Merit is a bell curve and compensation is a ski slope, correct?

Dreamer

Argument Topic: Not even close.

On the low end:

Its bad enough when you have college graduates working as janitors which at least is min wage. Even worse is sheltered workshops, prison labor, and unpaid internships. All of which are far below minimum wage.

On the high end:

You have CEOs of a huge monopoly who have maybe .3% more merit than another CEO and make 1,000 times more compensation. This is pure economic rent.

As for a bell curve and merit, yes humans do have differences in merit but they aren't that vast.

Bogan

So, what is your solution?   Socialism?   Okay, but you see it has been tried in 46 countries and it has failed in 46 countries.     Einstein declared that "insanity" was "doing the same thing over and over, and expecting a different result."

Bogan

just_sayin

Dreamer said:

On the low end:

Its bad enough when you have college graduates working as janitors which at least is min wage. Even worse is sheltered workshops, prison labor, and unpaid internships. All of which are far below minimum wage.

On the high end:

You have CEOs of a huge monopoly who have maybe .3% more merit than another CEO and make 1,000 times more compensation. This is pure economic rent.

As for a bell curve and merit, yes humans do have differences in merit but they aren't that vast.

I think when discussing CEO pay it is always important to keep greed and envy in mind - not the CEOs but those who want to restrict their salary.  CEOs don't set their own salary.  A board does.  This board is usually appointed by stakeholders of the company and the board has a fiduciary responsibility to both the company and to the stakeholders.  The board would be the best to determine what the CEO should make.  They know the industry, they know what the job entails and the skills needed.  If a board offers a CEO a salary that some think is too much - it is probably because those who think it is too much are ignorant of the job involved.  Boards are not in the business of overpaying someone for a job that could be done for less. The board isn't offering a high paying job to someone for a task they think isn't worth that money.  

I've always been amazed at the incredible level of jealously and envy of those who begrudge those who are successful.  Why can't they be happy for other people's success? If someone is willing to pay someone a good salary for a job, why is it the jealous person's right to keep that from happening? 

Regarding unpaid internships -  it seems obvious to me that those who oppose them, are not aware of how beneficial they can be.  There are literally thousands of people who would take an unpaid internship for a job on K street in DC.  These companies are movers and shakers in the political arena.  Having an internship from one of these companies on their resume would instantly make them more valuable to employers and would set them up for better paying jobs.  But because unpaid internships are not allowed there, fewer interns get that career boost.  

Dreamer

@just_sayin

The easiest way to show that CEOs pay aren't based upon merit is that they make more than in the past. Merit has remained stagnant for those CEOs.

 As for why CEOs pay is so high there is many factors other than merit. For example there is celebrities that are famous for being famous. This could be the case with CEOs. My best guess is it is about prestige.

https://en.wikipedia.org/wiki/Varsity_Blues_scandal

Other 1st world countries have better colleges and therefore higher merit. Yet, there is higher pay for CEOs in the less merit USA.

"American chief executives are systematically better paid than CEOs from continental Europe or Japan. CEOs of U.K., Canadian" 2013

https://slate.com/business/2013/07/american-ceo-pay-u-s-executives-are-paid-way-more-than-foreigners.html

As for greed and envy this is just some sort of ad hominem, tu quo, whataboutism red herring.

On an individual level yes unpaid internships can work. Yet, on a society level it is harmful exploitation. There is also low paid internships which are very similar. The problem occurs when unpaid/low pay become the norm and a needless barrier, some will be left behind.

Dreamer

"It is also more than bosses earn in Britain (where chiefs of FTSE 100 firms took home just shy of $5m), let alone in France and Germany (where CEOs are paid still less). " 2023

https://www.economist.com/business/2023/10/17/are-americas-ceos-overpaid

It is common knowledge that Britain, France, and Germany have better schools than the USA. Explain why CEOs with more merit make less than the United States CEOs. Oxford University is higher quality than all the ivy league schools, Yale, Harvard, Princeton, etc.

Dee

America is a country that totally embracesthe  greed is good mantra. Modern day America consists of a population the majority who claim to be christian yet are totally brainwashed into believing that a CEO of a company should by right be paid 344 times( and rising)  more than a typical worker , the same so called majority " christian"  Americans will   like screech like  stuck pigs if the lowest paid in society demand a minimun wage.

This clearly demonstrates how brainwashed as a nation they are and how they worship these self same corporate gods who brought about the crash in 2008 and in fact reccieved massive pay outs and bonuses despite this.

