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Personally, those amounts for the actors, authors, athletes seem pretty obscene to me, but lets ignore the philosophical issues over that, I'm aware the general

Personally, those amounts for the actors, authors, athletes seem pretty obscene to me, but lets ignore the philosophical issues over that, I'm aware the general populace isn't exactly into philosophy. I can't speak for all the human race, but one of the issues is whether there actually IS some connection between pay and actions and renumeration. Some people get paid huge amounts of money not merely because of what they do, but because of who they are and manipulation of social power structures. Queens, kings, heirs, priests....CEO's? We know that there have been relatively wealthy individuals throughout all of history, and we can also probably ascertain that many people would think that some actions should be socially more deserving of social remuneration/reward than others. There are rich people who are rich because of being rewarded due to doing great things for lots of others, and there are rich people who are rich because of nothing they did for the rest of society but because of current social structure or through random chance or through false beliefs and manipulation of those who sent money and social power their way, and there are rich people who are rich because they've done some pretty nasty shit. Some have probably done all three. So which are the CEO's (if we must talk of them collectively)? Well, I would say to Mr Mankiw that if the easiest answer is that CEO's make millions because of merit, then their merit should be easy enough to measure. Because if its not easy enough to measure, then on what basis could the boards possibly be connecting merit to pay? They couldn't be. Perhaps it is merely a cargo cult or back scratching operation relative to the amounts of capital they have available to them? As I said, there's lots of classes that have received money through the social mechanisms that the general populace has accepted, but just because the pope sits on a throne of gold, doesn't mean he's actually communing with god or deserving of it. Indeed, perhaps we could answer this empirically. We can take CEO pay of various public companies, and control against regular share-market index movements. Define a function to relate company size to CEO remuneration, and then define a function to relate this to company worth over time after that CEO has been hired. It should become pretty apparent, pretty quickly, that those that paid more for a CEO at a particular time had particularly better outcomes after paying high prices for said CEO after he came on board, on average, than those that paid less. If they didn't, then its pretty clear that of all the reasons people are getting paid so much money, relative merit isn't one of them and perhaps we need to look for other explanatory variables. So out of curiosity...anyone on HN aware of any such studies? /and by all means Mr Mankiw, people in your position bringing out the "but the rich pay more in taxes!" just reinforces my impression that harvard and higher education institutions are a complete sham.

hugofirth 13y ago
"...people in your position bringing out the "but the rich pay more in taxes!" just reinforces my impression that harvard and higher education institutions are a complete sham." Can you qualify this line? I'm not entirely sure why his providing the verifiable statistics bears any connection to the merit of high quality higher education institutions? Genuinely confused - not bating.
- ACow_Adonis 13y ago
  Sure. First of all some context. Mankiw wrote one of the main textbooks while I was doing economics at university. I was one of the few people who also took philosophy and the like, who came to economics because I found the area itself fascinating rather than wishes for employment/riches, and who discovered economics as a subject relatively late (after philosophy and IT) so you might say I contrast Mankiw, Marx and Megabytes :P (and don't worry, I'm not a communist :P) My opinion of Mankiw, and the work of places that have hired him, is not particularly high. I don't think their work is intellectually very rigorous (not to be confused with "academically" rigorous via referencing lots of papers, using models and language the layman doesn't understand, and hiding behind institutional status). It doesn't deal with many of the questions and complexities and outcomes that people actually care about, and they clearly push an agenda behind a facade of legitimacy. The "rich pay more taxes", specifically, is just such a juvenile, dumb, populist thought terminating cliche. "Queen Victoria" probably funded more parks than the average man, but what the hell does that mean? "The pope" built more churches. If you redistribute money from the rich to the poor, now the poor pay more taxes! And what does that mean now? NOTHING! Should we do it? I don't know! "The rich pay more taxes" is a regular throw-away line from those who generally wish to lobby for the wealthy, reliant upon the idea of "agency of money and those who hold it" in our current society rather than analysing money and its relationship to actual societal outcomes, beliefs, structures and social power. Queen victoria and the pope, of course, didn't actually build those parks or those churches (Viccy wasn't very good at bricklaying for a start), but they had the social power to get others to do it for them. But does that in itself legitimize their positions, power and actions? So you read Mankiw's editorials, and they contain a whole bunch of cheap appeals that are easily dismissed, and not much content (and that goes for his work as well). Why did wages and the like suddenly take off in the financial sector compared to how it used to be historically in relative conservative banking? Is this because they weren't worth much or very competent before? How does debt, power imbalance, informational asymmetry, and turnover enter into all this? Why are remunerations so volatile if their wages are meritorious? What about when these golden-handshakes aren't connected to their actual performance? How do boards measure the worth of CEO's when everyone else can't? What about intercultural/temporal/national differences in pay/situations? Would we actually be better off if we took money from the rich, distributed it, and had a more even distribution of both wealth and taxes? What about heirs? No one intellectually serious or competent would ever spout such lines if they genuinely wanted to discuss the issue. But Mankiw, and the institutions that hire him, generally don't want to seriously discuss the issue. Hence, complete sham. /my, that sounds really harsh.

