A maximum wage?

[luiz]

You're so right, every single country has the same type of executive compensation as America and there's nothing anyone can do about it.

Judging how the average salary of an American CEO is something like $5000/hr (something like 400 times that of an American worker), I don't see the problem with capping executive compensation at $500/hr (for instance).

There are not enough rolleyes in the world to express my feelings. Anyway (and boy, am I a patient man):

1- If I said "the most egalitarian countries in the world" that means I already acknowledge that some countries are more egalitarian than others. Denmark is much more egalitarian than the US, and that's reflected in average executive pay.

2- My point was precisely that in even highly egalitarian societies where take-home pay is much more equal than in the US, you still have billionaires, people worth far more than the CEOs of Goldman Sachs and JP Morgan combined. Wages are not the reason behind most of the super-fortunes, capital is.

3- What I meant, therefore, is that by capping wages you will not get rid of the super rich at all, and if their existance is what annoys you, you'll have to do much more than that. Like getting rid of property rights and capitalism broadly defined.

 

[amadeus]

Hey, let's compare cross-polity and cross-society! I'm sure there's something absolutist we can always reduce it to!

Like the "average" American worker, or CEOs of other countries?

I'm curious how the defenders of the 1% justify something like this.

Well, I'm a defender of the 100%, but that's beside the point. How would I defend a graph with figures but no explanations of why things changed? I wouldn't.

American teachers don't make their much larger salaries at the direct expense of Indian workers. Try again.

So what matters is the employee-employer relationship and not disparity in the aggregate? So Americans that earn 50x their Indian counterparts are exploited because they're employed by firms that pay more to their executives? I'm also interested in exploring further that you, as a socialist, are now rejecting the time-honored socialist tradition of portraying the global economy as a zero-sum game. What changed?

 

[Crezth]

There are not enough rolleyes in the world to express my feelings. Anyway (and boy, am I a patient man):

Yeah I hate it when people disrupt my poorly thought-out pre-conceived notions with facts and figures, too.

1- If I said "the most egalitarian countries in the world" that means I already acknowledge that some countries are more egalitarian than others. Denmark is much more egalitarian than the US, and that's reflected in average executive pay.

Okay, but in terms of executive compensation (which the proposal this thread is about is dedicated to) the US still has a massive ratio, by comparison to literally any other country in the world.

2- My point was precisely that in even highly egalitarian societies where take-home pay is much more equal than in the US, you still have billionaires, people worth far more than the CEOs of Goldman Sachs and JP Morgan combined.

Really? There are only 1,200 billionaires in the world. How many of those are American and how many aren't?

You're confusing the issue by saying "But aha! Maximum wage wouldn't stop the wealth gathering - in fact, there's no way to stop the wealth gathering! So just give up." They're two separate concerns: executive compensation and the profits obtained via capital investment are not the same thing. When it comes to capital gains, that is an issue that must be dealt with using, say, capital gains taxes.

3- What I meant, therefore, is that by capping wages you will not get rid of the super rich at all, and if their existance is what annoys you, you'll have to do much more than that. Like getting rid of property rights and capitalism broadly defined.

Jesus Christ, this is a monumental leap of logic and I love how you champion yourself as the "reasonable" one here. "There's no way to reduce the wealth gap without completely annihilating capitalism! Begging the question? What's that?"

Capping wages is a separate issue from dealing with the ultra-rich and is meant to address the runaway corporate culture in the United States.

Well, I'm a defender of the 100%, but that's beside the point. How would I defend a graph with figures but no explanations of why things changed? I wouldn't.

Well you could take a shot at explaining why they changed, but if that took effort and/or introspection I can see why you might not want to do that.

Like the "average" American worker, or CEOs of other countries?

You say "average" as if the median wage is actually way higher than the average. In fact, it's lower.

The CEO-to-worker comparison is a ratio that is constant within a country and can be compared to other countries. There's no point in creating a ratio on a between-country basis, especially to compare a country that might actually have worse labor practices than the United States.

