Trimming the fat, wouldn't it be more effective to trim from the top where the big paychecks are?

Well, the people are the top are the ones making the decisions, and so they tend to go with the decision that benefits them more in the short term then in the long term, and so screw everyone else. Hence Enron, etc. No, it doesn’t make sense in the long term, at all, but people so rarely listen to that when they could take a million dollar bonus, instead.

The idea behind not taking as much from the richest is that they worked the hardest and therefore deserve the money the most.

Many people see some flaws with this idea…

@BhacSsylan Greed is good :)

Seriously though, our society is based on selfishness to the point of being callously cut-throat. To be otherwise is a sign of weakness and will doom you to failure.

@papayalily I seriously doubt that the guys getting the fat bonuses did more work than even 100 of their underlings yet their pay is up to 2,000 times as great even when they mismanage the company into oblivion.
Those people who think that those execs earned the money are beyond idiotic.

Yes, but those are the people making the rules.

@papayalily The theory, and one which I ascribe to as an ideology, is that the ones at the top should be the ones who have worked hardest to get there, and still work the hardest.

And for many companies this is true. Take Bill Gates and Steve Jobs. I don’t like Apple much, but even so I can’t deny that they are both geniuses. Jobs more of a management and Gates more technical, but they still deserved to get where the are now. And there are many other examples, those are just the ones I have on my mind. And there are huge numbers of middle management that no one hears about that do great jobs, etc.

However, at this point, you could probably give a few hundred bad examples for every good one I give. So, in theory, it should be that way. But, businesses the way they are right now… yeah.

@BhacSsylan If they truly show their worth and there is no question then they should garner all the goodies that come from it. But a Charles Keating, Steven R Appleton, and Michael Milken types….....I don’t think so.

@jerv Those people who think that those execs earned the money are beyond idiotic.

I think that many execs earn their keep, and guess what? I am far from idiotic. Maybe I just have a little more corporate and fiscal sophistication than you. In many cases the remuneration for top execs is based on a percentage of the increased income they generate for a company.

@BhacSsylan I’m not so sure about those two. Gates was shrewd with licensing and Jobs… Jobs is rather insane and the fluctuations in Apple’s stock value reflects that.
However, in my opinion, Warren Buffet does deserve his status. For one thing, he only has a modest salary: most of his income is from investments, not bonuses. For another, he has been at it quite a while. Long enough for even compound interest to really do amazing things.

Also note that Gates and Buffet got to the point where they actually gave half their fortunes to philanthropy, knowing full well that their families will never need to work a day in their lives for at least the next 10 generations? I don’t see that sort of stuff happening too often with the banking and insurance guys whose incomes are far greater than Warren’s or Bill’s.

@plethora So basically incomes are artificially high and have NO relationship to the person’s actual value, eh? And what if you find someone who isn’t a greedy fuckwad who cares only about raking in money?
Or are you saying that the ONLY people who succeed are the greedy shits who only care about the size of their compensation package?

Fine, we’ll make this country perfect. We’ll pick one person and give them every penny in our economy!

@DarkScribe Don’t get me wrong; they do do quite a bit of work. I am just saying that their income is sometimes disproportionate to the amount of work they do and the benefits of those efforts. That is especially true for those that steer their companies into an iceberg.

@jerv their income is disproportionate to the amount of work they do

Why? Many of them began the company, or own a good number of shares. Why should they limit their salary to a proportion of their worker’s salaries? It isn’t based on hours, it is based on results – consistent results.

@DarkScribe First off, you can’t always measure effort in hours. That is why execs are on salary.

Second, they don’t always get results, though they don’t suffer the consequences of failure as often. Some companies are better than others here, but some are far worse.

Third, the guys at the top don’t always know what is up, and I don’t think that a CEO telling an underling “I want this!” really compares to the effort required to actually do whatever-it-is…and it’s often the underling that tells the management what really needs doing, at least often enough that the pay gap is a little absurd.

