6 ms·

Side note: asset bubbles pop. Executive pay is not an asset. I don't know where you work or what you do for a living, but I've heard a similar rant about execu

by kolbe 13y ago

Side note: asset bubbles pop. Executive pay is not an asset. I don't know where you work or what you do for a living, but I've heard a similar rant about executive pay from hundreds of people, whereas I've only ever seen a handfull of people trying to do something about it. So, I propose to you, if this hurts your sensibilities so much, what are you doing about it? Are you continuing to feed the machine by working as one of their employees? Are you participating by trying to create an aqui-hirable startup? Or are you pushing to enact change?

thenewbtg 13y ago
There is nothing we can do, really. Money is very close to power, and obviously the relatively poor (those who rely on a salary) have far less say and control than the extravagantly paid (those who do not require a salary). It is a fundamental trait of our free and capitalist society. We're merely mourning obvious inefficiencies, "bugs" in the convoluted system of laws and philosophies and culture that govern our society. This is a suboptimum outcome, in our opinion. Watching inequality rise dramatically over a few short decades only bolsters the belief that these are suboptimal outcomes. And watching these unmeritorious fools perform poorly while being paid thousands of times the average pay of their own staff is disheartening. It's obviously not a meritocracy. It's obvious that the extravagant, suboptimal pay scheme isn't buying quality leadership, nor is it rewarding any kind of out-sized risk on the part of management. Tiny risk compared to venture or entrepreneur, small or negative benefit, massive reward.
- frandroid 13y ago
  Sure, we can do something. It's called popular political action.
  - chillingeffect 13y ago
    Also, we can encourage one another to shift our consumption habits- If Coke is earning so much money and misbehaving, let's patronize other soda companies! If Yahoo is doing the same, let's spread out to other mail and search providers!
  - thenewbtg 13y ago
    I would point out the recent fun little study showing that the class we are (those who work for a salary) have less say in policy outcomes than the rich (those who do not require a salary). They bill it as "The US is more of an oligarchy than democracy" because those very few >0.1% of Americans have a greater political say than the rest of us.
- kolbe 13y ago
  I don't think engineers earning six figures are relatively poor. You should learn what poor is before you say something like that. They are solidly middle class in one of the most prosperous times to be middle class. And the middle class is designed to sit between the upper (capital owners) and the lower. You're paid to augment their capital. So if they get filthy rich off of your work, despite their bad decisions, it shouldn't matter to you. You're every bit a part of the problem, and you choose to be a part of it. You don't need to live in the Bay Area. You don't need the best schools. You don't need fancy new tech toys. You don't even need US. You choose to be a part of the middle class in order to receive those luxuries.
  - smtddr 13y ago
    >>You don't need to live in the Bay Area. You don't need the best schools. You don't need fancy new tech toys. You don't even need US. You choose to be a part of the middle class in order to receive those luxuries. I was with you until this part. You can't just tell people they don't need their current resident city or country or what schools they(or their children) need. Running away from a problem is almost never the right solution.
    - stingraycharles 13y ago
      I think the point he or she was trying to make is that you control your own happiness and shouldn't make that depend on things that are outside of your control. I agree with that sentiment, it's the advice I generally give people who are in a bad situation. But if you look at it from the country's perspective it feels like avoiding the problem, and isn't a solution.
    - kolbe 13y ago
      I'm pointing out that they're choices, not needs. They are things you can live without, and if you see a problem, and you feel strongly about changing the world, then you can sacrifice these luxuries. And it is absurd to claim that I am advocating running away from a problem. I absolutely want you to tackle the problem head-on. But by voluntarily enriching the aristocracy, you are part of the problem. So I find it painfully hypocritical to complain about your bosses earning too much, while at the same time choosing to be their employee.
wpietri 13y ago
I think the underlying problem here is managerialism [1], which is mainly a cultural problem [2]. The way that one solves cultural problems is mainly by talking about them. If enough people are saying, "Hey, this prohibition thing doesn't work," and do it for long enough, then eventually the unquestioned cultural assumptions dissolve. So my question for you is: why are you standing in the way of people doing something about it by being a jerk? [1] http://en.wikipedia.org/wiki/Managerialism http://en.wikipedia.org/wiki/Managerialism [2] http://www.amazon.com/Confronting-Managerialism-Business-Economic-Controversies/dp/178032071X http://www.amazon.com/Confronting-Managerialism-Business-Eco...
