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Why the Rich Are So Much Richer

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Re: Why the Rich Are So Much Richer

#51

Post by sumedh »

tsotha wrote: post #38
wstrange wrote: post #12

Some good points in the article, but I am not sure I agree with all of its conclusions. CEO pay is going through the roof because of a ratcheting-up effect that has been going for years. The board brings a consultant to evaluate the CEOs pay. Said consultant is in tight with board, and is looking for their next consulting gig. Not a chance they are going to recommend a significant cut, or a performance plan that is a…

>I'd like to see CEOs treated like true investors. Want to make 50 million if the company does well? Cool. Company loses money? You owe $60 million. I'd like to see people not worry about what other people get paid. Unless you're a shareholder, what difference does it make? It's not your money.

> Company loses money? You owe $60 million.

How about the CEO does not get a golden parachute?

> Unless you're a shareholder, what difference does it make? It's not your money.

It is your money when you bail them out when a too big to fail company fails.

Re: Why the Rich Are So Much Richer

#52

Post by tsotha »

sumedh wrote: post #51
tsotha wrote: post #38

Earlier quoted context omitted.

>I'd like to see CEOs treated like true investors. Want to make 50 million if the company does well? Cool. Company loses money? You owe $60 million. I'd like to see people not worry about what other people get paid. Unless you're a shareholder, what difference does it make? It's not your money.

> Company loses money? You owe $60 million. How about the CEO does not get a golden parachute? > Unless you're a shareholder, what difference does it make? It's not your money. It is your money when you bail them out when a too big to fail company fails.

>How about the CEO does not get a golden parachute?

How about we let the CEO and the board work it out?

>It is your money when you bail them out when a too big to fail company fails.

There's no reason to bail companies out.

Re: Why the Rich Are So Much Richer

#53

Post by herval »

pcurve wrote: post #23
wstrange wrote: post #12

Some good points in the article, but I am not sure I agree with all of its conclusions. CEO pay is going through the roof because of a ratcheting-up effect that has been going for years. The board brings a consultant to evaluate the CEOs pay. Said consultant is in tight with board, and is looking for their next consulting gig. Not a chance they are going to recommend a significant cut, or a performance plan that is a…

I would basically like to see stock options eliminated. If you want shares of company, you need to buy it just like everybody else. With your taxed income. This makes decisions to buy stocks much harder, and it will really show you're putting money where your mouth.

What would be your perceived benefit of that (specifically for employees)?

Re: Why the Rich Are So Much Richer

#54

Post by da02 »

parasubvert wrote: post #19
da02 wrote: post #6

Earlier quoted context omitted.

Pardon my ignorance of economics, but does US/FED policy and trillion dollar deficits have anything to do with this? Along with other countries printing more money? I remember reading Zimbabwe had the best performing stock market, but it was fueled through the "printing press". And they had no choice but to stop printing more.

Not specifically, though indirectly. The FEDs activities are intended to counter balance the lack of economic activity and investment capital coming out of the banks after the 2008 crises left them having to unwind their debt positions globally. Someone has to keep the fuel spigot on - usually that's the government but most did the opposite (austerity) due to politics. What you're witnessing is a LOT of unused capita…

Thanks for clearing that up. What do you think the US govt & FED should/should not do now?

Re: Why the Rich Are So Much Richer

#55

Post by justinmk »

crpatino wrote: post #30
panic wrote: post #11

Earlier quoted context omitted.

If people have been making profits for the last 25 years and investing them, the amount of money in the markets will increase regardless of the instruments involved. Wealth is accumulating, but people don't really know what to do with it besides giving it to someone else to invest.

No, money is only numbers. If you cut down a tree, cut it in boards, cut the boards and nail the pieces into a bunch of chairs, that is value added. It did create wealth. Same, if you write a bunch of code that did not exist before, and the code is compiled and linked into a program that allows users to do stuff they could not do before (or could, but much more slowly) then there is value added. Wealth was created, e…

Prediction markets are valuable.

Re: Why the Rich Are So Much Richer

#56

Post by gress »

justinmk wrote: post #55
crpatino wrote: post #30

Earlier quoted context omitted.