These people are like Turkeys voting for Christmas. 

just_sayin

Dreamer said:

"It is also more than bosses earn in Britain (where chiefs of FTSE 100 firms took home just shy of $5m), let alone in France and Germany (where CEOs are paid still less). " 2023

https://www.economist.com/business/2023/10/17/are-americas-ceos-overpaid

It is common knowledge that Britain, France, and Germany have better schools than the USA. Explain why CEOs with more merit make less than the United States CEOs. Oxford University is higher quality than all the ivy league schools, Yale, Harvard, Princeton, etc.

Why would you assume that what country you are from determines the CEOs salary?  Wouldn't you expect the CEO of Apple to make more than the CEO of a company with less profit?  The US drives innovation and industry.  BMW, one of the largest companies in Germany, but sales more cars in the US than in Germany.  Also keep in mind that salaries in socialist countries can be restricted by government forces directly or indirectly.  For example, the average doctor's salary in the UK is between $100,000 to $150,000, while in the US the average salary is about $325,000.  

Again, it seems evident that people want to second guess what board members with a wealth of knowledge about the industry they are in, choose to pay CEOs.  Do those who second guess have the knowledge and experience to determine what a CEO in that industry is worth?  I don't think they do.  

Dreamer

@just_sayin

The reason why doctor's salary is higher in the US is because the number of doctors are artificially restricted. There are less doctors as a % of population in the US.

just_sayin

Dreamer said:

@just_sayin

The reason why doctor's salary is higher in the US is because the number of doctors are artificially restricted. There are less doctors as a % of population in the US.

The US does not restrict the number of doctors.  The UK has a socialized system of medicine that restricts what doctor's earn.  The UK doesn't pay its doctor's what they are worth and its healthcare system is collapsing.  That's the difference.  

MayCaesar

The bell curve is the shape of the curve of the density of normal distribution, and normal distribution describes stochastic processes satisfying certain symmetry considerations. While merit is hard to quantify and it is not one-dimensional, there is little reason to assume that its projection onto any axis is symmetric. For instance, if we talk about merit in academia as in the research productiveness of a scientist, then a tiny minority of geniuses generate nearly all major ideas, while the rest 99.9% or however many mostly do the grunt work - and most of those "rest" are quite qualified to do what they do, as the unqualified ones have already been vetted by the rigorous academic progression process. Rather than having normal distribution, it seems more reasonable to expect it to be mostly uniform within a narrow range, followed by a huge peak far to the right of the range.

As far as compensation in academia goes, it really differs from country to country. In the US it seems to generally mirror the merit distribution: a small minority of genius scientists receive massive grants and awards, while most others receive fairly decent regular salary and an occasional medium-size grant. In Japan it is much more uniform, where the difference between young fresh scientists and old dinosaurs is small. In China, it is further complicated by the fact that the scientific research is run by the Party, so considerations of merit and compensation are conflated by corruption and favoritism.

Overall, outside of considerations of any particular profession, the snowball model seems to generally hold. Whatever trajectory you are on over time makes it easier to stay on that trajectory. If you have adopted a set of habits that drive you towards poverty, then they will keep dragging you deeper and deeper into the abyss, and you will be broke forever. On the other hand, if you have adopted a set of habits that drive you towards prosperity, then the further you go, the more opportunities will open up to you, allowing you to get more prosperity, allowing you to take even better opportunities... Over long periods of time, there are going to be huge discrepancies in the outcomes of the former and latter groups. Rather than being a ski slope, I would expect that limit distribution to look more like two peaks, one far to the left and another far to the right.

Think about the difference between an obese person and a fit runner. The obese person has gotten himself to the point where it is hard for him to get off the couch, so working out for him is extremely challenging and takes a huge amount of willpower - which he does not have given the condition he allowed his body to end up in to begin with. On the other hand, a fit runner keeps running frequently, becoming fitter and fitter, able to run more and faster, which makes him even fitter... For any run distance you will see that a tiny minority of runners run far faster than everyone else. Worldwide the average marathon time is 4.5 hours, while the 0.2% percentile cutoff is 2.5 hours. If you are not a marathon runner, it is hard to explain to you just how incredibly massive this difference is.

Elon Musk's net worth is $200b. Read about how hard Elon Musk works, how quickly he solves problems, how much he knows about virtually every narrow scientific subfield his companies are involved in... There are maybe 10-20 people of such caliber at a time in the entire world, and most of those people live in countries with economical and political systems that make it impossible for them to realize their potential. It is no surprise that he has so many financial opportunities open to him: anyone who knows anything about business would give up an eye to get contracted by this guy. Compare this to you and me - the number of people in the world who would want to be contracted by us is close to 0.

