John Gruber’s Daringfireball.net led me to
http://www.nytimes.com/2010/11/07/opinion/07kristof.html?_r=1
by Nicholas Kristof.
Gruber’s DF lead-in posed an interesting question.
Nicholas Kristof on U.S. Income Inequality Nicholas Kristof argues that the U.S. is at the level of plutocratic banana republics: CEOs of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.
Step back and (for the moment) avoid passing judgment on whether this state of affairs is good or bad. What’s fascinating is that against this backdrop, last week’s election went to the Republicans, who admit that their top priority is passing large tax cuts for the richest 2 percent of Americans. I know much has been written about this, but I think it defies easy explanation how economic policies that benefit so very few enjoy the support of so many.
Okay, my question is as follows:
How does one debate this point with liberals/progs?
I understand the simple point that what one earns, whether janitor or CEO, is simply no one’s business (perhaps not even the government’s), but I’m more interested in the implied connection between a a failing middle/lower class and the extreme rich making orders of magnitude more than their employees than they made in the past.
As a stockholder, I certainly don’t think the CEO’s of many of my companies deserve tens of millions of dollars (no matter what the revenues) when they are not the actual workers. But, as an owner of the company, I am within my rights to say so. As an outsider, I would not be.
Help me combat this. Please and thanks.
Moe Lane
PG DeFreese
Victoria Coates
Daniel Horowitz
Dan Spencer
Private company vs. Public company vs. Non-Union vs. Union
izoneguy (Diary) Tuesday, November 9th at 11:38AM EST (link)If the owner of a private company can make millions of dollars – more power to them. I know dozens of owners of private companies. Most have struggled for decades making no money at all for years on end. The success that most of them enjoy is hard fought and usually earned. Of course the left looks at them pull up in their Rolls Royce and say the workers are getting ripped off!!!! But they never take into account the risk that owner took many years ago to get where they are.
Now in a public company the board of directors usually determine what a CEO gets paid. The competition is fierce at the top end. It’s more like a CEO is a rockstar or star athlete.
Does the left rail on and bemoan the fact that some athletes get paid more than the guy selling beer at the game? No they don’t.
Does the left rail on and bemoan the fact that some movie stars get paid more than the guy selling popcorn at the movie theatre? No they don’t.
Business, be it manufacturing, sports, the movies are all capitalistic activities. The left just bemoans the fact that we are not like Cuba or Venezuela, where everyone is equally miserable.
So why is it fair for leaders like Castro and Chavez to live like kings and ripoff anything they like?
The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.
Short answer
eastbaylarry (Diary) Tuesday, November 9th at 2:35PM EST (link)No poor person and very few ‘middle class’ people ever created a job.
2+2=4 dammit!
But
jccbin (Diary) Wednesday, November 10th at 10:24AM EST (link)this does not debate the point being made. Sure, only those wealthy enough to have capital can fund jobs, but what is the advantage of having more wealth in fewer hands?
What have all these executives earning 500X their least employee’s wage done that the executives earning 20X or 50X or only 100X in decades past?
So far, two excellent points, but not an argument I can use against the stats quoted.
As a shareholder,
proudmarinemom (Diary) Wednesday, November 10th at 11:24AM EST (link)You can vote. If you object to the way the company is run, tell them. If they do not listen, sell.
What you’re asking here is how to debate the liberal position that a national government should run private industry.
Here’s how I’d debate it: Under the U.S. Constitution, national government powers are limited. The Constitution does not grant government the power to run businesses. Under our Constitution, the free enterprise system must be allowed to work without government interference. The problems start when government gets involved and tries to prevent failed businesses from suffering the consequences of their own failure. Government makes the failure worse. Look at GM.
Government meddling in private industry does not succeed in redistributing wealth from CEOs to workers, it simply creates a new class of CEOs in Congress and the White House.
Workers have never been better off under a system of government that strays from our Constitutional limit of powers.
Unfortunately, the long answer requires
eastbaylarry (Diary) Wednesday, November 10th at 11:50AM EST (link)an inherent belief in the Capitalistic ‘Free Market’ system. Probably most Conservatives already hold this belief, but your typical liberal will claim that this system has failed. Well, ask them ‘Failed How and Why?’