No, money is only numbers. If you cut down a tree, cut it in boards, cut the boards and nail the pieces into a bunch of chairs, that is value added. It did create wealth. Same, if you write a bunch of code that did not exist before, and the code is compiled and linked into a program that allows users to do stuff they could not do before (or could, but much more slowly) then there is value added. Wealth was created, e…

Prediction markets are valuable.

Sure, but the stock market is not valuable as a prediction market.

Re: Why the Rich Are So Much Richer

#57

Post by randyrand »

lostcolony wrote: post #25
randyrand wrote: post #17

Earlier quoted context omitted.

There's no reason to limit that kind of obviously beneficial practice to just the CEO. Imagine how beneficial it would be to apply it to all the employees. Company is earning money? You get your paycheck. Company is losing money? Cough up.

Having to cough up is, I agree, excessive. But having a CEO's compensation tied to performance is the same as all the schmucks under him have to deal with. Only, while they're on the hook for delivering, he's on the hook for providing vision. So making it take 5 years to vest or similar, so the effects of his decisions can be seen, and he has to plan long term, seems sensible. In the same way that tying a worker bee'…

Yup. Stock and options and delayed vesting are frequently used for these reasons. From normal employees all the way up to the CEO.

Re: Why the Rich Are So Much Richer

#59

Post by crpatino »

justinmk wrote: post #55
crpatino wrote: post #30

Earlier quoted context omitted.

No, money is only numbers. If you cut down a tree, cut it in boards, cut the boards and nail the pieces into a bunch of chairs, that is value added. It did create wealth. Same, if you write a bunch of code that did not exist before, and the code is compiled and linked into a program that allows users to do stuff they could not do before (or could, but much more slowly) then there is value added. Wealth was created, e…

Prediction markets are valuable.

Valuable for whom, or for what?

If those did what they claim to do, sure: They would help to allocate resources to invest in projects that created the most goods and services to raise everyone's standard of living. There is certainly value in that, since we all would get more and better capital goods for the same amount of investment.

Sadly, this is no longer the case. I don't really know about finances, but I have seen first hand great engineering companies that got bought by assholes that did not have any money themselves, but used their dark wizardry financial tricks to leverage themselves to the ears.

Then, they proceed to cut costs like there is no tomorrow, again, making the numbers in the accounting books look much better than the real health of the company, all this at the cost of gutting the mid-to-long term feasibility of the business. Finally, they go and use their lies and numbers to find a bigger sucker, and sell the company by a price even bigger than what they paid in the first place.

And you know what, the whole financial industry exist to enable those fuckers to go around dishing chaos and destruction, because earning an honest profit by servicing happy customers is almost never as profitable as dilapidating in months stores of wealth that took decades to build up in the first place. It does not matter if they sell below the real value, since they did not personally invest any time or effort in accumulating the wealth, getting pennies on the dollar suits just fine.

Re: Why the Rich Are So Much Richer

#60

Post by parasubvert »

da02 wrote: post #54
parasubvert wrote: post #19

Earlier quoted context omitted.

Not specifically, though indirectly. The FEDs activities are intended to counter balance the lack of economic activity and investment capital coming out of the banks after the 2008 crises left them having to unwind their debt positions globally. Someone has to keep the fuel spigot on - usually that's the government but most did the opposite (austerity) due to politics. What you're witnessing is a LOT of unused capita…

Thanks for clearing that up. What do you think the US govt & FED should/should not do now?

I think they should keep doing what they're doing - don't raise rates or reduce the monetary base (the $ trillions they keep on the books since the crisis) until real inflation is clearly setting in. Asset prices can keep inching up so long as they're not into bubble territory (which arguably they're not yet).

The economy is in a much better position but it's still underperforming and the labor participation rate is still historically down as so many exited the labor force during the 2008 crisis and ensuing layoffs. Once some inflation sets in, it's a sign the world is returning to "normal" (after 8 years!), but .. no guarantees given instability in Europe, Middle East, Oil Glut, etc.

Usual disclaimers: I am not an economist, but minored in it & follow it; the economics profession has a wide diversity of opinions, though I think my views aren't particularly radical.

I also think the government should be ready to invest in our crumbling infrastructure for the next downturn/crisis. The 2009 stimulus helped but was not well allocated and was too small. That said it's unlikely congress will pass any such thing for many years due to current politics.

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