Now, if their income is based on dividends from shares (like most of Warren Buffet’s income is) then fine. I have no problem with shareholders getting what is due to them. But that is a whole other ball of wax and has no bearing on salary or bonuses. I also am pretty down on the idea of handing out bonuses to those that cause their company long-term harm for the sake of a quick buck, and am not too keen on execs fiddling as Rome falls.

@jerv Well, Jobs may be worse then I thought, but from what I’ve seen hes good. But as I’ve said, I don’t care much for Apple anyway, so I’m much more familiar with Gates. However, modest salary also doesn’t necessarily indicate that. I went to Hopkins, and our president was (until about two years ago), the highest paid university president in the nation. The guy (William Brody, by the way), was also amazing, he deserved every penny.

He also took a voluntary pay cut which brought the number below the next school, but still, he got the big bucks for a reason. And his willingness to put the institution above himself showed it.

@jerv I assume he will finish a similar statement soon, but he didn’t say all (at least, not in his last post), just many. And I agree that those that take the most ludicrous bonuses tend to be the crappiest. He wasn’t saying that it should be related to the workers salary, only to the work they do. As I said with Brody, that was high and away higher then anyone else at the university (several million per year, at least), but he deserved it because of the work he did. Now, you can’t make the same argument for, say, Goldman-Sachs, who just paid off several billion in bonuses. After being sued for fraud.

and you did finish before me. Ah, well. Hopefully I did not misrepresent your position. Correct me if I did.

From the book “Freakonomics” there was a discussion about how the higher up the corporate ladder you were, the more likely you were to steal bagels. It’s certainly possible that many top-level excecs aren’t where they are because they worked the hardest, but because they were capable of being the most ruthless, unethical, and deceptive.

The hero-worship of corporate execs in this country is pretty baffling given that they’ve demonstrated the consistent ability to fuck over everyone but themselves without remorse. I certainly believe in the idea of the lone entrepreneur, who takes a risk works hard and is well rewarded for her efforts. I just don’ think this is the case in larger corporations, who are mostly slimy, honorless people that are willing to do whatever’s necessary to get to the top.

@ DarkScribe “*Many of them began the company, or own a good number of shares.*” Those who founded the business or company I would expect to have a big salary or income. The head is not going to boot himself from the job less he retires. The share holder is just that, a part owner of the company, he/she might work there but as far as axing jobs directly as a share holder they don’t do that.

*” It isn’t based on hours, it is based on results – consistent results.*” Yeah, and it should be that way but many either get big paydays while their company is tanking or they purposely ran it into the ground. Some even plain rip off the company or do other shady stuff like your Dennis Kozlowski, Bernie Madoff, and Jeffrey Skilling types. To say a parson is worth this or that simply because he flew in from some from some college with a MBA untested or even in a sinking company I find it hard to see good sense in paying them boat loads of cash. That is almost like major league sports, paying so much for an impact player only to have him be a bust. If the exects are the shot callers and leaders and the company is circling the drain then logic will say they didn’t do a very good job at the helm.

I do think those who get results, lead greatly or create profit (and don’t steal from the company doing so) deserve to get paid for their talent or skill.

@gorillapaws
I’ve not worked in corporate America but I certainly find it to be true in the education field-with a few exceptions-that those who rise to the top are lacking in ethics. Very interesting point you bring up.

Original question: The big guys just get rid of some of the little people and then make the remaining ones pick up the slack. The threat of further job loss keeps the employees in line.

@jerv, I have to agree that management frequently knows what’s up. A friend was recently hired as a consultant to analyze why morale was so low in a department that had a 70% staff cut. Within 3 months of the terminations, 30% of the “survivors” left of their own accord.

For this effort she was paid a $5,000 consulting fee.

Absolutely it would make sense to cut the fat at the top. Do they really deserve so much. Of course not. They get it because they can.
Have you ever tried to get some help at a Home Depot. They cut headcount significantly while giving their top dog Nardelli a $210 severance package . $50M wasn’t enough? They laid off more than 1000 employees.
If you have to pay the top dogs that much money to stay, it is clear they do not have the best interests of the company in mind. It should is up to the Board of Directors to align those two competing interests. Unfortunately they are usually friends with top management so there are no checks and balances.