- Zigurd 13y ago
  Culture? Surely the legal framework and tax environment of corporations could be adjusted to fix at least part of that problem.
  - wpietri 13y ago
    As with alcohol prohibition and, later, drug prohibition, I think the legal environment flows from the cultural notions. Managerial pay has gone up not because executives are hundreds of times smarter or more competent than a couple generations back. It's because the cultural notion of executives as a higher corporate caste has become much stronger. In other words, it's not that we rationally measured the value of CEOs and paid them accordingly. It's that we stopped really thinking about it. In, more ore less, the same way that people stopped thinking rationally about drugs for some decades. The change in marijuana laws in the US is now happening not because of new facts, but because of new attitudes. A shift away from managerialist thinking might similarly trigger new laws. But I doubt it will work the other way around. Especially given the new research showing that laws basically respond only to the interest of rich people and businesses: http://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf http://www.princeton.edu/~mgilens/Gilens%20homepage%20materi...
- kolbe 13y ago
  Let me know how that works. The have-nots complaining about the haves being unworthy is probably the most discussed topic in the history of humanity.
wpietri 13y ago
Regarding the first bit, bubbles: executive pay isn't an asset. Executives are the asset. And given the enormous historical run-up in executive pay, it's not unreasonable to ask whether it will return to its earlier baseline. It's different than the typical asset bubble in that most of the people setting executive pay are also executives. But it could still just as well be a bubble.
- Florin_Andrei 13y ago
  > executive pay isn't an asset. Executives are the asset. If so, it's a special kind of asset, that can dictate the conditions of its own "usage".
sentientmachine 13y ago
You say Executive pay is not an asset. So if an executive owns the deed to a house, you'd agree that's an asset, but if the executive maintains a skill to be hired for 200k/day, that this is not an asset? Doesn't an executive's ability to convince a company to pay 200k/day fluctuate based on market forces just like how people price homes or tulip bulbs?
- mitochondrion 13y ago
  Absolutely. They cost so much more than they did before precisely because of market forces. Good luck convincing all of the underpaid $120k/yr salaried engineers, though. 95% of the world would kill to live in the cozy little bubble of tech, but that doesn't matter because those other guys over there are getting even more. No matter how much you have, you always want more.
Florin_Andrei 13y ago
Historically, when too much power migrates towards the top, the only way to restore balance is via some sort of violent commotion. But perhaps things have changed now - at least I hope so. > what are you doing about it? Are you continuing to feed the machine by working as one of their employees? Are you participating by trying to create an aqui-hirable startup? Or are you pushing to enact change? The nature of this imbalance is a positive (self-reinforcing) feedback loop. Power begets power (and lack of it begets a deeper deficit). Again, we're back to square 1 - explosive social upheaval. Human nature sucks.
bedhead 13y ago
I manage a hedge fund, so I'm close to the issue. I have read more proxies than I care to think about, it's always the first thing I read when looking at a company. Your question about what I'm doing about it is fair, so here goes another rant. As a manager, my feet are held to the fire every day, and my compensation is 100% formulaic. If I don't perform well, I don't get paid well, PERIOD. My pay isn't subjective, or based on what Ken Griffin earned. I have put in measures that ensure I cannot get rich for simply "showing up". Do you know what else I did? I did something that almost no other hedge fund manager in the country does, which was put in a clawback. (My auditor, who did about 2,000 hedge fund audits last year, told me exact two other fund have this) If I make money in year 1 and lose money in year 2, I will end up giving back possibly a significant portion of my year 1 fees to my investors. Why should I get to get rich from one great year, then suck afterwards with no consequences? In my industry at least, I'm doing more than 99.9% of people to fix the problems. I WANT my incentives to be aligned. I WANT to make a lot of money, but I refuse to do it without merit or in a way that I can't feel good about explaining it to my kids. So I guess that's why I'm so maddened by the executive comp bubble, because I am trying to do something about it.

