Keith in a really bad mood...here's why

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Keith in a really bad mood...here's why

Postby William Thornton » Wed May 28, 2014 6:49 am

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Re: Keith in a really bad mood...here's why

Postby KeithE » Wed May 28, 2014 7:22 am

William Thornton wrote:Median CEO pay crosses $10 million

Further evidence that Piketty is right especially in the USA.

Is there any limit you will accept William? Or are you stuck in some theoretical ideology of take what you can (freedom entitles one to pay themselves whatever they can get any with).
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Re: Keith in a really bad mood...here's why

Postby William Thornton » Wed May 28, 2014 8:32 am

KeithE wrote:
William Thornton wrote:Median CEO pay crosses $10 million

Further evidence that Piketty is right especially in the USA.

Is there any limit you will accept William? Or are you stuck in some theoretical ideology of take what you can (freedom entitles one to pay themselves whatever they can get any with).


Agreements between private parties with full disclosure and a route provided to shareholders to change are none of the gummit's business. If we think that is too much income then we can tax it.
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Re: Keith in a really bad mood...here's why

Postby KeithE » Wed May 28, 2014 12:32 pm

William Thornton wrote:
KeithE wrote:
William Thornton wrote:Median CEO pay crosses $10 million

Further evidence that Piketty is right especially in the USA.

Is there any limit you will accept William? Or are you stuck in some theoretical ideology of take what you can (freedom entitles one to pay themselves whatever they can get any with).


Agreements between private parties with full disclosure and a route provided to shareholders to change are none of the gummit's business. If we think that is too much income then we can tax it.

Controlling the economy when it runs amok in bringing about our "general welfare" is certainly a legit role for "gummit". But if you insist otherwise and are open to tax solutions, taxing the top end marginal rate at 90-100% of income over ~$1.5M/year would be a fine step forward (like we did in the 50's). Even returning to the 60's/70's top rates of ~ 70% would help. Will you join me in promoting that?

Image

We have 22% childhood poverty in this country. You and I may be sitting pretty comfortable, but many are not.

I doubt your "route provided to shareholders to change" excessive salaries has turned an excessive salary to a realistic one very frequently (those meetings have fired many). It is certainly not the norm these days as your link above attests.
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Re: Keith in a really bad mood...here's why

Postby William Thornton » Wed May 28, 2014 7:10 pm

After all these years I recognize that you have a heartfelt compassion for the poor but also a tremendous resentment towards the wealthy. Sorry to have brought you such bad news in that there are highly paid individuals.
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Re: Keith in a really bad mood...here's why

Postby Dave Roberts » Wed May 28, 2014 8:01 pm

Is getting all you can a societal good? Evidently conservatives think so, even if it means paying those who work hard for minimum wage a wage that is far below a living wage. I think shareholders have a responsibility, but I wonder how many of us are shareholders in these companies through pension boards of the various Baptist entities. I wonder if our boards look at the ethics of the companies in which our money is invested other than being certain they don't own alcoholic beverage and tobacco stocks.
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Re: Keith in a really bad mood...here's why

Postby KeithE » Wed May 28, 2014 8:06 pm

William Thornton wrote:After all these years I recognize that you have a heartfelt compassion for the poor but also a tremendous resentment towards the wealthy. Sorry to have brought you such bad news in that there are highly paid individuals.


Didn’t really think you were up for the higher tax rates like in the 50’-70’s.

In all candor I have no “resentment" towards the wealthy (even those more wealthy than myself). I do not lay awake at night grumbling at them wishing I had more. I do worry about our economy especially the poor and our grandkid’s habitat/economy.

Four economic changes we need to make in this country return to its better days are:

1) more jobs in future enhancing arenas even if gummit has to create and pay them with temporarily larger deficits
2) money flowing down the economic chain, increasing the aggregate demand
3) an end to tax avoidance and evasion largely through offshoring
4) an end to highly leverage risky investments via enforcement of Dodd-Frank or modification thereof

The fact that the wealthy's gravy trains need to be upset to make this country truly prosper is tertiary in my motivation.