How: They will cite the statistics in your main article and ‘claim’ that this proves the system ‘rips off the little guy’, even though those of us still lucky enough to have a job are much better off than the equivalent person in most other countries. But the really scary and out-of-control capitalists are those like George Soros who has dedicated his life and fortune to destroying Capitalism and ending American Exceptionalism.
Why: If the Capitalist system is failing or has failed, it is because of the efforts of people like Soros through labor unions, ridiculously restrictive regulations and government take-overs. In short, the ‘free market’ is no longer free and cannot provide the general prosperity that it did 50 years ago in the current environment.
So why the huge bonuses? That is a reflection of the imbalance caused by government intervention in the free market. It may be irritating to see a big bonus go to an executive of a company that had to be bailed out due to their poor business practices, but from the perspective of that companies board of directors, that executive did a tremendous job in ‘turning around’ the company and avoiding bankruptcy.
It’s a matter of perspective.
2+2=4 dammit!
I am asking something different, I think.
jccbin (Diary) Friday, November 12th at 2:57PM EST (link)I want to know specifically about the statistic quoted. 500X the wage of lowest-paid employee versus 40X the wage of the lowest-paid employee.
If America was awesome and great in the 80s when the 40X stat was in force, is it moreso these days? Less so? Does this particular stat have ANY relationship with the reality of a “dwindling middle class,” or is it just a easy-to-spout number with a good punch factor?
While I worship capitalism, even the most capitalistic among us knows that usury is wrong. We would not defend a Title Pawn Shop’s desire for 4,000 percent interest even as we would recognize, begrudgingly, the need for short-term loans.
How is a CEO SALARY (not bonuses, not stock options) that is 500X bigger not also usury?
For instance, a CEO who earns $1million a year might consider himself wealthy enough to ship those funds to the banks of fiji (like the Kennedys), but one whose salary is $10million or $50million might take a large part of those funds OUT of the US economy.
Also, if a CEO’s relative value to the company has increased that much, why haven’t the values of the other employees also increased? Upper management’s greatest value is among the hardest to predict because they are leaders, not widgetmakers, and it makes sense to tie their pay to successful results, however, the quality of the workforce also matters. Is it reasonable to think that the quality/value of ditchdiggers has only increased at the same rate as inflation while those who determine the pay scales have seen exponential increases in their pay?
Again, I’m asking for advice to combat these arguments.
It's really a red herring
eastbaylarry (Diary) Friday, November 12th at 3:49PM EST (link)Pay rates, including bonuses are used to attract the required talent. That’s the free market.
Do todays’ CEOs have ‘more talent’ than they did in the 1980s? Probably, if they are successful in steering the company through todays’ regulatory and tax codes and still show a profit. The top exectives of a large corporation have a lot more to worry about today than they did 30 years ago.
That said, yes there are some examples of outrageous bonuses going to executives who seemingly could not turn a profit on a lemonaid stand in the middle of the desert. But what does that mean? Did their bonus come out of your or my pocket? Only in the sense that poorly run companies are a drag on the over-all economy.
What do your liberal friends suggest needs to be done about this situation? Do they want to nationalize all businesses? “Wage” controls on the “rich”? I think this is where you need to focus your replies. Ask them what they think should be done, then explain how that would throw gravel into the crankcase of an ailing machine.
2+2=4 dammit!
Look at it this way
Neil Stevens (Diary) Friday, November 12th at 4:03PM EST (link)How are you going to hire a capable, experienced person for less money?
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It could be that...
ceili_dancer (Diary) Friday, November 12th at 5:14PM EST (link)During the 80′s a lot of pay packages were incentivized (sp?) with options and stock offerings. If the company did well the stocks also did and thereby increasing the rate of pay they recieved.. I think it started with Lee Iacoca (sp?)(again). I think his base salary was $1.00 a year and was paid through the performance of stocks.
You could almost take it into the professional sports field. the pay that athletes get now compared to before free agency would be a great allegory to the pay of executives. The competition to have the best talent on your team pushed it higher than anyone expected and just to be a viable team or company you needed the incentives to have the athlete/CEO sign the contract.
Does that help any?