If your argument, therefore, was that "there are worse places to live" then I must applaud you for your defeatist sentiment and devaluing of the complaints every American has ever had about anything ever.

 

[zjintz]

There are not enough rolleyes in the world to express my feelings. Anyway (and boy, am I a patient man):

1- If I said "the most egalitarian countries in the world" that means I already acknowledge that some countries are more egalitarian than others. Denmark is much more egalitarian than the US, and that's reflected in average executive pay.

2- My point was precisely that in even highly egalitarian societies where take-home pay is much more equal than in the US, you still have billionaires, people worth far more than the CEOs of Goldman Sachs and JP Morgan combined. Wages are not the reason behind most of the super-fortunes, capital is.

3- What I meant, therefore, is that by capping wages you will not get rid of the super rich at all, and if their existance is what annoys you, you'll have to do much more than that. Like getting rid of property rights and capitalism broadly defined.

To put in football terms, Drogba will never be as wealthy as Abramovich, no matter how high is his wage.

And I can't prove it but I'm sure Droga pays higher taxes.

 

[amadeus]

Okay, but in terms of executive compensation (which the proposal this thread is about is dedicated to) the US still has a massive ratio, by comparison to literally any other country in the world.

There you go again with cross-polity, cross-society reductions!

 

[GoodGame]

So, what if a hypothetical government of a hypothetical country decided to promote social cohesion and lessen income disparity by introducing a maximum wage? That is, a fixed number beyond which all earnings would be subject to a 99% income tax (or something with a similar effect). The maximum wage could of course be set at different levels for different sectors of the economy, in order to promote some at the expense of others. Say, the maximum wage in the financial sector would be set far lower than that in industries which actually produce something.

What effects would that have, in your opinion?

Categorically, that's the same as saying let's have a progressive tax system (we already do) or similarly "no tax cuts for the rich". I can't imagine any nation bothering to have a 99% tax rate tier. What trillionaire would bother to aspire to that income bracket?

 

[Crezth]

There you go again with cross-polity, cross-society reductions!

Yeah and the parallels make perfect sense no matter what you compare! Using a ratio to compare wealth distribution is exactly the same as comparing absolute wages!

 

[amadeus]

Well you could take a shot at explaining why they changed, but if that took effort and/or introspection I can see why you might not want to do that.

I did not identify this as a problem or introduce the graph, but I'm saddled with the burden of explaining the change? It doesn't sound like I'm the lazy one here.

 

[Cheezy the Wiz]

So what matters is the employee-employer relationship and not disparity in the aggregate?

They're not mutually exclusive, and I have never stated such.

So Americans that earn 50x their Indian counterparts are exploited because they're employed by firms that pay more to their executives?

Yes.

I'm also interested in exploring further that you, as a socialist, are now rejecting the time-honored socialist tradition of portraying the global economy as a zero-sum game. What changed?

This has not happened. In the larger sense, yes, an American teacher must be paid $50,000 a year to survive because there are people in India who make so much less than he does; there is a line that can be drawn between the two, but it is a very long one. But the cutting of teachers' salaries, as you have proposed, does nothing to help the Indian worker who makes 1/10 of what they do. Wage caps almost exclusively affect the workers within a company. There is no reason to expect that this would create any sort of financial problem within that company at all either: if the bottom line is maintained when the salary cap is installed then as executive wages fall, worker wages rise. Despite that trite quote by Churchill, we don't want to see equal sharing of miseries, we want to see equal sharing of prosperity. As things are, only a few people benefit from the hard work of myriads. Despite the droll musings of neoliberal "morality," you cannot argue that society is worse off because of this.

 

[Mise]

Okay, but even in European countries like Germany, Japan, Italy, etc., the CEO-to-worker pay ratio is much, much lower than 400:1 (I think it's 30:1 in Germany, but I am not sure). So it's not just Japanese corporate culture that differs from the United States corporate culture.

