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I think it's worth asking why compensation is the way it is. If we assume that people's compensation is based on the value they generate for an organization, th

I think it's worth asking why compensation is the way it is. If we assume that people's compensation is based on the value they generate for an organization, then what you are asking is basically "can a million warehouse workers together in a collective be as effective as Jeff Bezos at producing value for Amazon?" Alternatively, you could ask "can a given warehouse worker given one million times his current compensation add as much value to Amazon as Jeff Bezos can?" It's quite possible that the answer to both of those questions is no, and if Jeff Bezos is generating a million times more value than the average warehouse worker for Amazon with his decision making and actions then it is not an issue that he is being paid a million times more than a warehouse worker. I'm not saying that what warehouse workers are being paid now is "fair" or "reasonable", but I do think that trying to establish some fixed ratio between what a warehouse worker makes and what Jeff Bezos makes is sort of a silly exercise. Additionally, if you think that comp shouldn't reflect value added to an organization, then I would be interested in hearing what you think it should be based on.

rorykoehler 6y ago
This is a false equivalence with the argument GP made. It’s not healthy for society to have Bezos level wealth in one person. It will never be no matter the political system in place.
- whatthesmack 6y ago
  It isn't a false equivalence, though. From the original comment: > taxing the top ~1% is to simply bring their wealth more in line with their contributions The comment above yours is just pointing out that Bezos may contribute more, which would be an explanation for Bezos' outsize wealth. Whether it's true or not that Bezos contributes more is subjective, of course. > It’s not healthy for society to have Bezos level wealth in one person. That's an entirely different point unrelated to the "contribution" question/attribute.
purple_ferret 6y ago
Jeff Bezos's net worth is almost entirely in Amazon's stock value. He isn't being compensated by some objective analysis of his worth. Amazon, the company, might be, at which point, he's benefiting as the largest shareholder.
- OminousWeapons 6y ago
  His current yearly comp is a function of what the board believes his value to the company is. If we want to talk about the legitimacy of his stock holdings being worth as much as they are, then we need to have a different, but similar conversation which is how much value has Amazon added to the world and how much should early stage entities involved with Amazon be rewarded for adding that value. If we assume that Amazon is fairly valued and that Jeff Bezos's holdings of Amazon are in line with his contributions, then it again makes sense for him to be worth what he is worth. If we assume that it's illegitimate for someone to prosper that much behind growth and optimism that growth will continue (ie he didn't sell his stock), then the legitimacy of the net worth of every single direct or indirect (eg via ETFs) investor in Amazon, every single indirect beneficiary of investments in Amazon (eg recipients of pensions whose funds hold Amazon), and every single employee with an equity stake needs to also be questioned. Sure there are some differences here such as stock options, but even if we divided Bezos's net worth by 2 or 3 to account for this I don't think it would make much of a difference.
  - purple_ferret 6y ago
    Jeff Bezos's salary is apparently around 80k. It's basically irrelevant as it is not really a reflection of his contribution at all, but merely a formality or symbolic. My only point is when you're talking about his growth in wealth, you're always de facto talking about his stock holdings and their growth and the idea of objective compensation goes out the window. In fact, even if you're talking about straight compensation, it still is part of the discussion because clearly in this case, he is willing to take a paltry salary because he is benefiting from massive stock value growth. As for this point: >If we assume that Amazon is fairly valued and that Jeff Bezos's holdings of Amazon are in line with his contributions He is not being 'compensated' via stock nor is the total amount of stock he holds fluctuating based some sort of objective analysis of his contribution. He could contribute nothing and retire and still hold the same amount. So I don't know how you can assume that.
tsimionescu 6y ago
Yes, I do believe that the amount of wealth people get from a company should be proportional to their contributions to that company. Of course, this is very hard to give a clear number to. Still, one way to go about this is to assume that workers and employers are rational economic agents and look at their incentives and bargaining power. Obviously, an employer will never employ anyone for more money than they believe that employee will contribute to the company (assuming no nepotism, fraud, corruption etc). However, an employee may well accept to work for less money than they are actually contributing, since they have ~0 visibility into this number, and much less bargaining power than the company, especially at the lower end. So, in for a large company without powerful unions, we can virtually guarantee that employees are each receiving less money than they are actually contributing - with shareholders correspondingly receiving more money from the profits accrued. Additionally, shareholders also have more money based on how over-valued a company's stock is, which employees gain nothing from. Now, the real question is of course "how much more wealth are they getting from the company"? I don't have an exact answer to this question. However, one way to look at it is that Amazon has ~800k employees who at MOST could collectively own the ~20% of amazon stock on the open market, while Jeff Bezos owns ~10% of the company directly. This would mean that Jeff Bezos personally would have to contribute as much as ~400k people to the company for his contributions to be in line with the value he extracts. I just don't believe that Amazon could be where it is if it replaced ~400,000 employees with a second Jeff Bezos. Honestly, I don't believe that Amazon could be where it is if it replaced 1,000 employees with a second Jeff Bezos.
- acover 6y ago
  I don't think marginal benefit of Jeff Bezos is what you are trying to measure. Consider, if a light bulb is broken having one Jeff Bezos replace it is hugely valuable. Adding a second Jeff Bezos to the situation doesn't help.
- ericd 6y ago
  With 0 Jeff Bezos’, ~none of those 800k people would be working at a company called Amazon. Not sure who else at Amazon you can say that about.
ip26 6y ago
The potential value the CEO can generate is outsized compared to a factory worker, yes. But if comp is just a reflection of the value added to the organization, and the total comp is a reflection of the entire value added by the staff, then why does it make sense for the poor & the wealthy staff to both pay low effective tax rates, but the middle to pay high effective tax rates? In any case, high comp for executives would not be such an issue if money didn't translate so fluidly to political power. If wild success just meant cushy living, you might not see so much blowback, but when profits translate to power which translates to using that power to shield your profits, then claims about a rigged game are not so crazy.
jelliclesfarm 6y ago
>I'm not saying that what warehouse workers are being paid now is "fair" or "reasonable" its not a question of "fair" or "reasonable". such jobs shouldnt exist. i come from the side of ag jobs and there are a lot of repetitive manual jobs that should simply be automated. in the place of low paying jobs, new higher wage jobs should be created. eventually, with more people being skilled and having good earning potential, the number of work hours will also come down leaving people to do other things than just work 40 hours/day and wasting 2 hours in commute. this is how we should live. we should live our lives and work a little bit to support that life style. life shouldnt be drudgery where work is how we survive. creating high value items and high wages with robots and automation taking care of menial tasks will also bring out the creativity and potential of human beings. there will always be those who will fall through the cracks and thats when the social net should catch them. current system is the expectation of the social net to catch everyone on a low wage. for example, you cant increase wages for ag. it would mean cost of food would go up. so we end up making cheap food, cutting corners, having a low wage worker class and then subsidising them through welfare paid through our taxes. its messy and complicated and inefficient. my fav example is that of automobiles replacing horse carriages as the preferred urban transport system. it erased all the jobs like the guy who drove the carriage, the kid who picked up the horse poop on the streets, the stablemen, the horse groomers..the farriers...i mean..how many people want to take up equine hoof care as a profession these days. all those jobs. gone. in its place, came a new set of jobs..the factory worker, the mechanic, the gas station owner (and with it 711)...not to mention the sweet relief for the poor overworked horses. and our lives are better. of course, the flip side is the pollution, dependence on fossil fuels, exponential population growth ..but we grow by leaps and bounds. and we fix our missteps as we move along. but some jobs..it is inevitable that they will disappear. they have to. or we will become stagnant.