Because of the pyramidal structure of most companies trimming the ‘fat’ at the top would result in relatively little savings despite how much satisfaction people might feel at the falling of the mighty.

I also question whether people who earn such salaries deserve them but as Thomas Sowell points out, no one gets too worried when a baseball player or rock star earns incredible amounts of money. The decision to give execs huge paychecks is the proper purview of the company’s BoD as is the decision of who to fire or who has to take a pay cut.

We may not agree with the decisions a given BoD makes but if we’re not shareholders it’s actually none of our business.

If you ask me cutting jobs wouldn’t save money it would actually lose money.

@Factotum look at @worriedguy‘s example. A $210,000,000 severance package is the equivalent of 1000, $210,000 positions. I think there’s plenty of fat at the top of the pyramid.

I just wanted to clarify my earlier post about the smaller CEO’s. I think these men and women should be the ones we truly honor. Small and mid-sized companies are the ones employing the vast majority of private-sector jobs. I think these are the people who truly embody the American dream and the triumph of capitalism. These people make $258,400 on average per year.

@gorillapaws I agree wholeheartedly.

Just a few more quick facts:
– As of 2006, the top 1% of income earners “earned” 21.3% of the income. The top 0.01% earned 6% of all income in the US.

- The top 10% account for 49.7% of income yet a hair under 40% of taxes. Combine that with the fact that 47% of Americans (representing ~15% of all income earned) paid no taxes last year and you have 53% of the people with ~35% of the income paying about 60% of the taxes!

- Between 1990 and 2005, corporate profits increased 106.7% while CEO salaries increased 298.2%; tell me that isn’t disproportionate! Meanwhile, production workers income has risen a mere 4.3%; effectively flat.Those numbers are adjusted for inflation.

- As of 2007, the average American CEO earned 350 times what the average worker in their company did; compare that to ~25x for Europe or just over 100x for America as of 1990.

@jerv If you need an intro to the communist party, I think you’d be a hit

@plethora you do realize that there are no CEO’s in a communist world? or are you deliberately spreading misinformation?

@jerv doesnt want CEOs. Good fit.

@plethora I have no problem with CEOs. I merely want rewards to be proportional to results. Any more factual errors, misinformation, or slanderous rhetoric you want to direct at me? Or are you going to spread falsehoods about my sexual preference next?

Why is it that handing a working class family some food stamps to supplement their income so they can eat considered a bad thing while raping the working class so that the rich can loot and pillage considered the ultimate expression of Patriotism?

It would seem to me that those in favor of less government intervention would be all for ensuring that the working class was at least self-sufficient enough to obtain modest food, housing, medical care, and other necessities without government subsidies or regulation of business. Therefore. supporting the current system as-is and without reform or even adjusting tax rates proves that they are either totally inept, absolutely hypocritical, or actually wish to commit genocide based on economic status rather than race, religion, etcetera. To be fair, I doubt that they are actually genocidal, which means that the only reason to take people like that seriously is because they pose a serious threat to America.

Here is something ironic. There has never been an ideal Communism anyways; they’ve all been basically a small minority with all of the money and the vast majority in poverty. So, by defending our current system’s redistribution of wealth in an upward direction, Plethora, YOU ARE MOVING US CLOSER TO COMMUNISM!

@jerv I hardly know where to start with you. So I won’t go very deep. First, I do not believe in “working classes” and ruling classes” in our society. Every person has the right to ascend to the level he or she desires.
For example

i think of the ecomomics teacher whose students were espousing exactly what you are. (True story, to the best of my knowledge):

An economics professor at a local college made a statement that he had never failed a single student before, but had once failed an entire class. That class had insisted that Obama’s socialism worked & that no one would be poor & no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”.

All grades would be averaged & everyone would receive the same grade so no one would fail & no one would receive an A.

After the first test, the grades were averaged & everyone got a B. The students who studied hard were upset & the students who studied little were happy.

As the second test rolled around, the students who studied little had studied even less & the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D!

No one was happy. When the 3rd test rolled around, the average was an F.

