5 ms·

I did an exercise here: the average CEO salary of S&P 500 is around $20M. That's around $10B totally. Assume there are three executives - so thats around $30B a

I did an exercise here: the average CEO salary of S&P 500 is around $20M. That's around $10B totally. Assume there are three executives - so thats around $30B annually. Lets go much further, lets multiply this by 10 to account for top 5000 companies (in practice it would be more like top 20,000 because the lower companies have much lower CEO salaries). There are around 300 million people in USA. By redistributing the 100% CEO salary you can give around $900 per year to every single person. All this for $900? Which does not even account for income tax paid by CEO's. Edit: after accounting for income tax it is more like $600 So all you have achieved by completely eradicating C suite salary for top 20,000 companies in the USA is around ~$900~ $600 for each individual per year. I'm increasingly convinced that CEO pay is the wrong place to look at for any impact at all. Edit: there's more to this if you account for spending patterns. Even if you give $500 to every citizen, that does not mean affordability will increase because inflation can increase proportionally. This is because even with increased money, each citizen is buying goods amongst the same quantity of goods as before. For example we can take potatoes: do you think citizens can afford potatoes even more now? No, because the number of potatoes have remained the same. Taking away CEO salary does not mean potato stock would increase because CEO's are not hoarding up potatoes.

drunner 1y ago
As shown by the covid payments. $900 a year is a lot of money to a lot of folks. Heck annual social security average is 24k a year, so you are talking about nearly 4% more money for just those people alone.
- simianwords 1y ago
  Fair, lets then count income tax which makes it more like $500 assuming net taxes around 40%. I'm ignoring salary increase due to stock valuation going up because it complicates things and there is equal force from both sides of the argument. So you decide: 20,000 companies running with a CEO being paid like an average person. And every citizen gets $500 in their account per year. Edit: its not just a CEO but the C suite. 20,000 running without a C suite.
  - Aurornis 1y ago
    > So you decide: 20,000 companies running with a CEO being paid like an average person. And every citizen gets $500 in their account per year In these contrived scenarios people will always choose the anti-CEO scenario. You could restructure your hypothetical scenario such that the money was lit on fire instead of being paid to executives and you’d still find support from people who are just angry at executives getting paid a lot.
    - simianwords 1y ago
      I agree but funnily enough - lighting it on fire will have the same consequence as every citizen being paid $500 (assuming similar spending patterns of CEO's and workers which is an exaggeration).
  - drunner 1y ago
    I don't think tax is that high for that income bracket but your point still stands for the rules of the current system. I agree with your sentiment there are way better ways to redistribute wealth. Just dont discount what several hundred bucks means to way too many people in such a prosperous country.
    - simianwords 1y ago
      This is the tax bracket for CEO's. >Just dont discount what several hundred bucks means to way too many people in such a prosperous country. Sure.. but the real disposable income has increased by a decent amount over the years. Just in the last 10 years (including covid) the real disposable income has increased by over 20%.
  - papascrubs 1y ago
    Shouldn't it be distributed to just the employees of those companies? Why are we including every citizen. That seems to dilute that overall picture.
    - simianwords 1y ago
- Forlien 1y ago
  You might be interested in https://www.theargumentmag.com/p/giving-people-money-helped-less-than https://www.theargumentmag.com/p/giving-people-money-helped-... which talks about the studies showing low effects for just giving money to Americans. It seems like just giving people money is still unproven to have impacts to make people healthier, happier (beyond the year they start giving money), get them better jobs, or improve their children’s intellectual development. There's still hope for targeted programs, but it changed my view on blanket payments.
woooooo 1y ago
Thats 3600 for a family of four. 5% of median household income in a country where most have zero savings.
- simianwords 1y ago
  The impact of the whole C suite of top 20,000 companies in USA would be much reduced incentives. These are the same companies that are making products that workers purchase from. Sure 5% extra money per family. Do you really think 5% increase in income would change the savings scenario? The median real disposable income increased by more than 20% over the years. I don't think savings have changed.
  - woooooo 1y ago