rorykoehler 6y ago

This is a false equivalence with the argument GP made. It’s not healthy for society to have Bezos level wealth in one person. It will never be no matter the political system in place.

whatthesmack 6y ago
It isn't a false equivalence, though. From the original comment: > taxing the top ~1% is to simply bring their wealth more in line with their contributions The comment above yours is just pointing out that Bezos may contribute more, which would be an explanation for Bezos' outsize wealth. Whether it's true or not that Bezos contributes more is subjective, of course. > It’s not healthy for society to have Bezos level wealth in one person. That's an entirely different point unrelated to the "contribution" question/attribute.

purple_ferret 6y ago

Jeff Bezos's net worth is almost entirely in Amazon's stock value. He isn't being compensated by some objective analysis of his worth. Amazon, the company, might be, at which point, he's benefiting as the largest shareholder.

OminousWeapons 6y ago
His current yearly comp is a function of what the board believes his value to the company is. If we want to talk about the legitimacy of his stock holdings being worth as much as they are, then we need to have a different, but similar conversation which is how much value has Amazon added to the world and how much should early stage entities involved with Amazon be rewarded for adding that value. If we assume that Amazon is fairly valued and that Jeff Bezos's holdings of Amazon are in line with his contributions, then it again makes sense for him to be worth what he is worth. If we assume that it's illegitimate for someone to prosper that much behind growth and optimism that growth will continue (ie he didn't sell his stock), then the legitimacy of the net worth of every single direct or indirect (eg via ETFs) investor in Amazon, every single indirect beneficiary of investments in Amazon (eg recipients of pensions whose funds hold Amazon), and every single employee with an equity stake needs to also be questioned. Sure there are some differences here such as stock options, but even if we divided Bezos's net worth by 2 or 3 to account for this I don't think it would make much of a difference.
- purple_ferret 6y ago
  Jeff Bezos's salary is apparently around 80k. It's basically irrelevant as it is not really a reflection of his contribution at all, but merely a formality or symbolic. My only point is when you're talking about his growth in wealth, you're always de facto talking about his stock holdings and their growth and the idea of objective compensation goes out the window. In fact, even if you're talking about straight compensation, it still is part of the discussion because clearly in this case, he is willing to take a paltry salary because he is benefiting from massive stock value growth. As for this point: >If we assume that Amazon is fairly valued and that Jeff Bezos's holdings of Amazon are in line with his contributions He is not being 'compensated' via stock nor is the total amount of stock he holds fluctuating based some sort of objective analysis of his contribution. He could contribute nothing and retire and still hold the same amount. So I don't know how you can assume that.