Dreamer said:

The easiest way to show that CEOs pay aren't based upon merit is that they make more than in the past. Merit has remained stagnant for those CEOs.

Nothing could be further from the truth. Modern CEOs have to deal with all-time complicated legal systems, international relations, emerging technology considerations... Long gone are times when a CEO could read a couple of newspapers in the morning and talk to a few advisors and know exactly what to do. Nowadays many CEOs are coincidentally programmers, lawyers, public relation officers, diplomats, recruiters, investment seekers and investors all at once. Compared to the work day of a CEO of a modern major corporations, CEOs of the past were on a permanent vacation.

Have you gotten a chance to spend a day with a CEO of a prominent company, seeing how they work? I have. The amount of knowledge these guys have to have and constantly acquire is insane. And the moment they take a breather and go on a 2-day vacation, they will be voted out by very demanding directors. It is a life I would wish on no one, and the amount of money they get is pretty irrelevant next to that.

Dreamer

@just_sayin

More people died of covid in the US due to lack of doctors compared to other Canada/Europe. 

" 31.71 26.1

"

https://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_number_of_physicians

The United Kingdom has more doctors per population ,31.7 versus 26.1. I don't see their healthcare system falling apart.

Dee

@MayCaesar


Nothing could be further from the truth. Modern CEOs have to deal with all-time complicated legal systems, international relations, emerging technology considerations... Long gone are times when a CEO could read a couple of newspapers in the morning and talk to a few advisors and know exactly what to do

Sure a modern CEO has to be top of his game and know his stuff that's what he's paid for. The average CEO works a 40 hours a week.

A CEO's salary is basically saying it's not a collective effort on behalf of the company that makes it a sucess but an individual effort as in the CEO's , every year company leaders make speeches about how innovative and inclusive they are and how much team effort is appreciated while at the same time giving the smallest possible pay rises to the staff they claim to value highly , yet awarding themselves and the top tier massive bonuses in appreciation of the " hard efforts " on behalf of the company.

. Nowadays many CEOs are coincidentally programmers, lawyers, public relation officers, diplomats, recruiters, investment seekers and investors all at once. Compared to the work day of a CEO of a modern major corporations, CEOs of the past were on a permanent vacation.

My brother is a CEO of a massive international  company he still lunches out and plays golf while doing business.

Have you gotten a chance to spend a day with a CEO of a prominent company, seeing how they work? I have. The amount of knowledge these guys have to have and constantly acquire is insane. And the moment they take a breather and go on a 2-day vacation, they will be voted out by very demanding directors. It is a life I would wish on no one, and the amount of money they get is pretty irrelevant next to that.

That simply isn't the case from what I know as the vast amount of  CEOs over here will take early Christmas holidays and in a lot of cases longer than the actual regular  staff, I include CEO's of some of the biggest American companies based over here for the tax breaks.

I grant a lot of them work hard so what all their staff mostly work hard, does that seriously merit a CEO making up to 350 times more than his team?

It' s actually an enviable life in many ways the CEO's responsible for bringing on the last disastrous financial worldwide crash walked away with massive payouts while leaving a trail of disaster and ruination behind them , this myth that they are  " fired by demanding  director's" fails to mention that most CEO's are steps ahead of the game and always have an exist strategy , do you not think they know when the game is up?

I can give a  list of former CEO's and politicians who brought disaster on their countries and big business who travel worldwide making a fortune lecturing others on finance and business , its a big boys club where one hand washes the other.

MayCaesar

@Dee

The way CEOs work is not the way most of us work. Most of us work our 8-hour shift and go home, having no duties until the next shift. The higher up the ladder in a company you go, however, the more you have to work and study outside of those hours, the more you have to be available for a sudden phone call or urgent meeting... It is a very stressful environment few people are capable of (or willing to) handling. Even when playing golf, a CEO should be ready to go somewhere at the first notice.

Someone's salary being much higher than someone else's does not imply that that someone carries the whole company on his back while someone else is slacking, but that someone is much more valuable and less replaceable for the company. It is not hard to find a good software engineer for a position in Microsoft, there are thousands candidates available and willing to start working almost immediately; it is VERY hard to find a good CEO for Microsoft. A software engineer making a mistake may cost the company a few thousand bucks; a CEO making a mistake make cause it to go bankrupt. The high pay is a reflection of the high responsibility, in conjunction with low replacibility. A CEO making 350 times as much as a software engineer does not necessarily work 350 times harder, but he does (as per company owners' evaluation) has 350 times the value. 

