Social Question

gorillapaws's avatar

What are your thoughts on this article about the wealthy in the US?

Asked by gorillapaws (16340 points ) March 6th, 2012

I just read an article called 6 Things Rich People Need to Stop Saying that was pretty much in line with my views on the attitudes of wealth in the US. What were your impressions? Were there specific points that you agree/disagree with?

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93 Answers

MollyMcGuire's avatar

Not much. I’m pretty tired of hearing about the evils of wealth.

gorillapaws's avatar

@MollyMcGuire any specific points you wanted to address? You read the whole thing and then didn’t have much to say?

rooeytoo's avatar

I wish I were one of them! But I guess I was not smart enough, didn’t work at it hard enough and got out of the rat race too soon. But I don’t blame the country, the government, anyone except myself. I think the problem with that article (and I must admit I got bored after the end of page 1) is that the folks complaining are hearing what they want to hear so that they can stay in the poor me role. I think you have to be smart and lucky and willing to work your butt off to acquire wealth and if you are, you can.

MollyMcGuire's avatar

There isn’t much to say. It’s a worn out subject. Who people are matter much more to me that what they have.

DominicX's avatar

Well, I guess I disagree with the part where it says a rich person claiming that they worked hard for their money implies that people with no money are worthless. I don’t really see how that’s implied and I don’t think rich people who say that imply that. I also disagree that saying “hey, I work hard for what I have” implies that the listener doesn’t. To me, it implies that whoever is accusing them of not working hard is wrong. I don’t get where the writer is getting all these “implications”. (By saying that, I’m implying that the writer should go shoot himself).~

Other than that, I pretty much agree with it. And I think my dad probably would too (at least, with much of it), and he’s sittin’ on dough.

Aethelflaed's avatar

Yeah, pretty much. (Also, didn’t Cracked used to be funny? I mean, I agree with almost every word, but didn’t laugh once…)

Couple of really minor points:
1) I’m firmly of the belief that it’s some serious psychological crazy that drives people to earn that much. Be it staggering amounts of self-delusion, to being an insane control freak who can’t ever lose even if it costs a lot (like that person who will hire a lawyer that charges $500 an hour to fight off a $100 speeding ticket), to (quite commonly) an inner self-loathing that is constantly driving them to prove themselves more and more. Not that not-rich people can’t possibly have their own crazy, and frequently do, but it’s not shocking that rich people would be assholes. If they weren’t, they’d be ok putting in a 40 or 50 hour week and then spending the rest of the time with their family and friends and having fun like a well-adjusted person. I’ve known some rich people who were fairly well-adjusted, but it often they come from better-off families (came from private schools, not public schools, etc) and often are the “low earners” of their profession.

2) On the “Well, $500,000 a Year Might Sound Like a Lot, but I’m Hardly Rich” one: I kinda get both sides. On the one hand, it is massively total bullshit when acting like you only being able to afford the cheaper private schools in town is the same thing as not being able to afford the root canal your kid will need because they have an infection. On the other hand, people have a hard time estimating how far money goes in tax brackets they aren’t in. So, it’s really quite common for people living on $30k a year to assume that someone living on $300k a year can spend the money of someone living on $4m a year. And when the $300k person tries to say, no, actually, that’s really not something I can afford, the conversation often turns really hostile, really fast. Don’t really know why… So, basically, they sound like an ass, and they are being an ass, but I understand the slightly more complicated dynamic that causes them to defensively act like an ass. And, as a bit of a side-note, not-rich people need to stop assuming that the kids of rich people have access to that money, or have that money spent on them, from cars to nice clothes to college tuition to orthodontia. Rich people are often rich because they’re stingy as fuck, including towards their kids.

jerv's avatar

Pretty much spot on. Possibly

@DominicX It’s not that us non-rich are worthless, merely that we are worth so much less to society than they are that we are practically worthless. I have known a couple that outright stated that, and a shitload that said that whether they meant to or not. And that was what the whole link was about; what was said versus what was heard.

@MollyMcGuire True, but intolerant, greedy assholes with less empathy than an autistic houseplant are still intolerant, greedy assholes with less empathy than an autistic houseplant regardless of income bracket.

@Aethelflaed Regarding point #2, my stepfather has told me a few times, “I’m rich, you’re not.”.

Aethelflaed's avatar

@jerv Ah, that sounds so familiar….

jerv's avatar

@Aethelflaed The irony is that he got laid off from his six-figure job last year and is starting at Home Depot (as a floor slave) next week.

DominicX's avatar

@jerv Yeah, but I’m saying, it doesn’t make any logical sense to hear “you’re worthless” when a rich person says “I worked hard for this”. Just not seeing the connection.

jerv's avatar

@DominicX Let em see if this makes sense to you.

- A guy with a nice little $750,000 house and a $180,000 car in the driveway says he worked hard for it.

- That implies that hard work leads to getting nice things.

- People like me cannot afford nice things like mansions and Maseratis

- If hard work leads to affording nice stuff, and you cannot afford nice stuff… well, I think you see where I’m going.

And those are the nice ones. Others just say, “You would have this too if you weren’t a lazy parasite!”.

Aethelflaed's avatar

@DominicX Oh, no, I hear that all the time. I worked hard for this, and you’re just a lazy bum, so that’s why it’s ok for me to not care about you, for me to not help you out with charity (like, at all, or giving only to the local ballet and not to a soup kitchen as well), for me to pay less taxes, for me lay off tons of people so that I can have a bigger bonus. In private company, “I worked hard for this” will often be followed up with “and you didn’t [work hard]”.

DominicX's avatar

Hmm, that’s not how I was interpreting it. I was interpreting it as a response to the people who claim that rich people don’t work hard and are all Paris Hilton/Kim Kardashian types.

funkdaddy's avatar

The article could do with a reminder that generalizations on “the rich” (whoever that is) are like generalizations about any other group.

Did you know black people don’t like dogs? The Chinese are excellent at math? Women can’t handle their emotions and men are messy slobs? The British have bad teeth and apparently college girls are all bisexual…

How about that people with more money than you are assholes?

An asshole will tell you he worked harder than you without evidence of that fact. This isn’t exclusive to those that make a lot of money.