I do recognize your overriding concern for the freedom of the few and the principle of freedom. But to me your anti-government ideology trumps common sense in the name of freedom (for a few) and if followed will continue to badly hurt our general welfare, our democracy, equal justice, equal opportunity, morale, and freedom (for all).

People in the bottom 80% (increasingly so, the lower they are) do not have the “freedom” to live in a nice safe neighborhood or have equal quality schooling or afford higher education (in short climb the economic ladder as easily); some even struggle for food, shelter and clothing and may go into criminal activity to make a living; others depend on “gummit” handouts (which the RW is trying to eliminate). Consider their “freedom” to do as they wish as well.
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Re: Keith in a really bad mood...here's why

Postby Sandy » Wed May 28, 2014 8:08 pm

I have trouble figuring out what kind of work one person can do that merits that kind of pay. There's only so much expertise and creativity that a single human being can have.

Of course, there is a Biblical, Christian statement about the love of money being the root of all evil. This is a great illustration of that principle. Of course, conservatives conveniently ignore the Bible when it doesn't support their view of the way things are. It only becomes imposed when it fits their agenda. When it doesn't then you get some answer about how the world isn't necessarily bound by its moral perspective.
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Re: Keith in a really bad mood...here's why

Postby William Thornton » Wed May 28, 2014 8:17 pm

My income redistributionist friends do realize that most of the large CEO pay is from stock? Meaning that millions of shareholders benefit?

Not that it makes any difference to the soak the rich crowd.
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Re: Keith in a really bad mood...here's why

Postby KeithE » Wed May 28, 2014 9:23 pm

William Thornton wrote:My income redistributionist friends do realize that most of the large CEO pay is from stock? Meaning that millions of shareholders benefit?

Not that it makes any difference to the soak the rich crowd.

There were 170 CEOs (or other high company officials) that had over $10M/year in salary alone in 2012. Read the Forbes List. Your article said that the median CEO compensation grew to over $10M/year in the S & P’s 500.

Now look back at the Forbes List and you will see high compensation in terms of stocks owned on top of that $10M median in salary usually greater than their current salary and often greater than even their last 5 years of salary. I do not believe this includes unexercised stock options and certainly doesn’t include their cash allowances (average of Fortune 500 CEO’s get $32,108/year) which exceeds the wage that many of their employees get. Even their free financial advice averages about that of a min wage earner.

And those owners (and other wealthy people, many from inheritances) own the great majority of not only their company stock, but of stock in general. Sure “millions” who have 401Ks have some stock/mutual fund holdings. But the bottom 90% only holds 19% of stocks and mutual funds. As such the wealthy control the actions at stockholder meetings.

Image
Source: Who Rules America. Read it, if you would be so kind, William, and tell us who has already gotten “soaked” over the last 30 years and who has slurped up the proceeds.

Image
That share of Income for the Top 1% has shot up to 19.3% in 2012 (2013 figures are not available yet).

The largest problem is that the money is squirreled away not servicing our economy, which would help all both now and in the future.
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Re: Keith in a really bad mood...here's why

Postby William Thornton » Thu May 29, 2014 7:04 am

...and we need gummit to unsquirrel all that money and put it into vast porkulous programs and hordes of new, non-productive bureaucrats?
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Re: Keith in a really bad mood...here's why

Postby KeithE » Thu May 29, 2014 7:42 am

William Thornton wrote:...and we need gummit to unsquirrel all that money and put it into vast porkulous programs and hordes of new, non-productive bureaucrats?

Speaking of a bad mood! Have you not heard Government is Good? Or at least it can be if funded adequately and held accountable, instead of lampooned.
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Re: Keith in a really bad mood...here's why

Postby Sandy » Thu May 29, 2014 9:05 am

William Thornton wrote:My income redistributionist friends do realize that most of the large CEO pay is from stock? Meaning that millions of shareholders benefit?

Not that it makes any difference to the soak the rich crowd.


Actually, shareholders are getting shortchanged. Regardless of where the money comes from, no one's work is that valuable. And if a CEO is getting that much in dividends, the stockholders are not getting the benefit of their investment. I don't have a problem with a CEO getting stock options and a salary, but what he gets needs to represent the value of his work, not his influence, position or title. And if that much is going into CEO pay and stock options, then that much less is being taken from potential job creation and pension funds.