As I said before, excessively high corporate pay in the US is a symptom of particular corporate governance problems in the US. Tackling CEO pay merely disguises the symptoms and does nothing to tackle the underlying cause.

And again, I don't see a 400:1 ratio as being "worse" than a 30:1 ratio, so there's really no point telling me about that.

Furthermore, what is it about US corporate culture that is worth preserving? Could it be the lack of accountability? The obsession with profits over other tangible results? The proclivity towards business implosion that doesn't effect executives at all thanks to golden parachutes?

There is a LOT about US corporate culture that is worth preserving. It's no coincidence that so many of the world's largest and most successful corporations are American.

I would elaborate but it doesn't seem like you're interested in doing much else than bashing CEOs. If you actually cared about the underlying causes of excessive CEO pay, you wouldn't try to get American bosses to be more like Japanese (or Italian or German) bosses; you would instead be trying to strengthen minority shareholder rights, promoting more activism among insurance companies, pension funds and other long-term institutional investors, and separating the role of CEO and Chairman of the board. It's a boring and technical conversation, but it's the right way of solving the problem.

 

[Crezth]

I did not identify this as a problem or introduce the graph, but I'm saddled with the burden of explaining the change? It doesn't sound like I'm the lazy one here.

Well, the accepted left-wing explanation is that the change came about as a result of poor regulation, upper class-friendly legislation, and lower taxes on the highest brackets.

The question of "why" is something that must be tackled generally, I agree, but it looks like an issue of greed. Why are the upper-class earning more money while the middle-class earns the same amount of money that it has earned for 40 years?

There is a LOT about US corporate culture that is worth preserving. It's no coincidence that so many of the world's largest and most successful corporations are American.

I would elaborate but it doesn't seem like you're interested in doing much else than bashing CEOs. If you actually cared about the underlying causes of excessive CEO pay, you wouldn't try to get American bosses to be more like Japanese (or Italian or German) bosses; you would instead be trying to strengthen minority shareholder rights, promoting more activism among insurance companies, pension funds and other long-term institutional investors, and separating the role of CEO and Chairman of the board. It's a boring and technical conversation, but it's the right way of solving the problem.

Actually, please elaborate. If I'm mistaken I want to know.

 

[luiz]

Yeah I hate it when people disrupt my poorly thought-out pre-conceived notions with facts and figures, too.

Your first post did not address at all what I was saying. I said: "even the most egalitarian countries have super-rich people" to which you reply "Aha! There are countries where wages are less unequal than the US, gotcha!"

How's that not frustrating?

Okay, but in terms of executive compensation (which the proposal this thread is about is dedicated to) the US still has a massive ratio, by comparison to literally any other country in the world.

So what? Am I supposed to believe that high CEO wages harm "social coehesion" but billionaires worth 100 times more do not?

Really? There are only 1,200 billionaires in the world. How many of those are American and how many aren't?

The US has 34% of all billionaires. The US also has over 25% of the global GDP. By comparisson, India has 4.5% of all billionaires but only 2.5% of the global GDP, and Russia is even more extreme, with 8.3% of all billionaires but just slightly over 2% of GDP. So the US is over-represented, but not by as much as you seem to think.

You're confusing the issue by saying "But aha! Maximum wage wouldn't stop the wealth gathering - in fact, there's no way to stop the wealth gathering! So just give up." They're two separate concerns: executive compensation and the profits obtained via capital investment are not the same thing. When it comes to capital gains, that is an issue that must be dealt with using, say, capital gains taxes.

No, you are failing to grasp what the discussion is about. The OP said that as we are fundamentally equal, it is wrong that some people are making so much more than others. He singled out CEOs. I pointed out that CEOs are not the people making the most money around, and in fact most of the super-rich do not depend on wages.

So how is capping wages fixing this particular problem? How are they fixing any problem? There's no salary cap even in Scandinavia, you know.

Jesus Christ, this is a monumental leap of logic and I love how you champion yourself as the "reasonable" one here. "There's no way to reduce the wealth gap without completely annihilating capitalism! Begging the question? What's that?"