by kolbe 13y ago

thenewbtg 13y ago

There is nothing we can do, really. Money is very close to power, and obviously the relatively poor (those who rely on a salary) have far less say and control than the extravagantly paid (those who do not require a salary). It is a fundamental trait of our free and capitalist society. We're merely mourning obvious inefficiencies, "bugs" in the convoluted system of laws and philosophies and culture that govern our society. This is a suboptimum outcome, in our opinion. Watching inequality rise dramatically over a few short decades only bolsters the belief that these are suboptimal outcomes. And watching these unmeritorious fools perform poorly while being paid thousands of times the average pay of their own staff is disheartening. It's obviously not a meritocracy. It's obvious that the extravagant, suboptimal pay scheme isn't buying quality leadership, nor is it rewarding any kind of out-sized risk on the part of management. Tiny risk compared to venture or entrepreneur, small or negative benefit, massive reward.

frandroid 13y ago
Sure, we can do something. It's called popular political action.
- chillingeffect 13y ago
  Also, we can encourage one another to shift our consumption habits- If Coke is earning so much money and misbehaving, let's patronize other soda companies! If Yahoo is doing the same, let's spread out to other mail and search providers!
- thenewbtg 13y ago
  I would point out the recent fun little study showing that the class we are (those who work for a salary) have less say in policy outcomes than the rich (those who do not require a salary). They bill it as "The US is more of an oligarchy than democracy" because those very few >0.1% of Americans have a greater political say than the rest of us.
kolbe 13y ago
I don't think engineers earning six figures are relatively poor. You should learn what poor is before you say something like that. They are solidly middle class in one of the most prosperous times to be middle class. And the middle class is designed to sit between the upper (capital owners) and the lower. You're paid to augment their capital. So if they get filthy rich off of your work, despite their bad decisions, it shouldn't matter to you. You're every bit a part of the problem, and you choose to be a part of it. You don't need to live in the Bay Area. You don't need the best schools. You don't need fancy new tech toys. You don't even need US. You choose to be a part of the middle class in order to receive those luxuries.
- smtddr 13y ago
  >>You don't need to live in the Bay Area. You don't need the best schools. You don't need fancy new tech toys. You don't even need US. You choose to be a part of the middle class in order to receive those luxuries. I was with you until this part. You can't just tell people they don't need their current resident city or country or what schools they(or their children) need. Running away from a problem is almost never the right solution.
  - stingraycharles 13y ago
    I think the point he or she was trying to make is that you control your own happiness and shouldn't make that depend on things that are outside of your control. I agree with that sentiment, it's the advice I generally give people who are in a bad situation. But if you look at it from the country's perspective it feels like avoiding the problem, and isn't a solution.
  - kolbe 13y ago
    I'm pointing out that they're choices, not needs. They are things you can live without, and if you see a problem, and you feel strongly about changing the world, then you can sacrifice these luxuries. And it is absurd to claim that I am advocating running away from a problem. I absolutely want you to tackle the problem head-on. But by voluntarily enriching the aristocracy, you are part of the problem. So I find it painfully hypocritical to complain about your bosses earning too much, while at the same time choosing to be their employee.

wpietri 13y ago

I think the underlying problem here is managerialism [1], which is mainly a cultural problem [2]. The way that one solves cultural problems is mainly by talking about them. If enough people are saying, "Hey, this prohibition thing doesn't work," and do it for long enough, then eventually the unquestioned cultural assumptions dissolve. So my question for you is: why are you standing in the way of people doing something about it by being a jerk? [1] http://en.wikipedia.org/wiki/Managerialism http://en.wikipedia.org/wiki/Managerialism [2] http://www.amazon.com/Confronting-Managerialism-Business-Economic-Controversies/dp/178032071X http://www.amazon.com/Confronting-Managerialism-Business-Eco...