There is this saying about working hard versus working smart. It is common for people to assume that, due to some inherent justice in nature, hard work must be proportionally rewarded - yet the world does not work this way. An elite runner may put 30% as many hours as a rookie and still kick the rookie's arse on the track, as his muscles work much more efficiently both during the training and the race - in fact, the better runner you are, the easier it is for you to run, so, in a sense, elite runners have to work less than rookies. Similarly, I would argue that my work is much easier than that of a construction worker, but I happen to produce much more value per unit time due to the efficiency of my work. A construction worker may lay a few thousand bricks in a month; I can design a model millions construction workers can employ to lay a hundred extra bricks in a month, resulting in an insanely superior net benefit.

Lastly, it is absolutely true that being a good CEO does not equate being a good politician, or being a good person in general.  These require different character traits and skill sets. A CEO that is great at business negotiations may be a terrible husband, always overpowering his wife in arguments and never letting her insert her piece. Awesome husbands and awesome politicians are also rare, and, due to the nature of their activities, they are typically rewarded differently than through hefty paychecks.

Dee

@MayCaesar

The way CEOs work is not the way most of us work

What way do most work?

. Most of us work our 8-hour shift and go home, having no duties until the next shift.

A sizable amount of CEO's are the same according to stats.

 The higher up the ladder in a company you go, however, the more you have to work and study outside of those hours, the more you have to be available for a sudden phone call or urgent meeting.

A good CEO knows full well how to sort the unimportant from the important if he / she is not aware in advance of sudden urgent possible  meetings he / she has a very poor handle on things.


.. It is a very stressful environment few people are capable of (or willing to) handling

How do you know this? A lot of people handle a lot more for a lot less as in a doctor in A and E on a busy weekend.

. Even when playing golf, a CEO should be ready to go somewhere at the first notice.

How often do you think that happens? Also a CEO has ( mostly) a driver on call and flights etc arranged for him / her , that's a luxury very few of us are granted.

Someone's salary being much higher than someone else's does not imply that that someone carries the whole company on his back while someone else is slacking, but that someone is much more valuable and less replaceable for the company

It certainly does  if the company resists pay rises to even keep to inflation also what signal does it give to workers if the company does bad and the CEO is still given the usual massive bonus?

. It is not hard to find a good software engineer for a position in Microsoft, there are thousands candidates available and willing to start working almost immediately; it is VERY hard to find a good CEO for Microsoft.

You really believe that?


A software engineer making a mistake may cost the company a few thousand bucks; a CEO making a mistake make cause it to go bankrupt.

Yes and I can provide a  list of 100's who bankrupt companies and destroyed countries and still walked with massive payoffs and new jobs.


The high pay is a reflection of the high responsibility, in conjunction with low replacibility. A CEO making 350 times as much as a software engineer does not necessarily work 350 times harder, but he does (as per company owners' evaluation) has 350 times the value. 

High responsibility to shareholders right?

Yes I know where big companies place value and how they place , that's one thing will never change.

There is this saying about working hard versus working smart. It is common for people to assume that, due to some inherent justice in nature, hard work must be proportionally rewarded - yet the world does not work this way

Yes I've heard that saying can you give me an example please?

The world pretty much is reliant on good productivity, yes I know the world doesn't work that way.

You just mentioned how hard a CEO actually works and how proportionately they are rewarded for that , so hard work does seem to count for some but not others?

. An elite runner may put 30% as many hours as a rookie and still kick the rookie's arse on the track, as his muscles work much more efficiently both during the training and the race - in fact, the better runner you are, the easier it is for you to run, so, in a sense, elite runners have to work less than rookies. Similarly, I would argue that my work is much easier than that of a construction worker, but I happen to produce much more value per unit time due to the efficiency of my work. A construction worker may lay a few thousand bricks in a month; I can design a model millions construction workers can employ to lay a hundred extra bricks in a month, resulting in an insanely superior net benefit.

Yes I get that,  I'm addressing the value placed on a CEO's position . Remember one thing this blind trust in a CEO's abilities in the financial sector have cost the world dearly and continue to do so, a very careful has to be kept on them and the companies they work for.

Lastly, it is absolutely true that being a good CEO does not equate being a good politician, or being a good person in general. These require different character traits and skill sets. A CEO that is great at business negotiations may be a terrible husband, always overpowering his wife in arguments and never letting her insert her piece. Awesome husbands and awesome politicians are also rare, and, due to the nature of their activities, they are typically rewarded differently than through hefty paychecks.

Yes I understand that.