The scores never increased as bickering, blame & name-calling all resulted in hard feelings & no one would study for the benefit of anyone else. All failed, to their great surprise, & the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.

@jerv That’s what it’s all about!!

@plethora I don’t think anyone has a problem with people getting A’s and others’ getting bad grades based on their effort. The problem we’re facing now is that you’re having .01% of the class that’s getting a grade of 100,000% at the expense of the rest of the class getting F’s with maybe one or two able to scrape out a C or B. The richest 500 American’s total wealth is almost as much as the entire collective wealth of the bottom 50% of Americans. Something is fucked up in a really disproportionate way.

I can assure you that Obama does not want everyone to make the same amount so you can put that fear to rest. That is communism, and he’s a Capitalist like most Americans. To put it into your cute little straw-man story I think Obama would like to see a bell-shaped distribution of grades, that is the majority of people doing well, paying taxes, making ends-meet and able to save while still contributing to the economy, some people doing very well and roughly the same number doing worse-than-average.

The problem with the current system is that these insane corporate bonuses and salaries are not geared around hard-work and skill, but has been radically skewed in favor of the top .01%. The result isn’t the classic Capitalistic American dream utopia, but something more akin to a dystopian oligarchy of ultra-rich tyrants who dictate the terms to the masses, and abuse their wealth by manipulating policy and regulations similar to what we saw in the Gilded Age. They are able to fuck-over small-to-mid-sized companies who are the true lifeblood of the American capitalist economy, thereby blocking the “ascension to whatever level they desire.”

I would be willing to bet my entire net worth that a team of 210 CEO’s who are currently earning 1 million/year would run circles around Nardelli in terms of strategy, innovation, management, and the other aspects of running a company the size of Home Depot. These guys aren’t where they are because they’re the best, they’re there because they have weaseled their way to the top.

@plethora @jerv @gorillapaws The grades example is a good way to show why we are still here and the Soviets went the way of the dinosaur, Frankie Smith, Kajagoogoo, and The Mullets. If you can’t get recognized for your hard work then you won’t work that hard. However, I believe good capitalisn is to reward the people on the line when certain goals are met and or exceeded. If the line making the widget produces X amount of widgets over the standard base they workers should get 12%, 15%, etc more on their pay for that pay peroid; they are helping the company’s bottom line. How the top 5% of America lives and acts I don’t know really, but if a company decides to produce the wrong widgets for the wrong market causing the company to hemorrhage money then sit upstairs with this grand ideal “lets gut the work force in the plant”. The numbnuts who chose the wrong path and got the bus stuck in the ditch now want to cure the problem not by axing some of the middle and top to save cash but clip the bottom and use the excuse that they have to save money for the company should be the ones to bare the burden; they DID make the choices that were not correct not the guy putting part #14509 into part #44920–5. And large companies where the golden parachute can amount to millions, that equals a huge swath of $35,000 a year workers (if they even get paid that much). As @gorillapaws pointed out depending on the bonus or severance package one person in a suit can equal hundreds or thousands in jeans and coveralls. Somehow that don’t sound like good win-win capitalism to me.

Pretty much. See, I did get good grades and all and when I was younger, I did work hard and did everything right. You know what? I have been more successful and a hell of a lot less stressed out since realizing that it doesn’t matter how hard you work.

I busted my ass my first couple of years in the Navy and my LPO got all of the credit. He even got a NAM (Navy Achievement Medal) for fixing sometihng that he could not figure out, nor could anyone else but I knew the answer within seconds and prevented a third explosion. The second one wouldn’t have happened had they listened to me. And that is far from an isolated incident.

And then there were the times I had things going along nicely and then got laid-off. I guess that it was my fault that that happened. Or when my savings got wiped out by an emergency like an exploded car.

No, the only way to get ahead is to start out ahead. Either that or be an evil, unscrupulous bastard and hope to outrun all of the bad karma. Hard work alone won’t do it. Brains won’t do it. Hard work and brains won’t do it.