I don’t want to be the defender of “the rich” but with the way people are approaching things right now you’d think the only way to make money is to club baby seals and sell children into slavery. It’s just not the case.

Punish assholes regardless of income. Don’t punish income regardless of the character.

Jeruba's avatar

It made me smile.

gorillapaws's avatar

If you’re interpreting the article as a universal bashing of the wealthy, I think you’re missing the point. It’s more to do with deconstructing common arguments put forth by some wealthy people (and the supporters of certain political viewpoints) rather than a blanket criticism of all wealthy people. The “Batman argument” is basically validating that it’s possible to be wealthy and be a good guy (without having to give away all of your wealth).

jerv's avatar

@gorillapaws Sadly, the nice rich people rarely run for office or seek publicity, so guess who gets heard from the most, and guess who affects the lives of us all.

funkdaddy's avatar

@gorillapaws – that’s fair. I admit I was viewing the article as part of the larger media steam that seems to be increasingly “us” vs. “them” against anyone who falls above a certain income line. The article uses “they” and “we” throughout, so it’s hard to not read it in confrontational tone. I don’t feel it’s constructive. It’s frustrating.

On the specific points in the article, I’d say the first three (6, 5, 4) are reaches by the listener and the last three (3, 2, 1) misrepresent the quotes given and are what the writer implies from what is said by spinning it in a malicious way.

It’s not insulting to say “I work hard for what I have”, if someone hears an implied “and you don’t” at the end that really is a reach. It’s the same if I said ”@gorillapaws is a pretty smart guy, I definitely enjoy his commentary” and @jerv hears “I don’t think you’re very smart, and your feet smell funny” implied afterwards because I didn’t say the same about him. You can do that with anything. Saying you work hard is not insulting as long as you actually do. For the record, everyone thinks they work hard.

Most of the article feels like it’s written from that same perspective. From the “What we hear” on through with only a token acknowledgement of “What they think they’re saying”.

Isn’t the intended interpretation the correct one when someone is speaking?

I know my angle won’t be popular, for the record, I’m not rich, I think taxes should be higher on the wealthy, and I respect people who truly have worked hard and have made a good life for themselves. I don’t feel those things have to be at odds. I don’t think anyone ever got rich to spite me or keep me down.

Aethelflaed's avatar

@funkdaddy I think there’s a lot of context that Wong didn’t really take the time to point out. But, all of these are statements that rich, public figures make, not just things some people say in relatively private environments (like, on Fluther). Usually, when we the public hear rich people saying “I worked hard for that money”, it’s right after they’ve been asked the question “Why shouldn’t the rich pay more in taxes?” on national television.

funkdaddy's avatar

@aethelflaed – you make a great point as well. And I was trying to address the context somewhat…

I wish this was one of those conversations we could have in person because it’s hard to get the correct tone this way and I don’t really want to hijack this question and be the “pro” rich guy.

My problem with the article could be summarized as “Offer up fair and well thought out alternatives, or you’re just complaining without purpose” and I’ll just leave it there.

augustlan's avatar

It was interesting to me, as a contrast between right wing rich and left wing rich. The rich people I’ve personally known in my life were almost all Democrats, and none of them would ever dream of saying any of those things. Not even the “I worked hard for what I have” line. Most of them readily acknowledge that hard work alone didn’t get them where they are. They credit things like “Hard work and a lot of luck” or “I was at the right place at the right time” and things of that nature, instead.

basstrom188's avatar

Where would the rich be if they didn’t have those who are not?

Linda_Owl's avatar

Wealth insulates against reality. The rich do not see how the average person lives because they do not have the same points of view or the same priorities as the poor person does. Science has shown that the rich are more prone to cheat, lie, & take advantage. They are less willing to contribute to charities. They are prone to break traffic laws. They think that anyone who is not rich – is worthless, & being worthless, it is perfectly ok to take advantage of them. The rich have little or no empathy for their fellow man.

CaptainHarley's avatar

We need to be less concerned about the evils of wealth, and more concerned about the wealth of evils affecting us.

SuperMouse's avatar

What that article points to for me is society’s misplaced priorities. Seriously why is it that an investment banker can work their ass off 80 hours a week and pull down a half a million a year and a teacher with a master’s degree can “over time” reach a maximum of one fifth that amount? I’ll tell you what, it really would be darn near impossible to house, feed, and clothe a family in Manhattan on a starting salary of $45,530. Maybe if we pay these people what they are worth we attract more talent to the applicant pool and these poor souls who only pull down $500,000 annually could save a boatload of money by deigning to send their kids to the public schools their exorbitant taxes are funding. Every single teacher I know works at least as hard as every investment banker or executive I have ever known. I have known plenty of both being the daughter of a public school teacher and having three brothers and sisters and lots of family members who are teachers. I worked as a banker for ten years and my grandfather retried executive vice president of a major motion picture studio – I have seen both sides of this coin.

The reality is that a large percentage of the super rich have totally lost perspective and really just don’t get it. There is a huge chasm in this country between the have’s and the have not’s. Mitch Daniels is an idiot for saying that there are no have nots just soon-to-haves. The reality is that laborers, teachers, average working folks will remain where they are on the wealth ladder until retirement – no matter how many hours a week they put in.

It is interesting to me that the well-to-do seem to be the most likely to want to poo poo this discussion and say there really is no need for a dialog such as this. Pretty telling if you ask me.

CaptainHarley's avatar

There are a multitude of factors influencing the amount of money people earn: type of training and where it was obtained, innate skills of the individual, time and place the individual entered the workforce, type of work the parents did, the intellect of the individual, the cleverness of the individual, the list is long.

Suggesting that the government intervene in this process, @SuperMouse, is to suggest that someone ( someones ) in government knows better how to manage this process than does the marketplace. What do you suggest, wage and salary controls?

This seems to be another of the long list of problems to which the government is not the answer!

Coloma's avatar

I agree with watching out for stereotypes.
There are plenty of generous and non-snobby wealthy people.
I call it reverse discrimination, and usually wealth bashing is in direct proportion to ones own sour grapes attitude. Not all wealthy made their money being ruthless, greedy sociopaths and exploiting the little guy. I think the wealthy get just as bad a rap as the poor.