MayCaesar

@Dee

A lot of work that people do is unaccounted for by pure stats. If you look at the stats, I work 20 hours a week. If you look at what I actually do, then, depending on what you classify as work, it can be anything from 30 to 80 hours a week. There definitely are times when I do not have to work, that is I am 100% guaranteed to not have any assignments doing which at the time is crucial for me maintaining my position and my organization staying strong. That is not the case for CEOs of large corporations: they can never be sure that they will be able to watch this 2-hour movie without being interrupted by something urgent requiring them to get up and go somewhere. It is a huge luxury we have that they do not. A good CEO, indeed, is better at handling these things (often in advance, so they do not suddenly blow up later), but the more complex the corporation is, the less feasible it is to try to take care of everything.

CEOs, as you noticed, have luxuries that we do not as well. Being a CEO of a large corporation, you never have to worry about transportation, or meals, or many other things. You do have to worry about a lot of things that we do not. It is a trade-off, and one that the vast majority of people, had they seen both sides of the coin up close, would not want to make. I certainly would not. Flying first class gets old fast; in my experience, people significantly overestimate the value of nice things, and significantly underestimate the value of peace of mind. Being a CEO of Microsoft, peace of mind is not what you are likely to get.

From the perspective of the company owners, it does not matter where their money goes: to the CEO's wallet, or to the lower employees' wallets. What matters to them is what would generate more profit, and the fact that the investments are split as they are suggests that the market forces do not favor redistribution of investments in favor of the workers. Maybe the vast majority of company owners are just mistaken and would actually profit from restructuring their investment strategies - but it seems to me that, had it been the case, someone would have started making a killing a while back, and that does not seem to be happening.

A simple example of the principle "working hard versus working smart" is this: it is much harder to repeatedly bang yourself in the head with a hammer, than it is to sit in front of camera half-naked and smile. Yet the former will get you no money and a lot of nasty side-effects, while the latter may give you millions of dollars if you are smart about advertising and selling it.
Effort is not rewarded; productiveness is. Productiveness generally involves effort, but effort can be misplaced. Some incredibly productive things can be effortless for some people, and some incredibly unproductive things can be frustratingly difficult. From the point of the rewarder (i.e. buyer) on the market, the value of the product is important, not the value that came into creating it. When I buy a car, I do not care how long the company workers had to work in order to build it and how hard they worked - I am buying the car that I want to drive, not their labor. Their labor was bought by the company owners, and the company owners thought that it was a good trade for them - but it is their concern, not my or other buyers'.

That CEOs have to work hard is a factor in their replacibility, but not in the value of their work itself. Replacibility is important because supply shortages lead to increase of relative value. If a job requires someone to work extremely hard, then that alone can repel a lot of potential applicants and inflate the value of the remaining ones - but it does not increase their absolute value, it just means that the investors can profit less off them because they have more bargaining power.
If someone can find a CEO that will not have to work hard, and yet still will profit them tremendously - all the power to them! There probably are cases like this, although I would not imagine that they are very common. Few people are going to pay someone $100m a year for barely putting any effort. If you are so good that you can do in 1 hour what other CEOs do in 40, then the directors are going to want to put you to a better use - and maybe pay you $200m, but have you work 40-hour weeks.

At the end of the day, the CEOs receive what they do because the directors choose to pay them this much. Someone may see it as unfair, but if they are not paying, then it is not really their business - just like it is not really my business how much you sell your art for. Maybe I personally think that your art is overpriced - but I am not a buyer, so why should you or other buyers care? Similarly, you may think that my work is underpriced. If so, you are free to offer me a better deal. But demanding that my employer offers me a better deal is bizarre: I can speak for myself, don't you agree?

Bogan

It is clear to me that Dreamer is some kind of neo-Marxist who hates free markets and probably democracy as well?      What annoys me is how he never actually comes out and states what his beliefs are?    Instead, he does it through implications.

Now, take this topic for example.      It is a classic "always imply but if challenged deny" style of debating.      Dreamer simply uses the example of very high CEO wages to illustrate how evil the free market world is, and although he dos not say it, he is implying that this is the reason for inequality which begets crime and social strife.

Okay, his implication fails to address the fact that within socialist countries, the difference between the guys at the top and the rest of society is even more unequal.        FIdel Castro had his game boats and his Penn Senator fishing reels while his county starved.    The Politburo in the USSR had roadway lanes exclusive for the use of their own cars, and special hard currency stores for themselves and their cronies.   Mao tse Tung got ever fatter and screwed a virgin every night while 50 million Chinese starved to death  

The point is, Mr Dreamer, that regardless of what inequalities that will rise within democratic, free market economies, that these countries give a much better deal to ordinary people than the command economy counties who have never innovated anything, and who's failing economies mostly benefit only those at the top.      

Bogan