    I think we could do with some different incentives. A lot of the readers here have worked at mega corps and seen what the incentives are in the real world, its not Ayn Rand superman doing the best thing for the company because their interests are aligned.
ravivooda 1y ago
Beginning of game: CEO = 0$ value Employee = 0$ value --- Round 1 Year CEO = $20M Employee = $0.5M (generous) -- Round 5 Years CEO = $100M (if pay remained the same, and they did not create new companies, which I'm sure they will). Employee = $3M (let's give them promo) etc. Cost of living is increasing with employee's wage, nothing for a CEO. ---- Tell me who is more secure, who has the flexibility to take risks, and create new value. It's not about the 900$ every human being gets. It's how much differentiation 5 years makes, which is 1/4 of value generation timespan of adults.
- Workaccount2 1y ago
  Do it again but factor in the 90% start-up failure rate.
shortrounddev2 1y ago
You're only looking at salary, and not equity based compensation?
- simianwords 1y ago
  It accounts for equity based compensation.
DeRock 1y ago
Another way to look at it is every single person, including children, are paying $75 a month for executives of 5000 public companies. Or $190 per month per household. That is significantly more than the average electricity bill ($130/month). Downplaying that shows you are out of touch with the average American.
- Aurornis 1y ago
  > Another way to look at it is every single person, including children, are paying $75 a month for executives of 5000 public companies. No they are not. The economy isn’t a zero-sum game where the only way an executive can get paid is by taking money from a household. Executive compensation is largely equity based. The mostly equity is new value created in the economy. Using zero-sum thinking for economic topics like this is very misleading.
justinrubek 1y ago
I'm not convinced that diluting it this far is a fully effective thought experiment. If you took half of that $900 and distributed it amongst 500,000 instead of 300 million, then it'd be a more formidable amount. I'm not sure why it needs to be equally distributed. Just putting it back into the economy otherwise is good enough.
- simianwords 1y ago
  I agree with you. I prefer it more centrally allocated - with the CEO's as the market intended.
Herring 1y ago
Is distributing it to individuals the best option? My suggestion would be to first identify the best option, eg improving education usually has a fairly high ROI. That's how taxes are supposed to work. > “Every dollar we put into high-quality early childhood education we get $7 back in reduced teen pregnancy, improved graduation rates, improved performance in school, reduced incarceration rates. The society as a whole does better.” https://www.washingtonpost.com/news/fact-checker/wp/2015/04/20/obamas-claim-that-every-dollar-spent-on-pre-kindergarten-education-earns-7-back/ https://www.washingtonpost.com/news/fact-checker/wp/2015/04/...
ASalazarMX 1y ago
Now do this exercise only for the workwers of each of those companies. If they're generating billions value, they should get a fairer share of the profits.
- simianwords 1y ago
  Around $2000 per year.
  - ASalazarMX 1y ago
    That means those companies employ almost half the US population. Amazing.
ianhawes 1y ago
Similarly if you seized 100% of the wealth of the top 400 Americans[0] and liquidated all of their assets to cash, then you'd have ~$5.4T (assuming you didn't completely destroy the economy in the process, which you would but for the sake of the argument assume you wouldn't), which is around 15% of the US Public Debt OR about 3 years worth of the U.S. Budget Deficit.
fragmede 1y ago
$900 doesn't go a long way if you're buying cocaine or yacht time, but it goes pretty far at the grocery store. How about not eradicating it entirely, but taking enough to give $500 to everyone?
FridayoLeary 1y ago
It's the unfairness which bothers people. >Even if you give $500 to every citizen, that does not mean affordability will increase because inflation can increase proportionally. This is because even with increased money, each citizen is buying goods amongst the same quantity of goods as before. I know. I thought those covid payments proved it. Everyone got a temporary financial boost, which was great, but they ended up paying for it threefold with rising inflation. As far as i can tell the only people that did really well from it were the banks. The whole policy was well intentioned and completely misguided.
_DeadFred_ 1y ago
Here's the problem. Companies need workers. And society needs it's people to be bought into society. So you can't really say to the majority of your people 'you are sucker loser idiots for working these jobs, you should really do something else'. Long term, that isn't going to work for society. Look at China. The people were fine with whatever, as long as incomes were going up. America was the same. Give people the American dream, and you can do what you want at the top. Take it away and at the same time say 'yeah, of course your life is going to suck, you are a dumb worker who deserves nothing, have you tried not being that?' isn't a winning tagline for a company/a society.