@plethora
Your grades example is so fucking bogus that I have to laugh at your propaganda. If you want to make it more accurate, then set it up so that no student gets below a D and the only way to get an A+ is to tutor those who would normally get an F until they are able to get a D on their own; otherwise, you won’t get better than a regular A… which is still pretty decent and allows those that work hard to actually see some reward for their efforts.

If you think that that teacher thought exactly like I do then you really need to either get to know me better or go back to 3rd-grade English and work on your linguistic comprehension skills. Also, you need to learn some math. Is it fair for those few with the most money to pay less taxes than the hard-working people like the average small-business owners who create more jobs than any fat-cat CEO ever did?

Even if you support the flat tax (which is actually a decent idea in theory) then you must agree with me that our current tax system is ludicrous… unless your math skills are worse than mine were in the 4th grade. (I knew this stuff when I was 10, and the numbers have only gotten worse in the last quarter-century.) Or is part of the rewards of being rich avoiding taxation?

“Only little people pay taxes.” – Leona Helmsley

And that means that most of America is “little”. If that isn’t classes then what is? Hell, by holding your position, you are reinforcing the idea of classes

You’re digging yourself a hole and I am starting to feel sorry for you.
Do yourself a favor and put down the shovel.

@jerv I’m sorry your naval career didn’t work out but I think you’ve learned the wrong lesson from your boss’ success – he didn’t succeed at your expense he succeeded with your help. Yes, the award should have been yours. But that’s a common story indeed. As for your preventing a third explosion surely there was reward in preventing it regardless of not getting an award. People who mattered to you knew. And it’s not like either you or your LPO got a bonus check.

You note that your car exploded and your job fell out from under you. These are bad things but they happen and cannot be mitigated against other than through expensive insurance or through a ‘guaranteed’ job which tends to create waste and sloth like nothing else in the universe.

Your conclusion, that ‘the only way to get ahead is to start out ahead’ and that, ‘Hard work and brains won’t do it,’ is simply not true. There is never a guarantee but hard work and brains get people ahead every day and they are certainly more reliable than good luck. Meanwhile, the children of rich people don’t always acquire the skills or will to make money.

Leona Helmsley was a nasty creature but she is a) dead, b) may never have spoken the words attributed to her and, c) not a legitimate poster girl for ‘the rich’ in any case. By all means despise her but she’s only one (dead) person.

I do agree that the rich should pay their taxes though we would probably disagree on which taxes they should pay and at what percentage. Whether the flat tax would work, we should definitely have flatter taxes than we do – and with fewer deductions and much less government support/propping up of institutions and businesses.

The problem with government tinkering is that there is no end to what can be tinkered with and every adjustment comes out of someone’s paycheck.

@Factotum I didn’t even get a “Thank you” for that one. At least where I worked in NH gave me that little bonus. Plus, like I said, that is far from the only example.

Some people think that everything is a choice though, and that if stuff like that happens then it’s your own fault for not choosing a better car/job and it’s also your fault for not having at least $10K in the bank.

I have yet to see it. The closest I’ve seen is my stepfather who managed to get into a position that pays >$100K through sheer luck.Don’t get me wrong; he works hard to keep it, but without that initial good fortune, it never would’ve happened. I was on the same track (at a lower level; he has more experience) but unlike him, I got laid off from a decent-paying job simply because of the economy.

It is a quote that is attributed to her, and it also seems to be where Plethora and many Conservatives are coming from, so I’m sticking to it.

True, but whenever we try to let the inmates run the asylum, it gets even worse. Right now, it only comes out ot the paychecks of those that have worked hard enough to be moderately successful but who have yet to make it to the >$1m/yr bracket.

I think the problem with the view that hard work and brains is all you need is it ignores the human greed factors. People want job security and bonuses more than they want the best people in the drivers seat of a company. The result is rather than having a meritocracy, you get people who are particularly talented at weaseling their way through the system (such as the LPO in @jerv‘s story).

It is common for people to hire subordinates who are dumber than they are so that they don’t have to worry about their subordinates eventually taking over their job. The same thing happens at the very top with corporate boards. These people realize they’ve got a good thing going and so they milk it for all they can. Ever notice how many companies do much worse when the founder passes the reigns to someone else?