I'm OK with a higher tax rate for these folks. They cost far more in maintenance of the infrastructure to protect their business and help make it profitable than I do. I shouldn't have to subsidize them with my tax dollars, and the way the tax structure is set up now, I do, and they don't pay for what they consume.
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Re: Keith in a really bad mood...here's why

Postby James » Thu May 29, 2014 10:53 am

My ThM thesis is titled The Ethics of the Guaranteed Annual Income. It looks at the idea indorsed by Robert Thoebald, a liberal and Milton Friedman, a conservative. In its simplest form, GAI proposed to give individuals living alone and families a basic income sufficient to meet basic needs-housing, food, clothing etc. In several European countries which have accepted GAI as the structure for those in poverty, the average length of a GAI grant is five years. People want to be self sufficient. They take the GAI use it to improve their situation. Whey they do not need it anymore, they leave the program. The chronic poverty rate hovers around 5%.

If the rich could see their way clear to help pay for such a program here in the good old USA, we could perhaps eliminate 95% of poverty, get our economic situation in balance and see the DOW at 5,000. The rich would be even richer than they are now and no one would care, because we would all be doing well enough.
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Re: Keith in a really bad mood...here's why

Postby William Thornton » Thu May 29, 2014 1:54 pm

We already have a hybrid of the GAI/negative income tax in the EIC. Fraud is a problem with the latter, of course. If the program is added on top of existing welfare and in-kind payments then it makes much less sense. I have no doubt that liberals would be happy to tax the wealthy to transfer to lower Y people regardless of existing welfare programs.

If a GAI could replace all existing welfare and the like it would probably have my support, but then the poverty bureaucracy would be out of jobs.
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Re: Keith in a really bad mood...here's why

Postby James » Thu May 29, 2014 6:03 pm

William, that's the idea. Replace the whole system. Needy people get the money. We could and probably should offer training programs like budget management to the poor, but no more trying to moralize them before they get their money. No visits the single mother to see if there is a pair of men's shoes in the closet and no Phd. in Home Ec running around all over town in her fancy car pricing loss leaders at every grocery store to figure out how much it cost to feed a person. The genius that did this never did figure how a person who's only transportation was her own two feet could shop anywhere else but the ghetto grocery store where prices were much higher (Ohio plan). Under GAI, the people get the money and that's all. How they spend it is up to them.

As an aside, consider this. Give each vet a gold health card. With it let him get care from where ever he or she needs it and shut down the **** VA. Bills would go to medicare. It would not take long for the civilian health system to adapt and add the specialties greatly needed by our vets. We support our wars. We have not supported them since WWII/Korea. In our modern wars, soldiers have crystallized as the toys of politicians send them anywhere anytime on any whim and when they break throw them away.
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Re: Keith in a really bad mood...here's why

Postby William Thornton » Thu May 29, 2014 8:02 pm

Privatize VA? Heresy! As it is we get to see where single payer would go.
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Re: economic ignorance and Christian principle

Postby ET » Thu May 29, 2014 9:02 pm

Sandy wrote:I have trouble figuring out what kind of work one person can do that merits that kind of pay. There's only so much expertise and creativity that a single human being can have.

Of course, there is a Biblical, Christian statement about the love of money being the root of all evil. This is a great illustration of that principle. Of course, conservatives conveniently ignore the Bible when it doesn't support their view of the way things are. It only becomes imposed when it fits their agenda. When it doesn't then you get some answer about how the world isn't necessarily bound by its moral perspective.

So Sandy, if you admit that you "have trouble figuring out what kind of work one person can do that merits that kind of pay", then you are admitting that you don't fully understand the process. Since you don't fully understand the process, how can you rightfully accuse those Christians - such as William and myself - who don't find this to be "a great example of that principle" and say that we "conveniently ignore the Bible when it doesn't support their view of the way things are"?