CaptainHarley's avatar

@Coloma

Good answer. Most of the wealthy I have known got that way by offering a product or service which others wanted to buy, then invested the money wisely.

jerv's avatar

@funkdaddy You would be correct if not for one thing; many of those who actually say they worked hard actually do say the non-rich don’t. At least that is how I take it when they say (not imply, but actually utter the words) “If you worked hard, you’d be rich too.”, and there really is no other way to take, “If you want the sort of lifestyle I have, then get off your ass!”.

To be fair, that is a minority viewpoint amongst the well-to-do, but the majority viewpoint of the vocal rich; like I said earlier, we don’t hear much from/about the non-assholes.

@CaptainHarley If over 90% of the economic gains over the last few years all went to the top, where is the incentive for normal people to work harder? People talk about raising tax rates on the rich removing incentive for them, but what about the people who actually do most of the work?

CaptainHarley's avatar

@jerv

That great disparity is due to people being allowed to influence politicians to tilt the playing field, in my opinion.

jerv's avatar

@CaptainHarley That sounds like something that someone who is part of the Occupy movement would say; I’m a little surprised to hear that from you.

Personally, I thought it was the fact that business doesn’t regulate itself, though I doubt having government regulate pay scales would be an improvement.

gorillapaws's avatar

@jerv the government could mandate that executive compensation be voted upon by shareholders (including those who own the stocks via mutual funds). I think this may be a reasonable “free market approach,” although I admit to not have fully thought of all of the potential repercussions of this.

SuperMouse's avatar

@captanharley, teachers are paid by the government, who else should get involved?

CaptainHarley's avatar

@SuperMouse

Teachers are paid by LOCAL government. It’s the FEDERAL government which has NO business being involved in the school system.

CaptainHarley's avatar

@jerv

If I was their age, I would most likely be among them! The accumulation of great wealth in few hands is problematic, as is the undue influence it has in the political arena, but I am unsure what might be done to ameliorate it.

SuperMouse's avatar

@CaptainHarley excellent point. So does that mean you have no problem with living wage ordinances since they are passed by local rather than federal government? Also, I re-read my post and I couldn’t find the spot where I advocated for government regulation. Although I will admit again to believing our priorities with regard to who earns what are pretty messed up.

funkdaddy's avatar

No one is paid based on their worth. It is impossible to measure someone’s worth as a person. We keep teaching people that they’re paid based on their worth and it’s never true.

People are either paid based on how much revenue they generate or how much those paying them can afford. They are two distinct categories. Both are open to everyone.

Investment bankers are paid based on how much revenue they generate. The “best” generate a lot, and they get paid a lot based on that fact. No one goes into investment banking because it’s their life’s dream, they go into it to make money. Hopefully that enables them to fulfill whatever other dreams they have.

If your goal is to make a lot money you almost have to go into a field that pays you based on what you generate. I wish they would state this fact that simply from early on in life.

Teachers unfortunately fall into the category that are paid what those paying them can afford. And local government pays them. And citizens pay the local government with taxes.

I don’t think many people go into teaching because they want to be rich. I hope the best go into it because they want to change lives for the better and influence children. Hopefully they find those goals and results fulfilling. I hope they enjoy it.

If you we want to pay teachers more, then the solution is to demand higher taxes and have the money go to education. Governments of all sizes have no problems figuring out a multitude of ways to raise money from those willing to give it, I’m sure we could be presented with a wide array of options to give more. I’m all for it.

In the absence of that, I’m sure individual schools would be happy to set up a fund for those who would like to donate either to teacher’s salaries directly or to the school as a whole. If you can’t give money, your time is valuable, needed, and generally welcomed.

Who else should get involved? People who want to make it better. We’re smart enough and able enough to make it better without someone taking it out of our hands and then making the decisions for us.

SuperMouse's avatar

@funkdaddy I’ll tell you what, there is an education behind everyone of those investment bankers and it was provided by a teacher. So maybe that rich fellow – who is rich based on the revenue he generates – revenue he would not be able to generate had someone not taught him to read, write, and to do math – should actually be willing to pay some taxes to fund raises for teachers. The issue is that we have no way to quantify the revenue generated by teachers therefore it is assumed they generate none.

I would happily pay more taxes if it meant my kids were receiving a better education. I know that is a minority opinion but to believe anything else is shortsighted. Whether anyone wants to admit this or not, the folks shouting the loudest about unfair taxation are the folks the earners that article discusses. For example, there is a reason California schools are strapped for money, it is a little thing called Proposition 13. I sold a house in Southern California for $750,000 and bought one in the midwest for $200,000. My property taxes on the new home are more then two and half times what they were in California. You know what? My kids schools are exponentially better here and the teachers are better paid. When Warren Buffett pointed out that he pays more property taxes on his home in Omaha than on his mansion in Southern California and that this made no sense, he was shot down before he even finished his sentence.

jerv's avatar

@SuperMouse…which is stupid since Warren Buffet knows more about money than CA, and than those that insist that his tax rate should be half of what his secretary pays.

@CaptainHarley My problem with Occupy, other than the fact that they lacked direction/focus, is that they are keen to point out what is wrong but a little deficient when coming up with practical solutions. While I can be idealistic at times, I am familiar enough with The Law of Unintended Consequences to know that the only way to get a real solution is to have discussions with people of opposing viewpoints and find a middle ground. But as you know, compromise is weakness, so we are stuck with either extremism or toothless “changes” that don’t solve anything.

CaptainHarley's avatar

@jerv

It’s kinda moot, anyway. We’re all doomed.

Jaxk's avatar

There’s no question that success can be elusive and requires some degree of luck. But it also requires some sacrifice and risk. Some people will take the risk or sacrifice and some will not. Working hard does not insure success it merely skews the odds. I’ve been in upper management and seen all kinds of workers. Some want (or have to limit thier time) to work 8–5 and spend time with thier family. Some are willing to sacrifice thier personal time to the job. Neither attitude insures success or failure but merely moves the odds of success. We all make choices in our life. Some pan out, some don’t. It’s like the difference between a good poker player and a bad one. The good on knows the odds and when and how to skew them in his favor. The bad one doesn’t. The good one still loses sometimes but not as often as the bad one.

What we seem to be saying is that both poker players should not only win the same number of hands but win the same amount of money. Afterall, they both work just as hard and put up the same money, it’s only fair that they both win as much.