drunner 1y ago

As shown by the covid payments. $900 a year is a lot of money to a lot of folks. Heck annual social security average is 24k a year, so you are talking about nearly 4% more money for just those people alone.

simianwords 1y ago
Fair, lets then count income tax which makes it more like $500 assuming net taxes around 40%. I'm ignoring salary increase due to stock valuation going up because it complicates things and there is equal force from both sides of the argument. So you decide: 20,000 companies running with a CEO being paid like an average person. And every citizen gets $500 in their account per year. Edit: its not just a CEO but the C suite. 20,000 running without a C suite.
- Aurornis 1y ago
  > So you decide: 20,000 companies running with a CEO being paid like an average person. And every citizen gets $500 in their account per year In these contrived scenarios people will always choose the anti-CEO scenario. You could restructure your hypothetical scenario such that the money was lit on fire instead of being paid to executives and you’d still find support from people who are just angry at executives getting paid a lot.
  - simianwords 1y ago
    I agree but funnily enough - lighting it on fire will have the same consequence as every citizen being paid $500 (assuming similar spending patterns of CEO's and workers which is an exaggeration).
- drunner 1y ago
  I don't think tax is that high for that income bracket but your point still stands for the rules of the current system. I agree with your sentiment there are way better ways to redistribute wealth. Just dont discount what several hundred bucks means to way too many people in such a prosperous country.
  - simianwords 1y ago
    This is the tax bracket for CEO's. >Just dont discount what several hundred bucks means to way too many people in such a prosperous country. Sure.. but the real disposable income has increased by a decent amount over the years. Just in the last 10 years (including covid) the real disposable income has increased by over 20%.
- papascrubs 1y ago
  Shouldn't it be distributed to just the employees of those companies? Why are we including every citizen. That seems to dilute that overall picture.
  - simianwords 1y ago
Forlien 1y ago
You might be interested in https://www.theargumentmag.com/p/giving-people-money-helped-less-than https://www.theargumentmag.com/p/giving-people-money-helped-... which talks about the studies showing low effects for just giving money to Americans. It seems like just giving people money is still unproven to have impacts to make people healthier, happier (beyond the year they start giving money), get them better jobs, or improve their children’s intellectual development. There's still hope for targeted programs, but it changed my view on blanket payments.

woooooo 1y ago

Thats 3600 for a family of four. 5% of median household income in a country where most have zero savings.

simianwords 1y ago
The impact of the whole C suite of top 20,000 companies in USA would be much reduced incentives. These are the same companies that are making products that workers purchase from. Sure 5% extra money per family. Do you really think 5% increase in income would change the savings scenario? The median real disposable income increased by more than 20% over the years. I don't think savings have changed.
- woooooo 1y ago
  I think we could do with some different incentives. A lot of the readers here have worked at mega corps and seen what the incentives are in the real world, its not Ayn Rand superman doing the best thing for the company because their interests are aligned.

ravivooda 1y ago

Beginning of game: CEO = 0$ value Employee = 0$ value --- Round 1 Year CEO = $20M Employee = $0.5M (generous) -- Round 5 Years CEO = $100M (if pay remained the same, and they did not create new companies, which I'm sure they will). Employee = $3M (let's give them promo) etc. Cost of living is increasing with employee's wage, nothing for a CEO. ---- Tell me who is more secure, who has the flexibility to take risks, and create new value. It's not about the 900$ every human being gets. It's how much differentiation 5 years makes, which is 1/4 of value generation timespan of adults.