The article listed one rationale:
"If you have a good CEO at a company, the wealth he might generate for shareholders could be in the billions," says Dan Mitchell, a senior fellow at the Cato Institute, a libertarian think tank. "It might be worth paying these guys millions for doing this type of work."

Based on your admission that you don't understand the matter, you then say it's a result of the "love of money" and proceed to condemn folks such as William and I based on that same ignorance and accuse us of "conveniently ignoring" Scripture. However, what Scripture provides the justification for William and I to intervene in the private affairs of the two parties engaged in a legal, voluntary transaction? Even if the CEO has a love of money, what right do we have to - for all practical purpose - steal from him, which is what you are promoting. Two parties have a legal arrangement. In we follow your argument, we think he has "too much" (covetousness). We therefore seek out government to take (steal) from the CEO because the thought police (us) have determined he loves money too much. We then get to spend that money on things we want (greed) with money taken by force from someone else.

It is not required that we fully understand the results of economic transactions. I can't figure out how someone can hire a ship, build a drilling right, sink it out in the Gulf, extract oil, load it on a ship, bring it back to land, ship it to a refinery in Memphis, refine the oil into gasoline, transfer it from the refinery to a gas station a mile from my house and ONLY charge me $3.35 for a gallon of it. Since I can't comprehend that part of the gas business, I certainly can't get too worked up over the aspect of why the CEO gets paid so much.

The Bible also tells me not to covet what others have, nor to steal what others have. It also tells me to do unto others as I would have done to me. When the wealth a person has is acquired through voluntary, legal transactions with other people, then in my view the Bible sets a very high standard for me to seek out government force to negate that transaction regardless of whether or not I understand them or approve of them. Whether I think that person is "worth" what he is paid or that I don't think he "needs that much money" is irrelevant. There is no Biblical justification for me to insert myself into what is none of my business and void or limit that transaction. Nor would I appreciate someone else intervening into a transaction between William and myself should a busybody third party that doesn't understand the transaction decide that our arrangement offends their sensibilities.

I think William and I are on a far stronger Scriptural footing regarding this matter than you.
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Re: Keith in a really bad mood...here's why

Postby ET » Thu May 29, 2014 9:20 pm

KeithE wrote:
William Thornton wrote:Median CEO pay crosses $10 million

Further evidence that Piketty is right especially in the USA.

You might want to be careful with Piketty....he can't even get some basic facts straight. He writes:
Roosevelt came to power in 1933, when the crisis was already three years old and one-quarter of the country was unemployed. He immediately decided on a sharp increase in the top income tax rate, which had been decreased to 25 percent in the late 1920s and again under Hoover’s disastrous presidency. The top rate rose to 63 percent in 1933 and then to 79 percent in 1937, surpassing the previous record of 1919. [Piketty pp. 506-507]

The problem is that it was Hoover who increased the top tax rate from 25% to 63%, not FDR. The Revenue Act of 1932 raised the top rate to 63%. Since that legislation was passed in June 1932, Piketty's claim is false. The rate was not adjusted again until 1936. Such a basic factual error brings his work into question.

One of the ironies in the original article is this:
Over the last several years, companies' boards of directors have tweaked executive compensation to answer critics' calls for CEO pay to be more attuned to performance. They've cut back on stock options and cash bonuses, which were criticized for rewarding executives even when a company did poorly. Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options.

The change became a boon for CEOs last year because of a surge in stocks that drove the S&P 500 index up 30 percent. The stock component of pay packages rose 17 percent to $4.5 million.
***
Petrello was one of a handful of chief executives who received a one-time boost in pay because boards of directors decided to re-negotiate CEO contracts under pressure from shareholders.

Some folks wanted CEO pay to reflect company performance. That was done at some companies and the CEOs ended up getting paid more as a result, for this year. "Past results not indicative of future performance."

All ya' gotta do Keith, is get enough shareholders to adopt your plan and we won't be having this discussion. You'll get the pay ratio you want. William and I will be fine with it because that's the agreed-upon conditions between private parties. However, I do not delude myself to believe that if a CEO takes a pay cut to 100 times some lowly worker's pay that it will be of any benefit to me and others like me who work in a corporate environment.