CaptainHarley's avatar

@Jaxk

Very true, except for those who obtain their money by inheritance or nefarious means. I often wonder what would have happened if the little business I started some years back had been adequately capitalized.

JLeslie's avatar

The article was interesting to me, because I love how the various quotes are interpreted by the different income levels. For instance, I have defended rich people for having worked hard for what they have, but at the same time I completely defend all people who work hard, including the poor. What bothers me is when the wealthy think the poor are automatically lazy, or when the poor think the rich had everything given to them. I will say that physical labor takes a toll on people that those who have never really had to do it full time + will never understand, and the rich are less likely to have to stand on their feet all day or lift heavy things.

As far as where the rich cut off is, which has been discussed a lot because of tax discussions, I think we should stop using the term rich probably. I also agree with Michael Bloomberg the middle class along with the rich can pay a little more to help us pay off this debt.

For sure complaining about a vacation to Europe costing an extra grand than you expected is going to sound bad to someone who can barely afford the gas for their car going and coming from work. And, complaining about making ends meet when a person has a newish Mercedes and BMW plus a $3,000 mortgage is just idiocy. Sure we can complain about prices going up like the next guy, but I have very little empathy for people who make a great income, let’s say over $100k in an average American medium sized city, spending every penny, and being so tight on funds they are check to check. And, I am one of those people with over $100k household income and I have two Porsches, and a big house. I have way more respect for people living within their means than whether they make a lot.

Anyway, this article illustrates why social class matters so much. Taboo to say in America in my opinion. Why often times social circles and things in common, depend more on socioeconomic factors more than other grouping like race, religion, etc. A person who can barely pay rent is not going to sit around a long time listening to me and a few friends talk about our racecars and where we are planning to travel to this summer. Of course, there are plenty of topics and interests we could discuss that do not touch on economic standing, science, health, fishing, cars, environment, children, parenting, dancing, the arts, but even then those topics sometimes are influenced by someones socioeconomic level.

It has little to do with being smarter, or harder workers, but about the very different worlds each economic class lives in. Especially if someone is born into a certain class, and continues to be in it, they have their own way of looking at the world, and their worlds are very different.

CaptainHarley's avatar

@JLeslie

Good answer! I have the advantage of being able to see the world from several different perspectives, having been up and down the ladder so many times that I periodically get nose-bleeds. Heh!

jerv's avatar

@Jaxk I agree with you almost entirely. It’s the last paragraph that I take a little bit of issue with. As little as thirty years ago, prosperity was distributed fairly equally, it’s just that the share of it given to workers was divided amongst more people. And yet, somehow, some managed to get rich anyways. The pay gap between CEOs and their employees was less than one-tenth what it is now, and that allowed average people to have enough disposable income to keep money circulating.
Now, if people can barely afford essentials, how long will out be before the economy slows down and it is no longer possible to sell things because hardly anybody can afford them?

Jaxk's avatar

@jerv

I know we’ve been down this road many times. I just can’t get my mind around the theory that for some to do better we have to make sure that others do worse. I just don’t believe that. And I might add that no one gets rich off thier salary. They can do well but it is the investment that gets them over the top. It’s the investment that spurs and grows the economy. It’s like @CaptainHarley mentioned above, what if his little company had been properly capitalized. Would it have grown bigger and made him rich? Maybe. Would someone else have had to earn less to make that happen? I just don’t think so.

rooeytoo's avatar

Farmers should make the most money of all, if they weren’t feeding everyone else, we would all die, rich and poor alike.

In the 1929 depression poor people were skinny because they didn’t have anything to eat and no money to buy anything, now obesity is a problem, among the rich and the poor, in most all developed countries even with the dire economic conditions. Now that is the government’s fault, they should eliminate fatty foods or at least stop paying people who aren’t rich and working, then they would get skinny. That is one problem solved.

CaptainHarley's avatar

@Jaxk

Great answer!

CaptainHarley's avatar

@rooeytoo

It is not part of the government’s responsibility to keep me skinny. Leave ME alone, leave my FOOD alone, and let me live my life the way I WANT to!

jerv's avatar

@Jaxk And that is exactly the problem. See, Bill Gates managed to get quite rich while still allowing Microsoft to produce more than a few millionaires. It is possible for a company to increase wages beyond the rate of inflation and still make a profit, as many companies have shown. It’s not that it can’t happen, it’s that it doesn’t happen.

What you seem to fail to grasp here is that, to an extent, someone must earn less in order for someone else to make more. Every penny that goes to giving existing employees raises, or to creating a new job is one less penny that goes to management. While it would easily be possible to give each everybody at all levels a share of the increased prosperity, the prevailing trend is to give the regular workers barely enough to keep up with inflation (if they don’t get fired and replaced by someone cheaper) and give the money to those who already have enough that they really have nothing to do except invest and create an economic snowball.

There is this misguided notion that if the lower classes (in this context, anyone under $150k/yr) had money that they would not invest it and therefore the money is effectively wasted so it’s best to give the money to those who already have it. While it’s true that I am unlikely to invest more than ~5% of my gross income right now, I would love the opportunity to make enough to be able to afford to invest and make money, and I am sure I am not the only one. And like I said earlier, you cannot sell to those who don’t have the money to buy, so letting the rising tide lift all boats really is the only way to have a sustainable economy. We won’t even get into how unsustainable economies get during civil unrest.

CaptainHarley's avatar

@jerv

You’re assuming that earnings are a zero-sum game, and that everyone works for someone else. Have you forgotten entreprenuership? : )

jerv's avatar

@CaptainHarley Three things;

1) Not quite, as I believe that capital takes many forms; “sweat equity” exists. The thing is, the ROI is highly variable depending on your economic standing.

2) The majority of Americans do work for someone else. While I have no problem with entrepreneurship, it should be pointed out that it takes a combination of skill and luck that not all people have. However, lacking those skills doesn’t mean that they don’t deserve a slice of the pie that they helped bake.

3) Entrepreneurs are different from people who are hired by or take over an existing company. I have a different (and more generous) attitude towards those succeed along that path.

CaptainHarley's avatar

@jerv

Interesting. So what do you propose we do about the imbalance? I’m all for decreasing it, but I don’t have any acceptable solutions.