Capping wages is a separate issue from dealing with the ultra-rich and is meant to address the runaway corporate culture in the United States.

Countries like Denmark and Sweden already have highly progressive taxes, a large welfare state and have achieved great equality (I'm not saying that's necessarily good, just stating facts). And they still have super-rich folks. How do you propose getting rid of them? You'll have to go much beyond even what Scandinavia does.

 

[amadeus]

They're not mutually exclusive, and I have never stated such.

Fair enough.

But the cutting of teachers' salaries, as you have proposed, does nothing to help the Indian worker who makes 1/10 of what they do.

It definitely could! The money saved by paying less to the staff at Egalitarian High could go into some fund to provide microfinance loans, build infrastructure, be used for capital goods to make Indian labor more productive, or education in India itself. If every dollar earned by a CEO takes a potential dollar away from the company's employees, it should stand to reason that every dollar everywhere comes, at some point, at the expense of everyone else.

Despite that trite quote by Churchill, we don't want to see equal sharing of miseries, we want to see equal sharing of prosperity. As things are, only a few people benefit from the hard work of myriads. Despite the droll musings of neoliberal "morality," you cannot argue that society is worse off because of this.

"Sharing" in socialism is kind of like how a rape victim "shares" their body with the rapist. It's an unpleasant comparison, but your brand of socialism has a much more unpeasant history.

 

[Cheezy the Wiz]

It definitely could! The money saved by paying less to the staff at Egalitarian High could go into some fund to provide microfinance loans, build infrastructure, be used for capital goods to make Indian labor more productive, or education in India itself. If every dollar earned by a CEO takes a potential dollar away from the company's employees, it should stand to reason that every dollar everywhere comes, at some point, at the expense of everyone else.

What you are advocating is a society-wide imposition and redrawing of all finances and monetary values, if you expect to lower the entirety of American financial interactions to the Indian level. Even I'm not that reckless. I mean, yes, the ultimate goal of communists is to create a world absent of disparities of wealth, but that's the result of a very long process. If there were a worldwide revolution tomorrow and I lived to be a hundred years old, I would never see anything remotely resembling communism, and my children probably wouldn't either.

And anyway, I don't believe the standard socialist line is that we've harvested all possible wealth, merely that what has been harvested is a finite amount, as well as that there is a finite amount existent than can be harvested. Money doesn't spring forth from thin air; objects of value are created by people, and all the people involved have a right to a share in the rewards of that process. A silly piece of paper doesn't make one person's contribution of tools more valuable than the contributions of people who use the tools. People like you use the "no zero-sum game" to argue that everyone can create their own wealth, but that's simply not true. Wealth creation, aka commodity production, is a social process. Why you can't understand that is beyond me.

"Sharing" in socialism is kind of like how a rape victim "shares" their body with the rapist. It's an unpleasant comparison, but your brand of socialism has a much more unpeasant history.

If it is so abhorrent to you, then please, by all means become the Lucretia in that comparison of yours, when things come to pass.

 

[HannibalBarka]

I don't really think CEO "deserve" the wages they are having because (I am talking more about France here, it may not apply in other countries):
1. It is very often decided by other CEOs: in many companies in France, member of the board of a given company are CEO and ex CEO of other companies. the process of defining the CEO psalary is far from being "democratic" even in the capitalistic sense. In family owned companies, CEO makes much less money even when they are not part of the family.
2. There is barely any "pay back" mechanism:We may justifie the big gains CEO make when they manage their companies very well if there is a counter mechanism, very often there is none, and CEO end making huge money whether their company work well or not.

Now that being said I am against establishing any kind of "maximum" salary because:
1. it may be shortcut,
2. there are indeed some CEO who deserve their pay. Steve Jobs was one of them for example. I am sure Warren Buffet would deserve a 10m$ salary if he gets hired by a bank or a hedge fund as he is probably going to make his employer make even more money.
3. I'd sometimes rather see "talented" people get paid millions from the poket of capital owners than those million remainning in the capital owner's pocket 'especially when said owners did nothing but be born in the right place).
4.Tax is the way to "fight" inequality et distribute money among people not limiting salaries.