People love to use the baseball analogy, that CEO’s are the best-of-the best in their industry and deserve the salaries they get. Except in baseball you start out little-league and have to consistently play well throughout your whole career to make it to MLB. Many of these guys come out with an MBA and get injected directly into upper management from the get-go. I promise you that there’s plenty of pedigree and old boy’s club going on in that particular orbit.

I just grow tired of hearing people champion the idea that the people at the top are there because they deserve to be and the people at the bottom are also there because they deserve to be. Some people are where they should be, but it ignores the fact that many people simply aren’t, and there are inherent problems with our system that are designed to preserve the status quo (because if you’re the CEO of a major corporation and aren’t really the genius you pretend to be, you probably don’t want to see things changed anytime soon).

@gorillapaws Valid points all.

@jerv It is my hope that we can one day return the running of the asylum to the electorate.

@gorillapaws Pretty much, and that really screws over us Aspies who have the skills/talent to excel at many jobs but lack the social engineering skills to get through an interview, let alone screw people over. Give me a busted PC, an engine with a blown head gasket, or a milling machine and I can get shit done. As soon as I stop dealing with machines and have to interact with people things generally head South quickly, especially if they are stupid.

That is true in the military as well; there is a reason that senior enlisted people get more respect than junior officers; authority and big paychecks are not related to competence or effort.

The best superiors I worked for (in or out of the Navy) were those that started at the bottom and worked their way up, often with 30+ years experience. The worst were officers fresh out of college; totally clueless, but because they had a degree in something totally irrelevant to their duties, they were my lawfully-appointed superiors even though they couldn’t get results.

And that begs the following question; if social engineering is practically the only skill that can get you the big bucks, why do people even bother learning other skills like engineering, medicine, or anything other than the art of bull-shitting?

jerv ”The best superiors I worked for (in or out of the Navy) were those that started at the bottom and worked their way up, often with 30+ years experience.” Good luck with that one. I know a few people who like an old wife whose breast have gone South, and had stretch marks after ao long the company is looking to replace you, force you into early retirement with the threat that if you got fired your retirement is at risk. Back in the day when you could work at a company that long; start in the mail room and end up running the show. These days it seem like they want to get just enough talent to keep the show going but hardly the brightest bulbs in the chandelier. They will get and pay for a few really talented hot shots but most will just be MBA vice presidents of know nothing because they won’t really know the pulse of the business or the society of the workers. Often people can work in an organization for many, many years and never get above the level of manager, and not even a district manager.

@Hypocrisy_Central Sad but true. Unfortunately, many Conservatives seem to overlook the fact that things have changed in the last century. Just like the notion of hard work paying off, the idea of a company promoting from within is deader than a Kennedy.

Communist China struggled economically until it decided to try Hong Kong’s approach (free enterprise) and now it’s an economic dynamo.

@ItsAHabit I don’t believe anyone here is advocating against free enterprise. They’re saying that companies should look to trim fat at the top first. Interesting timing on re-engaging this thread. I just read a facinating article by Dan Ariely that discusses some studies conducted that show that big-bonuses seem to actually DECREASE performance.

@gorillapaws I know I personally stop caring about my productivity when the fruits of my labor go to rewarding my boss while I get nada. Why should I quadruple their income while my own wages don’t even keep pace with inflation? Why should I starve when they mismanage the company into bankruptcy while they ride golden parachutes?
I can see it. Why can’t people who are supposedly more educated see it? Or are they out of touch with reality? Or maybe, just maybe, they are too corrupt to actually see facts and thus find a conclusion then find “facts” to support it and then defend unfair policy on such “logic”?

@jerv ”...they are too corrupt to actually see facts and thus find a conclusion…” reminded me of this point from the linked article:

“When I presented these results to a group of banking executives, they assured me that their own work and that of their employees would not follow the pattern we found in our experiments. (I suggested that with a suitable research bud- get and their participation, we could examine their assertion, but they were not interested.)”

@gorillapaws They never let facts interfere with their theories…