How about mandated profit sharing? What about a set percentage between the very bottom and the very top of the payscale? But what do we do about those who operate exclusively as investors? Ceilings on total income? Confiscatory tax rates? How about a set percentage of the highest income over the lowest nationwide?

See how difficult that is to get a handle on?

gorillapaws's avatar

@CaptainHarley I don’t think laws should focus on tearing down the wealthy, but ensure that their employees are sufficiently compensated.

If someone works for a company full time, then I believe that employer is responsible for ensuring that worker has enough to feed/shelter/cloth themselves and their family as well as have their healthcare needs met (aka they should be paid a living wage). If an employer fails to do this then they are effectively leaching off of the government’s welfare system to subsidize their profits (after all they wouldn’t have any employees if the government wasn’t stepping in to help meet these basic needs). I don’t think every household need a flat screen, expensive new clothes and the latest gadget, but I think all families should have the basics met when they are working full-time. As far as laws that could be enacted to satisfy this, automatically scaling the minimum wage with inflation would be a start. Preventing companies from abusing the “independent contractor” loopholes (see this article for an infuriating story about how Fed Ex fired an ‘independent contractor’ who got cancer) and preventing them from exploiting workers through abusing the part-time employment rules by limiting their employees’ hours to just under the threshold to qualify full-time.

Additionally, my proposed solution of having executive compensation be approved by shareholder vote might dramatically reign in abuses in the boardroom, and give shareholders better returns. This would be especially true for eliminating golden parachutes of multi-millions of dollars to CEOs who turned out to be miserable failures. I know if I were a shareholder who watched the CEO of my investment drive the values of my shares down, you can bet your ass I would vote against any big payouts when they fired him.

I truly believe that a CEO or other exec is entitled to make as much as they possibly can (this is America after all), as long as they’re meeting the basic living needs of their employees and treating them honestly/fairly. I don’t hate the wealthy at all (quite the opposite in fact), just the attitude that some of them have.

jerv's avatar

@CaptainHarley I am aware of how difficult it is.

The thing is, we shouldn’t have to. The fact that we have gotten where we are, to the point where something needs to be done though… well, if our current situation doesn’t illustrate the downfalls of free market Capitalism (complete with flashing neon signs) then we are screwed anyways. We cannot survive without government intervention, but you and I both know that we cannot survive with their meddling either. It’s kind of like choosing between jumping off a cliff or getting mauled by a bear.

But how about this for an oddball idea; how about if companies treat their employees such that they can afford to live in a manner that befits a citizen of a highly prosperous nation? I’m not talking about paying us all enough to afford Ferraris, but enough to have enough left over after rent to in order to eat (easing the burden on food stamps), sock a little away for retirement (thus easing the burden on Social Security), and maybe do a little bit more luxury spending.

That last is actually important. See, money in an economy is like blood in your leg; if it doesn’t circulate, things start to wither and die. I have seen various things all to the effect that giving money to average people who will actually spend it has far more benefit than giving it to someone who won’t. Yes, investment is important, but spending is moreso. How much of Apple’s money came from investors, and how much of it from customers?

CaptainHarley's avatar

@jerv

You should talk to Obama about that. Instead of bailing out huge corporations and financial empires, he would have been much better off just giving the money to the people at the bottom.

I am reminded of the story about the textile business-owner up East whose plant burnt to the ground. Instead of simply laying everyone off, he maintained their healthcare benefits and employed most of them in helping to clean the site for reconstruction. Those people would have crawled to hell and back on their knees for him had he asked them to! Alas, the concept of Nobless Oblige died long ago. Now it’s just “get all you can while you can and devil take the hindmost.” : ((

jerv's avatar

@CaptainHarley That isn’t government’s job.

Jaxk's avatar

@jerv

Let me add one more tidbit. People tend to be a bit forgiving on the outrageous pay to sports figures or movie stars but CEOs are bashed relentlessly. There seems to be a feeling that a CEO is an easy job and those guys just aren’t worth much money. Nothing could be further from the truth. The right CEO will affect thousands (maybe hundreds of thousands) of jobs, $billions in net worth and millions of investors (retirees, 401Ks, etc.). The stock price will rise and fall depending who is selected as CEO. The CEO determines the company culture and whether they succeed or fail. A good one is worth their weight in gold. Everyone is looking for the next Lee Iaccoca or the next Steven Jobs.

@gorillapaws Yuo may be surprised to learn that the selection of a CEO is more democratic than you think. Stock holders vote for who is selected to the Board of Directors. It is the Board of Directors that approve the CEO and his salary. Not much different than how handle government. We select our representatives and they make the choices for us.

jerv's avatar

@Jaxk I am less forgiving of entertainers, so I guess I buck the trend. But paying them more than the leader of the free world is a relatively recent thing. And it’s not like I feel CEOs are not valuable; I feel that anybody who performs well deserves suitable compensation/rewards, but it’s not like CEOs are the only ones performing well either.

As selecting directors, if Congress is any clue, that doesn’t always work well. If only we had some form of magic that would allow millions of people to communicate and coordinate instantly so as to make their wishes known directly in a timely manner…

Jaxk's avatar

@jerv

I can’t help but wonder how much a good CEO would be worth at Kodak. They have over 18,000 employees, $250 million in Pensions, and $6 billion in debt. They have been around for over 130 years and are now bankrupt. The best lens grinder in the world couldn’t have saved them. Nor did the lens grinder cause this. It all rests on the CEO. I would think that a couple million to a good CEO might have been worth it. But that’s just me.

CaptainHarley's avatar

@jerv

True, but neither is giving enormous sums of money to financial and other companies, and to one’s political cronies.

jerv's avatar

@Jaxk A couple of million is about 100 times what a wage slave earns, or about 50 times what a skilled person like a well-qualified lens grinder makes. I mean, the median income for a person of my skills and experience is just under $40k/yr, and there are quite a few occupations that pay more, so I don’t think a million a year is too far out of line for a skilled CEO that can not only keep the company in the black but make it prosper. However, they should have to share the consequences of failure as well; incompetence or failure to perform should hurt regardless of what level you are at. I know that if I did my job poorly, I would be unemployed real quick, and I wouldn’t get a severance package. But once you get much higher, you have to start considering the true costs.