Workaccount2 1y ago
Do it again but factor in the 90% start-up failure rate.

shortrounddev2 1y ago

You're only looking at salary, and not equity based compensation?

simianwords 1y ago
It accounts for equity based compensation.

DeRock 1y ago

Another way to look at it is every single person, including children, are paying $75 a month for executives of 5000 public companies. Or $190 per month per household. That is significantly more than the average electricity bill ($130/month). Downplaying that shows you are out of touch with the average American.

Aurornis 1y ago
> Another way to look at it is every single person, including children, are paying $75 a month for executives of 5000 public companies. No they are not. The economy isn’t a zero-sum game where the only way an executive can get paid is by taking money from a household. Executive compensation is largely equity based. The mostly equity is new value created in the economy. Using zero-sum thinking for economic topics like this is very misleading.

justinrubek 1y ago

I'm not convinced that diluting it this far is a fully effective thought experiment. If you took half of that $900 and distributed it amongst 500,000 instead of 300 million, then it'd be a more formidable amount. I'm not sure why it needs to be equally distributed. Just putting it back into the economy otherwise is good enough.

simianwords 1y ago
I agree with you. I prefer it more centrally allocated - with the CEO's as the market intended.

Herring 1y ago

Is distributing it to individuals the best option? My suggestion would be to first identify the best option, eg improving education usually has a fairly high ROI. That's how taxes are supposed to work. > “Every dollar we put into high-quality early childhood education we get $7 back in reduced teen pregnancy, improved graduation rates, improved performance in school, reduced incarceration rates. The society as a whole does better.” https://www.washingtonpost.com/news/fact-checker/wp/2015/04/20/obamas-claim-that-every-dollar-spent-on-pre-kindergarten-education-earns-7-back/ https://www.washingtonpost.com/news/fact-checker/wp/2015/04/...

ASalazarMX 1y ago

Now do this exercise only for the workwers of each of those companies. If they're generating billions value, they should get a fairer share of the profits.

simianwords 1y ago
Around $2000 per year.
- ASalazarMX 1y ago
  That means those companies employ almost half the US population. Amazing.

ianhawes 1y ago

Similarly if you seized 100% of the wealth of the top 400 Americans[0] and liquidated all of their assets to cash, then you'd have ~$5.4T (assuming you didn't completely destroy the economy in the process, which you would but for the sake of the argument assume you wouldn't), which is around 15% of the US Public Debt OR about 3 years worth of the U.S. Budget Deficit.

fragmede 1y ago

$900 doesn't go a long way if you're buying cocaine or yacht time, but it goes pretty far at the grocery store. How about not eradicating it entirely, but taking enough to give $500 to everyone?

FridayoLeary 1y ago

It's the unfairness which bothers people. >Even if you give $500 to every citizen, that does not mean affordability will increase because inflation can increase proportionally. This is because even with increased money, each citizen is buying goods amongst the same quantity of goods as before. I know. I thought those covid payments proved it. Everyone got a temporary financial boost, which was great, but they ended up paying for it threefold with rising inflation. As far as i can tell the only people that did really well from it were the banks. The whole policy was well intentioned and completely misguided.

_DeadFred_ 1y ago

Here's the problem. Companies need workers. And society needs it's people to be bought into society. So you can't really say to the majority of your people 'you are sucker loser idiots for working these jobs, you should really do something else'. Long term, that isn't going to work for society. Look at China. The people were fine with whatever, as long as incomes were going up. America was the same. Give people the American dream, and you can do what you want at the top. Take it away and at the same time say 'yeah, of course your life is going to suck, you are a dumb worker who deserves nothing, have you tried not being that?' isn't a winning tagline for a company/a society.