So, anyway, Keith, going back to one of my main ideas in these discussions with you - let's deal in the real world. I decided to "run the numbers" for my employer. I found news articles that provide the CEO's pay. I made a basic assumption of $8/hr for an entry-level hourly worker. So If I run out $8/hour to a yearly salary, it's about $31k, which means the max CEO pay is around $3M a year. If I then subtract that 3 mil from the current pay and divide it by the number of employees and all of us "share the wealth", we'll all end up with a big, fat $4 more a MONTH in our paychecks. Yes, that's right, $48 a YEAR more with your 100x factor. Sorry, but your plan for CEO pay isn't worth as much as even a single cup of Starbucks coffee a year to me and my fellow employees. THIS is your plan to help the middle class? :? I think we need a better plan.
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Re: Keith in a really bad mood...here's why

Postby Sandy » Fri May 30, 2014 6:43 am

What we're living under in this country now is an economic system that feeds greed. It is unfortunate that conservatives, who have managed to pull in a large segment of people who claim to believe in Jesus, do not recognize what is happening. Even after the abject failure of Ronald Reagan's economic policies, with its "trickle down" theories that has essentially led to the two worst post-depression recessions we've experienced, they still seem to think that they're going to get some of it. But the caving in of evangelical conservatives on principle, especially when money is involved, is a predictable pattern.
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Re: Keith in a really bad mood...here's why

Postby KeithE » Fri May 30, 2014 9:19 am

ET wrote:
KeithE wrote:
William Thornton wrote:Median CEO pay crosses $10 million

Further evidence that Piketty is right especially in the USA.

You might want to be careful with Piketty....he can't even get some basic facts straight. He writes:
Roosevelt came to power in 1933, when the crisis was already three years old and one-quarter of the country was unemployed. He immediately decided on a sharp increase in the top income tax rate, which had been decreased to 25 percent in the late 1920s and again under Hoover’s disastrous presidency. The top rate rose to 63 percent in 1933 and then to 79 percent in 1937, surpassing the previous record of 1919. [Piketty pp. 506-507]

The problem is that it was Hoover who increased the top tax rate from 25% to 63%, not FDR. The Revenue Act of 1932 raised the top rate to 63%. Since that legislation was passed in June 1932, Piketty's claim is false. The rate was not adjusted again until 1936. Such a basic factual error brings his work into question.


There are a few errors in Piketty but none that derail his conclusions. The exact timing of the increase (and its attribution to FDR) is apparently one such error. Here’s the history (“he” being Hoover):

When the Wall Street Crash of 1929 struck less than eight months after he took office, Hoover tried to combat the ensuing Great Depression with government enforced efforts, public works projects such as the Hoover Dam, tariffs such as the Smoot-Hawley Tariff, an increase in the top tax bracket from 25% to 63%, and increases in corporate taxes.[3] These initiatives did not produce economic recovery during his term, but served as the groundwork for some policies incorporated in Franklin D. Roosevelt's New Deal.

Sounds like he tried Keynesian approach to recovery too late - it takes a few years.

Another error may have been data sources and how he represented recent UK growth in inequality as pointed out by Chris Giles (Financial Times).
Image
Note the Giles/FT data had the Top 1% inequality in UK as continually decreasing from 1970 until 1990 and then again decreasing radically from 2000 to 2010. Piketty analysis had a slow upgrowth in UK inequality from 1970-today; he choose UK to show not all countries had as radical growth in inequality as the US did. UK was second highest among “developed countries”.

After the data sources were doubled checked, minor corrections made, and discontinuities adjusted for (summarized in this article:
Piketty, Chris Giles and wealth inequality: it's all about the discontinuities) we see what it should be:

Image
Hardly different at all.

Conclusion from the article above:

To summarise, Chris Giles's investigation of Piketty's data has uncovered some errors and inconsistencies which Piketty will hopefully address in future work. This shows the importance of quality assurance and third party checking of all results from statistical analysis – particularly when they involve spreadsheets, where it is very easy to make errors.