Back as recently as 30 years ago, the pay gap between CEOs and average workers was around 40:1 as it had been for many years. But now it’s closer to 300–500:1, and CEOs pay is increasing more percentagewise in one year than the average person’s will increase in a decade. While on the face of it that doesn’t seem so bad, look at the dramatic rise in numbers of “working poor”, and how much extra taxes the government needs in order to maintain the safety nets that keep people from starving on the streets.

I can’t help but think how much government spending we could reduce/eliminate if we went back to the old pay gaps and spread the increased wealth around enough to have more people earning a livable wage. There would also be lower crime rates since poverty and crime go hand in hand, so we could save on court and prison costs as well. And more potential customers since people with more disposable income are more likely to spend than those who can’t make ends meet.

@CaptainHarley Exactly. The government’s job is to ensure the health, safety, and prosperity of our nation and of it’s citizens. If business isn’t doing it’s job of paying people enough to live self-sufficiently, then it’s the government’s job to make up the shortfall by taking taxes from those able to pay. But if the reason that businesses are not paying living wages is because they are spending their money on CEOs and damaging our economy and society as a result then there a few problems, and ones caused by business.
The business world is forcing the government’s hand here. I think everybody would benefit if companies just cut the shenanigans of their own free will. The alternatives are a degree of inequality that even the most corrupt Feudal state would be awestruck by, becoming a Third World nation, creating enough civil unrest to make things get ugly, or massive government intervention. Of the five options there, I think you and I agree which is the best path.

CaptainHarley's avatar

@jerv

Yes, albiet reluctantly. It’s difficult to maximize individual liberty when multiple organizations are abusing the system. : (

[ We just got hit by a massive thunderstorm here in East Texas! Lighting struck very close once and scared my old dog out of a year’s growth! ]

Jaxk's avatar

@jerv

I think I have to dispute your numbers. The ‘average pay for a CEO”:http://www1.salary.com/Chief-Executive-Officer-Salary.html is $750,000. That is not 300–500 times the average pay for workers. Hell it’s only 20 times your pay.

Jaxk's avatar

And I should add that it’s less than 40 times what you’d make flipping burgers.

gorillapaws's avatar

@Jaxk CEO’s make a lot more than just their salary. This data is from 2010, and is for big public companies:

“Equilar says the median pay package — the midpoint where half of the compensation packages on that list are lower and half are higher — declined by 13 percent last year, to $7.7 million. The average total pay tumbled by 15 percent, to $9.5 million.” (NY Times).

Regarding your earlier statement about CEO’s salary being decided by elected board members, I’m sure you know that its common for board members to sit on each other’s boards.There is not only extreme social pressure to accommodate salary requests, but also a strong financial incentive to scratch each-other’s backs. I honestly don’t mind seeing top performing execs making many millions of dollars, if their performance justifies those payouts. If they’re making their quarterly targets by accounting shenanigans, undermining the long-term health of the company, outsourcing, polluting, or otherwise fucking regular people over (i.e. externalizing their costs onto everyone else), I don’t think that the performance is due to them being exceptional leaders, but via cutting corners that decent people have the integrity to avoid. This behavior should not be rewarded financially, because they’re not generating real value for the company.

I think your figure probably reflects lots of small business owners, which I fully support making solid 6 figure salaries or even 7 figures. I mostly have a problem with failures being rewarded. Look at Léo Apothekeréo_Apotheker from Wikipedia:

“On September 22, 2011, the HP board of directors replaced Apotheker as CEO with fellow board member and ex-CEO of eBay, Meg Whitman.[12] Though Apotheker served less than 11 months as CEO, he received over US$13 million in compensation: a severance payment of $7.2 million, shares worth $3.56 million and a performance bonus of $2.4 million[13], although the company lost more than $30 billion in market capitalization during his tenure.” I can’t imagine that this would’ve happened if shareholders had the right to directly vote on these things.

jerv's avatar

@Jaxk Salary and compensation are not the same thing. By your logic, Steve Jobs only made $1/year.

Jaxk's avatar

@gorillapaws

And you believe the old lady sitting in a rest home in Florida with her retirement stock has the where-with-all to effectively analyze the performance of the CEO. Get real. You’re trying to turn a business decision into a political decision with all the trappings of a political election. You’re right about the Board but generally they have stock and stock options as well and are at least business savvy enough to know what is good and what is bad. That doesn’t insure good decisions nor alleviate the political pressures. At the same time open elections and voting on pay, etc., opens the door for much greater abuse. Especially from activists whether they be union, environmental, or any number of ideological positions. Personally, I’d rather see business decisions made by business. It doesn’t insure success but it at least doesn’t leave it to the whims of the ignorant or misinformed.

As for you list of companies, The biggest companies would naturally be at the high end of the scale. Trying to use that to make changes to the entirety of CEOs is foolish.

Jaxk's avatar

@jerv

You made some pretty bold statements with absolutely no reference or backup. If you want to say CEO compensation is 300–500 times where do you get that? If you say it used to be 50 times, where do you get that? The link I posted above shows incentives and options as well. Just saying something doesn’t make it so.

gorillapaws's avatar

@Jaxk if the old lady has enough wherewithall to have accumulated enough shares that her vote would have a significant impact on the outcome of those decisions, then absolutely. If she owns 5% of a company, I would imagine she is probably pretty damn business savvy (or at least know people who are). Votes of course would be weighted by their shares, so I don’t foresee the problems you do. The reality is that business people aren’t doing a very good job of self-policing, so clearly there is a problem.

jerv's avatar

@Jaxk I don’t think open elections open the door for greater abuse, merely a different type of abuse. On the plus side, you would have people that have no direct personal incentive voting for the good of the company instead of the type of personal gain that now happens.

You are that larger companies fall at the higher end of the spectrum, but a few million here and a few million there adds up to billions real quickly; enough to affect the economy more than many budget items Congress bickers over. You also overlook the possibility of tiered legislation not unlike our progressive tax rate; it doesn’t have to be all or nothing.

As for your latter comment, I see a range of numbers from multiple sources all across the spectrum. A single source merely serves as a starting point for investigation, but if I had to cite just one source, it would be Google. That, and a couple of decades of observation.