tsimionescu 6y ago

Yes, I do believe that the amount of wealth people get from a company should be proportional to their contributions to that company. Of course, this is very hard to give a clear number to. Still, one way to go about this is to assume that workers and employers are rational economic agents and look at their incentives and bargaining power. Obviously, an employer will never employ anyone for more money than they believe that employee will contribute to the company (assuming no nepotism, fraud, corruption etc). However, an employee may well accept to work for less money than they are actually contributing, since they have ~0 visibility into this number, and much less bargaining power than the company, especially at the lower end. So, in for a large company without powerful unions, we can virtually guarantee that employees are each receiving less money than they are actually contributing - with shareholders correspondingly receiving more money from the profits accrued. Additionally, shareholders also have more money based on how over-valued a company's stock is, which employees gain nothing from. Now, the real question is of course "how much more wealth are they getting from the company"? I don't have an exact answer to this question. However, one way to look at it is that Amazon has ~800k employees who at MOST could collectively own the ~20% of amazon stock on the open market, while Jeff Bezos owns ~10% of the company directly. This would mean that Jeff Bezos personally would have to contribute as much as ~400k people to the company for his contributions to be in line with the value he extracts. I just don't believe that Amazon could be where it is if it replaced ~400,000 employees with a second Jeff Bezos. Honestly, I don't believe that Amazon could be where it is if it replaced 1,000 employees with a second Jeff Bezos.

acover 6y ago
I don't think marginal benefit of Jeff Bezos is what you are trying to measure. Consider, if a light bulb is broken having one Jeff Bezos replace it is hugely valuable. Adding a second Jeff Bezos to the situation doesn't help.
ericd 6y ago
With 0 Jeff Bezos’, ~none of those 800k people would be working at a company called Amazon. Not sure who else at Amazon you can say that about.

ip26 6y ago

The potential value the CEO can generate is outsized compared to a factory worker, yes. But if comp is just a reflection of the value added to the organization, and the total comp is a reflection of the entire value added by the staff, then why does it make sense for the poor & the wealthy staff to both pay low effective tax rates, but the middle to pay high effective tax rates? In any case, high comp for executives would not be such an issue if money didn't translate so fluidly to political power. If wild success just meant cushy living, you might not see so much blowback, but when profits translate to power which translates to using that power to shield your profits, then claims about a rigged game are not so crazy.

jelliclesfarm 6y ago

>I'm not saying that what warehouse workers are being paid now is "fair" or "reasonable" its not a question of "fair" or "reasonable". such jobs shouldnt exist. i come from the side of ag jobs and there are a lot of repetitive manual jobs that should simply be automated. in the place of low paying jobs, new higher wage jobs should be created. eventually, with more people being skilled and having good earning potential, the number of work hours will also come down leaving people to do other things than just work 40 hours/day and wasting 2 hours in commute. this is how we should live. we should live our lives and work a little bit to support that life style. life shouldnt be drudgery where work is how we survive. creating high value items and high wages with robots and automation taking care of menial tasks will also bring out the creativity and potential of human beings. there will always be those who will fall through the cracks and thats when the social net should catch them. current system is the expectation of the social net to catch everyone on a low wage. for example, you cant increase wages for ag. it would mean cost of food would go up. so we end up making cheap food, cutting corners, having a low wage worker class and then subsidising them through welfare paid through our taxes. its messy and complicated and inefficient. my fav example is that of automobiles replacing horse carriages as the preferred urban transport system. it erased all the jobs like the guy who drove the carriage, the kid who picked up the horse poop on the streets, the stablemen, the horse groomers..the farriers...i mean..how many people want to take up equine hoof care as a profession these days. all those jobs. gone. in its place, came a new set of jobs..the factory worker, the mechanic, the gas station owner (and with it 711)...not to mention the sweet relief for the poor overworked horses. and our lives are better. of course, the flip side is the pollution, dependence on fossil fuels, exponential population growth ..but we grow by leaps and bounds. and we fix our missteps as we move along. but some jobs..it is inevitable that they will disappear. they have to. or we will become stagnant.