However, Giles then goes on to make a very serious error of his own in handling the UK data: he treats changes in the way wealth inequality is measured over the decades as if they were real changes in the underlying distribution of wealth. This error leads him to the misleading conclusion that wealth inequality fell in the UK between 1980 and 2010, whereas in fact it has increased (although not by quite as much as Piketty's published results would suggest).


Now to get to Piketty’s and my real point, here is the data for the Top 10% and Top 1% for the US
Image
Image

We have seen this great growth in US inequality since 1980 (the so-called Reagan Revolution and supply-side myth - trickle down has become a great trickle up). Far greater in the US even compared to the UK which comes in second place in terms of inequality growth among developed countries. Giles did not complain about the US data - just tried to dismiss Piketty (and Krugman’s and Stiglitz and several other leading economists) data on inconsequential points.


ET wrote:
All ya' gotta do Keith, is get enough shareholders to adopt your plan and we won't be having this discussion. You'll get the pay ratio you want. William and I will be fine with it because that's the agreed-upon conditions between private parties. However, I do not delude myself to believe that if a CEO takes a pay cut to 100 times some lowly worker's pay that it will be of any benefit to me and others like me who work in a corporate environment.

So, anyway, Keith, going back to one of my main ideas in these discussions with you - let's deal in the real world. I decided to "run the numbers" for my employer. I found news articles that provide the CEO's pay. I made a basic assumption of $8/hr for an entry-level hourly worker. So If I run out $8/hour to a yearly salary, it's about $31k, which means the max CEO pay is around $3M a year. If I then subtract that 3 mil from the current pay and divide it by the number of employees and all of us "share the wealth", we'll all end up with a big, fat $4 more a MONTH in our paychecks. Yes, that's right, $48 a YEAR more with your 100x factor. Sorry, but your plan for CEO pay isn't worth as much as even a single cup of Starbucks coffee a year to me and my fellow employees. THIS is your plan to help the middle class? :? I think we need a better plan.


Speaking of errors- $8/hour x 2080 hours/work-year = $16,640/year (not “it’s about $31K"). $7.25/hour (the min wage) is $15,080/year.

Don’t know your company (CEO salary or #employees) but I could surmise the following examples from your result of $4/month more for a CEO pay only pay cut spread across your company.

100 employees, CEO salary $3.0048M/year
1000 employees, CEO salary $3.048M/year
10000 employees, CEO salary $3.48M/year.

Now if we assume the real limit I’m proposing ($1.5M/year not your mistaken $3M/year), and a Median CEO salary of $10M, we get an increased yearly pay of:

$85K/year (100 person company)
$8.5K/year(1000 person company)
$850/year(10000 person company, most applicable to companies with $10M/ year CEOs)

That’s a lot of Starbucks and a 5.6% raise for a min wage worker (10000 person company). Of course poor people get their coffee at McDonald’s or the grocery store through food stamps since McDonald’s does not pay a livable wage leaving the feds to subsidize their labor. Question: Do McDonald’s employees get free coffee in the morning?

Truth is in a company with a CEO making the median Fortune 500 CEO salary of $10M/year (let alone other perks), there are more people who also make over $1.5M/year. That would be available to be “redistributed” as well (actually never should have been distributed that inequitably in the first place) and the redistribution would not be to all employees (maybe half). I’m for restructuring the whole pay scale initially not just spreading the excess CEO pay around the rest of the company in a fix-up mode.
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Re: GAI and "the rich"

Postby ET » Sat May 31, 2014 1:22 pm

James wrote:My ThM thesis is titled The Ethics of the Guaranteed Annual Income. It looks at the idea indorsed by Robert Thoebald, a liberal and Milton Friedman, a conservative. In its simplest form, GAI proposed to give individuals living alone and families a basic income sufficient to meet basic needs-housing, food, clothing etc. In several European countries which have accepted GAI as the structure for those in poverty, the average length of a GAI grant is five years. People want to be self sufficient. They take the GAI use it to improve their situation. Whey they do not need it anymore, they leave the program. The chronic poverty rate hovers around 5%.

