highest to the lowest salaries, while a more comprehensive look across all employee positions would provide a better data set for setting pay levels.

WalterBright 7y ago
As Steve Jobs proved, the CEO can make decisions that transform a company from near bankruptcy to the biggest market cap in the world. It's hard to get more productive than that, and would be foolish to begrudge Jobs a penny of his compensation. He earned it many, many times over. CEO decisions have enormous leverage over a company's fortunes, both good and bad. CEO pay is the least of those concerns. It's not hitting the pipe with a hammer, it's knowing where to hit the pipe.
- thulecitizen 7y ago
  ““There is not a single key technology behind the iPhone that has not been state funded,” says economist Mazzucato. This includes the wireless networks, “the Internet, GPS, a touch-screen display, and … the voice-activated personal assistant Siri.” Apple has recombined these technologies impressively. But its achievements rest on many years of public-sector investment. To put it another way, do we really think that if Jobs and Musk had never come along, there would have been no smartphone revolution, no surge of interest in electric vehicles?“ Source: https://www.technologyreview.com/s/539861/techs-enduring-great-man-myth/ https://www.technologyreview.com/s/539861/techs-enduring-gre...
  - janhenr 7y ago
    The question if somebody else would have made the smartphone is besides the point. Apple made the iPhone under the leadership of Steve Jobs, meaning the company profits enormously and thus the company can reward Steve Jobs enormously.

ddebernardy 7y ago

> Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. But that's besides the point. What on earth do they need to get paid that much for? Even if you assume they're contributing 100x what line workers are doing, they'll do just fine earning under $1M/year. Plus, you then pinpoint the bigger issue. Yeah, the investor class exists because, you know, someone shaved $32 off of everyone's salary so 5 people could get paid a total of ~$70M/year.

ekianjo 7y ago
> But that's besides the point. What on earth do they need to get paid that much for? Companies decide. It is their prerogative. If you dont like it nothing prevents you from having your own billion dollar company where everyone earns the same.
- pytester 7y ago
  There have been a number of shareholder fights over executive pay (it is their money, after all, so it's only natural they should try to claim it). They often end up losing thanks to the trend of passive investors and fund managers (principal/agent problem) with unhealthily close relationships with executives.
- FabHK 7y ago
  > Companies decide. It is their prerogative. Yet it is also a legitimate target for outside regulation, if there are indicators of market failure (monopoly, externalities, asymmetric information, etc.).
  - ekianjo 7y ago
    Asymmetric information is in the nature of business. This is where value emerges.
austhrow743 7y ago
Its not beside the point. It directly refutes the other commenters point. You don't get to jump in to a discussion between others and retroactively decide what the point was. How rude.

spodek 7y ago

> Walmart pays 5 of its executives a total of ~$70m/year [1]. Walmart employs 2.2m people [2]. Redistributing 100% of these 5 executives' salary to all 2.2m workers would be a raise of... $32/year. A calculation Louis XVI likely made in 1791.

nwah1 7y ago

The big issue surrounding inequality is plutocracy and rent-seeking. You hinted at that, but that is the real problem and we should address it from that perspective.

sudosysgen 7y ago

If the executives were paid as much as the workers, they would have very very different interests and concerns compared to nowadays.

mekane8 7y ago

From TFA: > from 1939 to 1950, hourly workers’ wages rose roughly three times faster than elite executives’ pay. This seems like it would be a good place to get back to.