Zigurd 13y ago
Culture? Surely the legal framework and tax environment of corporations could be adjusted to fix at least part of that problem.
- wpietri 13y ago
  As with alcohol prohibition and, later, drug prohibition, I think the legal environment flows from the cultural notions. Managerial pay has gone up not because executives are hundreds of times smarter or more competent than a couple generations back. It's because the cultural notion of executives as a higher corporate caste has become much stronger. In other words, it's not that we rationally measured the value of CEOs and paid them accordingly. It's that we stopped really thinking about it. In, more ore less, the same way that people stopped thinking rationally about drugs for some decades. The change in marijuana laws in the US is now happening not because of new facts, but because of new attitudes. A shift away from managerialist thinking might similarly trigger new laws. But I doubt it will work the other way around. Especially given the new research showing that laws basically respond only to the interest of rich people and businesses: http://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf http://www.princeton.edu/~mgilens/Gilens%20homepage%20materi...
kolbe 13y ago
Let me know how that works. The have-nots complaining about the haves being unworthy is probably the most discussed topic in the history of humanity.

wpietri 13y ago

Regarding the first bit, bubbles: executive pay isn't an asset. Executives are the asset. And given the enormous historical run-up in executive pay, it's not unreasonable to ask whether it will return to its earlier baseline. It's different than the typical asset bubble in that most of the people setting executive pay are also executives. But it could still just as well be a bubble.

Florin_Andrei 13y ago
> executive pay isn't an asset. Executives are the asset. If so, it's a special kind of asset, that can dictate the conditions of its own "usage".

sentientmachine 13y ago

You say Executive pay is not an asset. So if an executive owns the deed to a house, you'd agree that's an asset, but if the executive maintains a skill to be hired for 200k/day, that this is not an asset? Doesn't an executive's ability to convince a company to pay 200k/day fluctuate based on market forces just like how people price homes or tulip bulbs?

mitochondrion 13y ago
Absolutely. They cost so much more than they did before precisely because of market forces. Good luck convincing all of the underpaid $120k/yr salaried engineers, though. 95% of the world would kill to live in the cozy little bubble of tech, but that doesn't matter because those other guys over there are getting even more. No matter how much you have, you always want more.

Florin_Andrei 13y ago

Historically, when too much power migrates towards the top, the only way to restore balance is via some sort of violent commotion. But perhaps things have changed now - at least I hope so. > what are you doing about it? Are you continuing to feed the machine by working as one of their employees? Are you participating by trying to create an aqui-hirable startup? Or are you pushing to enact change? The nature of this imbalance is a positive (self-reinforcing) feedback loop. Power begets power (and lack of it begets a deeper deficit). Again, we're back to square 1 - explosive social upheaval. Human nature sucks.

bedhead 13y ago

I manage a hedge fund, so I'm close to the issue. I have read more proxies than I care to think about, it's always the first thing I read when looking at a company. Your question about what I'm doing about it is fair, so here goes another rant. As a manager, my feet are held to the fire every day, and my compensation is 100% formulaic. If I don't perform well, I don't get paid well, PERIOD. My pay isn't subjective, or based on what Ken Griffin earned. I have put in measures that ensure I cannot get rich for simply "showing up". Do you know what else I did? I did something that almost no other hedge fund manager in the country does, which was put in a clawback. (My auditor, who did about 2,000 hedge fund audits last year, told me exact two other fund have this) If I make money in year 1 and lose money in year 2, I will end up giving back possibly a significant portion of my year 1 fees to my investors. Why should I get to get rich from one great year, then suck afterwards with no consequences? In my industry at least, I'm doing more than 99.9% of people to fix the problems. I WANT my incentives to be aligned. I WANT to make a lot of money, but I refuse to do it without merit or in a way that I can't feel good about explaining it to my kids. So I guess that's why I'm so maddened by the executive comp bubble, because I am trying to do something about it.