hugofirth 13y ago

"...people in your position bringing out the "but the rich pay more in taxes!" just reinforces my impression that harvard and higher education institutions are a complete sham." Can you qualify this line? I'm not entirely sure why his providing the verifiable statistics bears any connection to the merit of high quality higher education institutions? Genuinely confused - not bating.

ACow_Adonis 13y ago
Sure. First of all some context. Mankiw wrote one of the main textbooks while I was doing economics at university. I was one of the few people who also took philosophy and the like, who came to economics because I found the area itself fascinating rather than wishes for employment/riches, and who discovered economics as a subject relatively late (after philosophy and IT) so you might say I contrast Mankiw, Marx and Megabytes :P (and don't worry, I'm not a communist :P) My opinion of Mankiw, and the work of places that have hired him, is not particularly high. I don't think their work is intellectually very rigorous (not to be confused with "academically" rigorous via referencing lots of papers, using models and language the layman doesn't understand, and hiding behind institutional status). It doesn't deal with many of the questions and complexities and outcomes that people actually care about, and they clearly push an agenda behind a facade of legitimacy. The "rich pay more taxes", specifically, is just such a juvenile, dumb, populist thought terminating cliche. "Queen Victoria" probably funded more parks than the average man, but what the hell does that mean? "The pope" built more churches. If you redistribute money from the rich to the poor, now the poor pay more taxes! And what does that mean now? NOTHING! Should we do it? I don't know! "The rich pay more taxes" is a regular throw-away line from those who generally wish to lobby for the wealthy, reliant upon the idea of "agency of money and those who hold it" in our current society rather than analysing money and its relationship to actual societal outcomes, beliefs, structures and social power. Queen victoria and the pope, of course, didn't actually build those parks or those churches (Viccy wasn't very good at bricklaying for a start), but they had the social power to get others to do it for them. But does that in itself legitimize their positions, power and actions? So you read Mankiw's editorials, and they contain a whole bunch of cheap appeals that are easily dismissed, and not much content (and that goes for his work as well). Why did wages and the like suddenly take off in the financial sector compared to how it used to be historically in relative conservative banking? Is this because they weren't worth much or very competent before? How does debt, power imbalance, informational asymmetry, and turnover enter into all this? Why are remunerations so volatile if their wages are meritorious? What about when these golden-handshakes aren't connected to their actual performance? How do boards measure the worth of CEO's when everyone else can't? What about intercultural/temporal/national differences in pay/situations? Would we actually be better off if we took money from the rich, distributed it, and had a more even distribution of both wealth and taxes? What about heirs? No one intellectually serious or competent would ever spout such lines if they genuinely wanted to discuss the issue. But Mankiw, and the institutions that hire him, generally don't want to seriously discuss the issue. Hence, complete sham. /my, that sounds really harsh.