If the rich could see their way clear to help pay for such a program here in the good old USA, we could perhaps eliminate 95% of poverty, get our economic situation in balance and see the DOW at 5,000. The rich would be even richer than they are now and no one would care, because we would all be doing well enough.

James wrote:My ThM thesis is titled The Ethics of the Guaranteed Annual Income. It looks at the idea indorsed by Robert Thoebald, a liberal and Milton Friedman, a conservative. In its simplest form, GAI proposed to give individuals living alone and families a basic income sufficient to meet basic needs-housing, food, clothing etc....
If the rich could see their way clear to help pay for such a program here in the good old USA

A couple of caveats. One, Friedman's support of an GAI was more of a "it's better than the mess we have now" condition. More of a "IF there have to be welfare programs, then an GAI is better than...." what the U.S. had back in the '60s and '70s. At least that's what I got from my readings/listening of his writings and talks.

Secondly, I doubt "the rich" possess the resources to fund it significantly. After all, "the rich" can only pay for so much. There's only so much money they possess...they can't pay for everything from an GAI to saving the planet to more money for college tuition to more job training to more infrastructure to, well, name any program being sold by the left. Is there any program that wont' be funded by more taxes on "the rich".

The burden of funding such a program will mean higher taxes on all, not just "the rich". Such a program is one of the reasons why Europeans are taxed out the wazzoo, prices are so high and they have less disposable income than U.S. citizens.
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Re: Keith in a really bad mood...here's why

Postby ET » Sat May 31, 2014 10:46 pm

Lets run the numbers for a couple of companies mentioned in the original article. At $8/hr, that means every CEO's maximum pay would be $1.7M a year. Please note that per the AP article:
To calculate a CEO's pay package, the AP and Equilar looked at salary as well as perks, bonuses and stock and option awards, using the regulatory filings that companies file each year.

So, running the numbers....
  • CBS: CEO pay - $65M. Employees - 32,000. Cut CEO pay to 100x results in a "CEO pay cut redistribution fund" of $63.3M. Benefit to each employee per year: $1,968.75. Not too bad...nothing grand.
  • AmEx (evil Wall Strett corporation): CEO pay - $21.7M. Employees - 63,600. Cut CEO pay to 100x results in $20M to the "KeithE CEO pay redistribution fund to support class warfare". Max CEO pay of $1.7M. Benefit to each employee per year: $314.
So, there's not much to your proposal in my estimation, Keith. Working at CBS, it sounds like a good deal. Another $164 or so probably sounds good to the guy making $8/hr, but probably not much of a big deal for those higher up the ladder. They probably spend that on a nice NYC or LA dinner. At AmEx, I doubt anybody is going to get very excited over another $30 a month.

KeithE wrote:Truth is in a company with a CEO making the median Fortune 500 CEO salary of $10M/year (let alone other perks), there are more people who also make over $1.5M/year. That would be available to be “redistributed” as well (actually never should have been distributed that inequitably in the first place) and the redistribution would not be to all employees (maybe half). I’m for restructuring the whole pay scale initially not just spreading the excess CEO pay around the rest of the company in a fix-up mode.

In the real world, I would expect the downward pressure on CEO salary to have a "trickle down" effect on the salaries of those below him, almost certainly bringing the "Law of Unintended Consequences" into play. Even if you start to siphon off the pay at the top of the management ladder, it's almost a certainty that it wouldn't all go to the employees. At best, it would probably be split between shareholders, employees and investing in the business.

I think on the whole it is a daydreamer's plan and completely unrealistic and unworkable. I think it will come with a big package of unintended consequences, and probably almost all of them you would find distasteful.
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Re: Keith in a really bad mood...here's why

Postby KeithE » Sun Jun 01, 2014 3:57 pm

ET wrote:Lets run the numbers for a couple of companies mentioned in the original article. At $8/hr, that means every CEO's maximum pay would be $1.7M a year. Please note that per the AP article:
To calculate a CEO's pay package, the AP and Equilar looked at salary as well as perks, bonuses and stock and option awards, using the regulatory filings that companies file each year.