 

[Arwon]

The only sport that matters, football, has no salary cap whatsoever

But as for the ones that do have a cap, I suppose the sport execs find a way to make sure the most talented players end up receiving much more than their salary. How much does Lebron James get out of marketing contracts? I bet it's much more than your average NBA player. That meas in effect there is no cap. So while the cap may boost competition between the teams, they do nothing to enforce equality of wages among players.

Yeah and that's why football is so uneven and boring with the same teams winning year-in-year-out.

The thing with American sports is that nobody else plays them, so the top atheletes can't really go overseas and make more money elsewhere. There's a monopsony market there. The same thing is true of Australian Rules Football, which is a sport unique to this country. Rugby League and Rugby Union are actually interesting, because players can move overseas, and some do, particularly with Rugby League players heading to Europe.

Sports with a salary cap also typically tightly control player recruitment, either through a draft system or through feeder leagues and zones. Players can't just be recruited willy-nilly, there are binding contracts and league rules about movements. The AFL has a trade window where players can only be traded between clubs for 2 weeks at the end of each year. Some leagues actually make an exception, allowing one or two "franchise players" to be paid an unlimited sum outside the cap. The NFL in the US does this, and Australian soccer's A-League uses it to attract international talent (or our own stars who currently play elsewhere).

The point of the salary cap is to equalise the ability of teams to obtain talent, making sure that teams compete solely on their ability to make good draft picks and recruitment decisions and to innovate in tactics and training. So individuals having the ability to get external contracts based on their own star power is actually fairly independent of that, since LeBron can make that marketing money at any club.

And, additionally, most leagues actually regulate third-party arrangements quite tightly, because of the capacity for abuse. In the case of Australian Football, we've seen players given part-time jobs with club sponsors (my team the Sydney Swans have a policy that all players should work or study one day a week. Some players sutdy, one guy with a finance degree now works at Citi, etc), but the AFL actually investigates and scrutinises each individual deal for whether it was used in attracting or retaining players at the club.

My guess is that if football were to ever go mad and impose a salary cap, it would be an agreement by the biggest clubs in Europe to limit their spending on wages to some extremely high ceiling (say, half a billion euro). The purpose wouldn't be equality, but to prevent a spiraling arms race whilst ensuring that Barcelona can still out-spend Zaragoza and Manchester United can still outspend QPR. Still not likely, of course.

(Yes I am a nerd for sports administration too)

 

[Leonel]

I've had ideas for a maximum wage myself. I would think something like a 20:1 ratio between the highest and lowest earner in a company and it would have to be fine tuned so that CEO's don't try to wiggle around it by having McDonald's Customer Center where they make all the burgers and McDonald's Executive Center where the executives work as being two separate companies. So for example, if the lowest paid worker gets like 20k a year, the highest paid would get 400k a year according to the 20:1 ratio and this would probably include bonus' because 400k is a massive amount of money still. Heck I might even bump it to a 30:1 scale.

 

[Rashiminos]

There are other means to acquire wealth than through wages, and other means to acquire the oft-intended result of wealth. As it currently stands, such as measure would likely be used to placate certain demographics instead of employed to reduce inequality in society as a whole.

 

[Crezth]

I've had ideas for a maximum wage myself. I would think something like a 20:1 ratio between the highest and lowest earner in a company and it would have to be fine tuned so that CEO's don't try to wiggle around it by having McDonald's Customer Center where they make all the burgers and McDonald's Executive Center where the executives work as being two separate companies. So for example, if the lowest paid worker gets like 20k a year, the highest paid would get 400k a year according to the 20:1 ratio and this would probably include bonus' because 400k is a massive amount of money still. Heck I might even bump it to a 30:1 scale.

I would love this.

 

[amadeus]

You would love it if companies fired their low-paid employees and moved those jobs overseas?