What is a good rebuttal when people talk about CEO’s “hoarding” alot of money. A teacher recently said that for every $1 a middle class man earns a CEO(from the top 100 companies) earns $1000+.
Should I claim that since he was willingly given this he earned it, or that the stockholders can take their money out if they have a problem with the CEO reaping too much.
Thanks.
Yeah. Bob Murphy has a section on CEO pay in his PIG to Capitalism, where he argues that their pays are highly risk- and performance-based, much like that of an advertiser’s. They can either make a firm huge profits, or huge losses. Reisman has an article on how financial shenanigans by central banks can bloat CEO pay, though.
Since the current system is not a free-market you can’t explain CEOs’ salaries only in terms of free market economics…
Look at the CEOs of the financial and car industries…a lot of them ran their companies into the ground while being paid a fortune…That’s…weird…no ?
Yep, which is why I referred to the Reisman article.
While the stock market was soaring to 14,000, people didn’t think the companies were being run into the ground.
The issue was and always will be transparency. Now the question is, do the CEO’s themselves limit transparency, or is it systemic? If the CEOs do it, there might be a case for fraud. If not, and it is systemic (as I am prone to believe as accounting standards are a popular area for state intervention), then it is hard to blame CEOs for making a big profit, anymore than it is to blame a shareholder who sells right before the crash.
But they were.
Maybe people at the top of the hierarchy are interested in limiting transparency and they have the means to do so ?
The point is both CEOs and stockholders benefit from state intervention. If your happy with capitalism being blamed for the problems created by the state, then by all means, cheer the ‘great’ CEOs and explain how they ‘deserve’ their salaries as if they earned them in a free market when they actually didn’t.
My argument is that if CEOs get more money than their worth then there is obviously room for other businesses and corporate take over financiers to either compete with these companies or buy them out. Furthermore if these folks actually believed this envy crap then they would put their savings in the hands of less highly paid CEOs of competing companies who would run the other companies with the high paid CEOs out of business.
My other argument is for the folks to eliminate envy from their lives and follow this not so old Austrian Economics proverb:
If you hate the trade deficit then stop measuring it.
There are several hundred of these but the one most appropriate here is:
If you are envious of CEO pay then stop measuring it.
I never excluded this possibility. However, a possibility is not proof of a fact.
Without a doubt. Employees too. Not just the CEO. The CIO, CFO, all members of the board. Everyone down to the janitor benefits. The shareholders and their stock brokers.
People who want to blame capitalism will find a way to do it no matter what, even if they have to invent bad guys, libertarian sects or false histories.
Juan, I have no interest in spending today with both of us talking past each other.
While it’s true that people envy CEOs just because they make lots of money, it’s also true that part of that money is ‘made’ thanks to the fact that the market is regulated. Not to mention outright criminal types like madoff…
Okay =]
The only way that is safe from using arguments that cope with “earned” is to argue that there is nothing like an objective value. If those that pay the CEO -given he is not the entrepreneur itself but paid for his services- belief the amount they paid is worth ti than that is what he gets paid. The idea that labor is the basis for a price is a fallacy. Every price, this includes the payments to a CEO as well as for a janitor is always what both sides consider to be aceptable.
sometimes people in sports get the big bucks.
sometimes those same sportsmens teams loose.
…mysterious…
No…they were still taking the risk. The risk did not pay off for them, but many CEO’s have guaranteed contracts that are not reliant on actual successes or failures. Many of these companies are highly reliant on market forces, and can not purely have their problems blamed on the CEO’s.
I don’t suppose you have a link?
Yes.
Your teacher is just pissed that CEO pay rises at a multiple of inflation because banks use margin to purchase stocks (the bulk of CEOs get paid via stock options). And through this counterfeiting scheme, only those on the front-end gain. Your teacher is complaining about the effects of inflation brought on by his/her observation that there are some who are becoming wildly rich for performing the same amount of work without bringing any more value to the process. The correct response to your teacher should be “CEOs would only get paid as much as the value they bring to a company if our money supply was in turn based on something of value.”
I think CEO pay wouldn’t be so vast in a truly free market environment. Corporate profits wouldn’t be so high without monetary inflation, so investors wouldn’t be so generous with the perks.
I don’t think CEOs should be paid at all. In Ama gi’s world, the position of CEO would go to whoever invests to most money into a corp, and instead of a salary they would only get dividends on their investment.