thegreekdog wrote:
I'm confused by your answer to 8. What prevented CEO salaries from being so high prior to the last 20 years or so? To my knowledge there were no laws, regulations, professional guidelines, or ethics manuals preventing CEOs from having salaries 100 times that of the company's employees.
Owners and unions, primarily.
to get back to the questions..( believe these are the ones you asked me to address?)
thegreekdog wrote: stahrgazer wrote:While this is true, it's also true that in the past 4 decades, CEO salaries have risen until they make like 100x of what their lowest worker makes, whereas before that, they made only about 10X what their lowest worker made.
It started around the same time Congress voted themselves a 100x raise. Coincidence? Maybe not.
Anyway, that's why groups like "Occupy Wall Street" are protesting, and that's why liberals and some otherwise-conservatives (like me) think there's something wrong with the US economic portrait.
Each ceo that makes 100x his lowest worker is taking up the funds that could provide for 25 or more jobs, and in many cases, they have laid off workers in order to meet their "profit" quota to get their bonuses.
I guess I have a few questions for you:
(1) Do you think if CEO salaries now were more in line with CEO salaries 40 years ago, there would be a recognizable difference in the incomes of the large majority of people in the United States?
You might need to go back a bit further than that.. before the tech boom "blip" skewed a lot of things, but absolutely.
However, to really get lasting prosperity means ALSO getting a handle on debt.. personal and otherwise. However, regardless of that, more money in the pockets of average people absolutely means general prosperity.
thegreekdog wrote:
(2) If companies did not pay their CEOs such exorbitant salaries, where do you think the money would go? Do you think companies would spend on infrastructure or more employees or better employees salaries? See question (4).
(3) How do you propose to get companies to pay their CEOs less money?
(4) How do you propose to get companies that pay their CEOs less money to pay more money to employees? Could companies pay shareholders more? Could companies keep more cash on hand?
(5) How many CEOs make too much money?
(6) How much money is too much money?
(7) Multiply (5) by (6) and we have the amount of available money for spending by companies on something other than CEOs. How much do you think that is?
These are the wrong questions.
Or rather, Stargazer answered with the only answer there is. CEOs will take whatever they can. Simplistically (yeah, there are corporate donations, some research, etc..) the goal of a corporation is to make as much money as it can. Anything else is, almost by definition, external, an impediment given traditional business models.
I don't argue it HAS to be that way, I say it is that way.
The only way to limit this, right now, would be through law. That is almost impossible because the large corporations, they system that supports them is so powerful.. and most people are already so vested (whether they want to admit it or not) that major change is simply not something people will consider.
Similarly, the only way to ensure where the money went would also be through law.
BUT, you are also focusing on the wrong issue. You are focusing on what is actually symptom, not the root cause.
The root cause is that we have a system that is almost solely controlled and dictated by profit. Profit is not evil, money is not evil, but when pursuit of money and profit are your primary or sole focus, a lot of good gets pushed aside and a lot of damage is ignored.
Some would call that evil.
thegreekdog wrote:
(8) How do you think CEO salaries got so high?
Because they could. People are inherently greedy. People value things other than money, of course, but people who reach CEO status tend to be highly motivated by money and power and tend to be adept at aquiring both.
PS the longer answer to your first few questions is that people were more and more encouraged to think that their prosperity, their future is vested in the stock market. Average people began to invest through mutual funds, IRAs, etc. You may forget, but these are relatively new inventions. Reagan -- some say intentionally, some say in what he thought would be a temporary measure and some say just without fully thinking out long term consequences (myself..Reagan was no dummy), did away with the SS trust fund, effectively (yeah, I know technically he didn't) and thus put what up until then had been, with pensions what most people relied upon to reture. Allt his was replaced with a dream of stock-based retirement, early 401Ks, etc. Pensions, too almost all went out the way as companies folded, people lived longer... etc.
Anyway, average people began to feel that they depended on the success of corporations. Corporations were no longer a remote entity, but something that would net them their retirement... so they were willing to overlook a lot. A high paid CEO was deemed OK, if that CEO generated stockholders profit. Note that many of these CEOs are very adept at convincing people they are correct, at gaining both money and power. As one CEO took a bit more, then others began to feel they had the right to do the same.. so the race to the top began.
Fast forward to today and we still have many CEOs making millions while the unemployement rate rises and gross wages for average people, those NOT making 250K, erode. Not cooincidentally, we also have Enron, Murdock, etc. etc. We have drug companies that cut corners, car and other companies that ignore warnings....etc,etc, etc. (no industry is immune and all have some decent players involved)
Some of that has always happened. But what has changed is the impact this has on average americans and the world.