CaptainHarley's avatar

A great deal of the problems here is that management has been running roughshod over both the stockholders and the board. Mangement probably hold more stock than all the other stockholders put together.

Jaxk's avatar

@gorillapaws

It’s not necessary for the old lady to either have any business knowledge or own a significant number of shares. All you would need to influence the outcome is the mailing list of stock holders. Then you barrage them with negative information, real or imagined. They want to cut your dividends or they use child labor in China, or any point you can create. Just like a political election negative advertising works. Do you remember the Whole Foods issue a couple of years ago. John Mackey (the CEO) wrote an article critical of Obamacare. Progressives went wild with boycotts and inflammatory messages to cripple the store. It’s not hard, it just takes a true believer to go off half cocked and start trouble. None of that had anything to do with Whole foods per say, just anger at the CEO for completely non-business reasons.

And I don’t agree that clearly they are doing a bad job. In fact I would say that overall, they are clearly doing a good job.

gorillapaws's avatar

@Jaxk You really think the business sector is doing a good job at self-policing? You don’t measure the overall average as an indicator of success when you’re talking about policing. The Department of Homeland security wouldn’t be considered “overall, they are clearly doing a good job” if most flights didn’t get blown up but we still had dozens of major airline terror attacks.

I really don’t see any problem with CEO’s being held more accountable to their bosses (the shareholders). I also think John Mackey did something profoundly moronic, by making controversial public statements that were ideologically opposed to a huge percent of his primary customer base. It would be like the head of Smith and Wesson making very controversial public statements that supported a liberal bill. It doesn’t make good business sense to publicly bite the hand that feeds you.

I also find it hard to believe that if a CEO is generating great returns for his shareholders, they would be all that inclined to punish him financially based on rumors in a mass e-mail.

funkdaddy's avatar

Letting outside forces affect and ultimately decide who is running a company simply because they have partial (and temporary) ownership of it would be like having your extended family vote in a new head of household because they think they know what’s best for you and yours.

What @gorillapaws cited at HP is a good example of what happens when there are too many decision makers with too many influences. You get reactions instead of a course.

analyzing the pay of 200 chief executives at 199 public companies with revenue of at least $5.78 billion

So the average pay for CEOs managing companies with revenue of at least 5.78 billion dollars is around $10 million in cash, stock, and perks. Correct?

As an attempt to move towards a solution, what do you think someone in charge of a $10 billion+ company should be paid? Remember that we’re talking cash and stock, stock that only increases in value if they are successful and that they usually cannot sell in any significant quantity until they leave the company. They are more closely tied the company’s success than anyone else, both in reputation and compensation, which seems to be exactly what you’re asking for, right?

So how would you solve it? What should a company offer to the best person for the job? What if they have to settle for the wrong person to run the $10 billion company they’ve all worked hard to build?

gorillapaws's avatar

@funkdaddy I think owning a part of a company means at a very essential level that your are an “inside” force. Your family example is ridiculous, extended family members don’t pay to own shares of households (and if they did, then they should have a say in how it was run).

I think CEO’s of multi-billion-dollar companies should be compensated based on their performance and their ability to add value. I also think they should share in the downside when they fuck-up. Stock options aren’t a magical solution to the problem, because there are examples where a CEO will deliberately tank the stock price so they can be bought out by a friend and then receive a huge payout on the backside of the deal. I think transparency and accountability are essential tools for the success of the free market, as well as for justice within a society.

jerv's avatar

@funkdaddy It seems like you are saying that a person who drives a $90,000 luxury sedan is a better driver than someone who drives a $3000 used Ford. What does the value of the company have to do with the worth of those working for it? And if people working for larger companies are more valuable then even the janitor at a multinational is worth more than the owner of a small mom-and-pop.

Jaxk's avatar

And quite often the janitor at a large company is making more than the owner of a small mom and pop. Better hours too.

Jaxk's avatar

@gorillapaws

I can see where this is going. You perceive there is a problem with one or a few companies so you want the entire system changed. And as always, to make more FAIR. You will willing over look the drawbacks. Short term gains are not always the measure of a good CEO. And in fact it is not always advisable to let you strategy become public. Both of these would be necessary to gain shareholder support (short term gains and knowledge of your strategy) and that’s assuming they would even understand the strategy if told.

The truth is most CEOs do share in both the upside and the downside of their performance. Citing a few examples where the CEO was able to negotiate a more lucrative deal doesn’t change that. Or even where the board was willing to buy out a CEO’s contract just to get rid of them.

funkdaddy's avatar

I don’t want to argue with either of you, and that wasn’t my intent. I was just trying to move this past the angst and into possible solutions for the CEO problem that has you both so fired up.

————————-

@gorillapaws – I would say investors by definition are outside the company. People with ownership inside are called employees or founders. I wasn’t trying to be ridiculous. In my experience investors either a) have never even see the daily operations of the company or b) show up a couple times a year to say “How’s my money?!?”. That day everyone puts on their best shirts, cleans their desks, and acts busy. To me this is a lot like extended family.

Again, I don’t want to get in to an argument of points over and over again, and you may be well aware of this, but regarding transparency, did you know public companies disclose executive compensation?

An example for JC Penney

You’ll also notice they disclose any movement of their stock that they receive over a certain threshold. This is so they can’t deliberately tank anything for a huge payout.

————————-

@jerv – I am a mom and pop. So I am not saying anyone is “worth more”. I mentioned it’s impossible to measure a person’s worth several days ago above, I still think that’s true. I will never say that a person’s worth is measured by how much money they make in a given year.

I also mentioned people get paid in two ways, either based on the revenue they’re responsible for or what someone can afford. CEOs are in the first category so the revenue of the company they head is important to their compensation.

At the risk of being ridiculous again, I’ll extend your example. (why my example was ridiculous and yours was a GA, I’m confused). I think a more apt comparison would be to look at the mechanic you would let work on each automobile. For your example to really work, you’d have to say the cars were used by a group of people, each with a say in how they’re maintained.

So our $3000 car isn’t doing so well, it needs some work. Because there’s a certain point where working on it isn’t prudent any longer, we need to keep the costs down. We’re looking for a mechanic now that can get the job done cheaply, they probably won’t be the best in their field, but it just doesn’t make sense to spend $5000 on a $3000 car.