So, running the numbers....
  • CBS: CEO pay - $65M. Employees - 32,000. Cut CEO pay to 100x results in a "CEO pay cut redistribution fund" of $63.3M. Benefit to each employee per year: $1,968.75. Not too bad...nothing grand.
  • AmEx (evil Wall Strett corporation): CEO pay - $21.7M. Employees - 63,600. Cut CEO pay to 100x results in $20M to the "KeithE CEO pay redistribution fund to support class warfare". Max CEO pay of $1.7M. Benefit to each employee per year: $314.
So, there's not much to your proposal in my estimation, Keith. Working at CBS, it sounds like a good deal. Another $164 or so probably sounds good to the guy making $8/hr, but probably not much of a big deal for those higher up the ladder. They probably spend that on a nice NYC or LA dinner. At AmEx, I doubt anybody is going to get very excited over another $30 a month.

KeithE wrote:Truth is in a company with a CEO making the median Fortune 500 CEO salary of $10M/year (let alone other perks), there are more people who also make over $1.5M/year. That would be available to be “redistributed” as well (actually never should have been distributed that inequitably in the first place) and the redistribution would not be to all employees (maybe half). I’m for restructuring the whole pay scale initially not just spreading the excess CEO pay around the rest of the company in a fix-up mode.

In the real world, I would expect the downward pressure on CEO salary to have a "trickle down" effect on the salaries of those below him, almost certainly bringing the "Law of Unintended Consequences" into play. Even if you start to siphon off the pay at the top of the management ladder, it's almost a certainty that it wouldn't all go to the employees. At best, it would probably be split between shareholders, employees and investing in the business.

I think on the whole it is a daydreamer's plan and completely unrealistic and unworkable. I think it will come with a big package of unintended consequences, and probably almost all of them you would find distasteful.


My desire is that such differences in pay within a company would never have occurred in the first place. It seldom happened in American’s most prosperous years the 60’s and 70’s when the CEO pay/worker ratio was ~25:1
Image
Note that even the Top 5% did well in the 50’s and 60’s.
Image

The real "class warfare" began in the early 80’s and lasted throughout the 80’s and 90’s. Then Bush Jr. came in and all quintiles lost.

Lacking an equitable pay distribution like we had in the 60’s and 70’s, fixing it is in order (one has to transition somehow). My proposal is that all those companies whose top execs make more than $1.7M/year (to use your number based on $8/hour instead of the real min wage of $7.25/hour) and desired government contracts, those salaries would be cut to $1.7M/year and redistributed in some manner favoring those who do not earn a livable wage. Other proposals are certainly possible including an IRS tax on all income over $1.7M/year including that hidden overseas (that way even companies who do not want government contracts would be wage disparity-controlled.

Back to your CBS Example
In the CBS case there are plenty of other execs over $1.7M that would contribute to the fund to be “re-distributed”, as well as Mr. Moonves’ $65,589,245/year. Just for the 5 executives reported in CBS Corp Executive Salaries that fund would be $107M and there would be more from those making between $1.7 and Mr. Ambrosio’s $4M.

True, that “redistribution fund” could be used to pay shareholders dividends (rare these days) or in capital improvements or “confiscated" (to use a RW term) by the IRS with a 100% marginal tax rate above $1.7M/year, but this proposal is to share the income more equitably across the company and especially help those who fail to make a livable wage (which probably is at most 1/4 of the workforce ). Therefore even if only the highest 5 execs drew down their pay, the increase to the non-livable wage earner would be least $107M divided by 8000 (1/4 of 32,000 employees) or $13,175/year or $1115/month (not $164/month) - a real difference to those making under a “livable wage”. Workable, the only “losers” are already millionaires if not billionaires. Much more than a “Daydreamer’s plan”.

AmEx Example
AmEx Corp Executive Salaries. Just for 6 executive salaries, there would be $57.471M/year in the “redistribution fund” spread over 1/4 of the employees that would be a ~$3600/year raise = $300/month - appreciable for low wage earners. And that assumed no more $1.7M+ salaries in that company.

I do recognize that a more graduated redistribution plan would be appropriate (some sort of continuous expandable scale - more than I want to figure out on a Sunday afternoon).
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