Our other car is a $10 million, brand new, one of a kind supercar. It’s the flagship of everything we do. Would you let the same mechanic work on it, or would you hire the absolute best and most qualified mechanic regardless of costs? You’d probably pay a guy $5000/yr to take care of that car, correct? It would make a lot of sense if the best person for the job only costs a fraction of the value to get that person?

I’ve changed your numbers because the new numbers represent the true difference between the size of the companies we’re talking about. A $3000 car would represent a $3 million company. The $10 million car would represent a $10 billion company. The $5000 for the mechanic is $5 million in compensation at the same scale.

@jerv asked: What does the value of the company have to do with the worth of those working for it?

If we skip over the use of “worth” here, janitors at both companies will generally make about the same, because they are paid based on what people can afford instead of based on the revenue they are responsible for. Those who decide the direction of the company will not make about the same simply because the stakes are higher in the larger company so they will seek out the best person for the job and pay them whatever amount is negotiated to be fair.

Another way to look at it is if there was an invite only contest, lets say it’s a footrace, and the prize is $3000, you’d probably just find the fastest person you know and tell them when and where. Maybe you’d say you’d split it with them if they happen to win.

If the prize was $10 million instead, you’d probably at least see what Usain Bolt’s going rate was for the afternoon and you’d probably be bidding against the other people in the contest. Depending on how people weighed the risks, he may come out with the majority of that prize.

You want the best person for the job, and when their asking rate is a tiny percentage of the possible rewards, you tend to go for it, even if the total number seems quite high.

———————

JC Penney is a great example. They’ve recently had troubles with their direction and hired someone new to totally change their strategy and eventually their culture. What’s the worth at a huge company when the rewards could be enormous?

So I’d pose the same questions again from above:

How would you solve it? What should a company offer to the best person for the job? What if they have to settle for the wrong person to run the $10 billion company they’ve all worked hard to build?

If you’re going to attack my points here, I’d appreciate it if you also acknowledged the questions posed. Picking apart only the portions you find fault with will never lead to a solution for a complex problem.

JLeslie's avatar

@funkdaddy I disagree with some of what you said. For instance the janitor. I don’t think he is paid on what the company can afford generally. I think typically in America we pay more to those who have unique skills, a supply and demand of labor. A neurosurgeon will be paid a lot of money because he is so highly specialized. An elementary ed teacher not so much, because it is not very hard to get accepted into that program or get through that degree. I use elem ed as an example, because it is so often put up as an example of people believing teachers should be paid more, because they are involved with the people we care about most, our children, but again, it is more about is teaching a highly specialized skill. It is changing now that teachers are scarecer, the supply is down and we will have to pay more to attract people to the profession.

Anyway, back to my point about the janitor, he is paid whatever the business can get away with most likely. The least amount they can get away with. If there are a bunch of people clammering for his job, he has no power in demanding more money. Corporations do analysis to see if their pay compares to the competition, if everyone else is paying shitty wages, they can too. It is rare, but it does happen, that a company has a stellar year and the people at the top give a bonus to a janitor, or even kitty some of the money for a downtime so they don’t have to lay off as many workers.

funkdaddy's avatar

@JLeslie – so you’ve found a sentence you can pick apart, that has little to do with the point, and was recycled from someone else’s response.

Thanks for that but I’m not sure I follow.

Are you saying you disagree that people are either paid what companies can afford or paid based on the revenue they’re responsible for?

I’d disagree, we could discuss the wording and perhaps change “what companies can afford” to “what the job market will bear”... but they mean the same thing and we’re back to discussing connotation and wording rather than concepts and ideas.

The “janitor” in my example just came from @jerv‘s earlier remark and represents a job that falls in the first category (positions paid what the company can afford) ... CEOs fall in the second (position paid based on revenue). One is affected by the size of the company and the other is not.

JLeslie's avatar

@funkdaddy It is because it is based on the reponsibility of the job in both cases. The Janitor in organization A, probably does the same amount of work as B, because the $10 billion dollar company probably employs more janitors if they are larger, but each janitor has similar tasks and work load. The CEO of a larger corporation has more likely more work load and responsibility because he is the one CEO.

What companies can afford amd what the marketbwill bear are two totally different things to me.

CaptainHarley's avatar

I just recalled that a major part of the problem here is US business schools. Back in the 60’s ( if I recall correctly ), the business schools began to almost exclusively teach budding executives how to maximize the quarterly bottom-line profit. Some of them went so far as to teach Machiavelli!

An exclusive focus on bottom-line results inevitably results in layoffs, strong resistance to pay increases, and to considering benefits as anathama!

JLeslie's avatar

@CaptainHarley The company my husband works for is profitable, but the investors are ansy because the business is not growing. Makes me think of when I worked in retail, had to beat Last Year. Doing well and being profitable was not good enough, had to acheive more and more sales. Of course it is good for a business to evolve and strive to sell more, but this feeling of never being satisfied is in all parts of our culture, not just business. It makes us unhappy I think, unhappy as a culture.

CaptainHarley's avatar

@JLeslie

I agree. That’s typical of a materialistic and consumer-oriented society. Nothing ever really satisfies, so people press down harder on the career and consumption accelarator in an attempt to find happiness.

jerv's avatar

@CaptainHarley I agree that that is a major part of the problem. In the years I’ve been following things (about half as many as you have) there has been a lot of emphasis in quick profits but none on sustainable growth.

What happened next? Bubbles burst, there were no safety nets, instability nd turmoil became the rule rather then the exception… basically a clusterfuck.

What is to follow? Well, we either collapse from rot or have a revolution; either way, this won’t last, and it will probably get uglier since I don’t see things changing peacefully.

basstrom188's avatar

A word of pessimism the last Great Depression ended with World War II.

jerv's avatar

@basstrom188 As the Ferengi say, “War is good for business.”. Lets just hope that the enemy isn’t ourselves…

CaptainHarley's avatar

@jerv

Collapse, war, revoultion, and finally a new paradigm. It’s going to get a lot worse before it gets better… IMHO.

GracieT's avatar

@CaptainHarley, I’m sorry to say I have to agree with you. With the way things are shaping up its going to ugly.

CaptainHarley's avatar

@GracieT

Sorry you had to agree with me. Heh!

Yes, I fear for my grandchildren’s future. : ((

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