Why is it "greed" when a CEO is paid his marginal product but "noble" when union members collude to be o

Union workers get what their employers agree to pay them.

Hellooooooo? wrote:

Union workers get what their employers agree to pay them.

And what about when the employer is politicians, who agree to pay with other people's money?

skewed liberal morals wrote:

Hellooooooo? wrote:

Union workers get what their employers agree to pay them.

And what about when the employer is politicians, who agree to pay with other people's money?

Well yeah, all of government is one big principle-agent problem.

It doesn't change anything. They're still getting paid what their employer agreed to pay them.

The public/private distinction is meaningless. In both instances, the basic corporate mechanism is the same. The shareholders elect the board of directors. The board elects the CEO, who is often also elected as the chairman of the board. The board forms a compensation committee to set executive compensation packages. The compensation committee and the board are always cozy with the executives because they do not want to have conflicts that will upset shareholders. So, the board pays the execs piles to make sure the execs will support the board and the execs support the board because they get paid piles. Also, public and private companies compete for the same talent. Cargill, Koch, Dell, and Deloitte have to compete with publicly traded companies and will offer the same compensation packages.

The real issue with CEO pay is that people on the board see a big paycheck as a sign that they hired the top guy. If they went cheap and the CEO had a bad year, the shareholders would blame the board for hiring going cheap and hiring a clown. But when the board spends a pile on a CEO who does a bad job, the shareholders just say: "it's ok . . . you hired the best guy out there . . . who would have known he was a dud."

Also, unions do not "collude". They are exercising their constitutionally protected right to assemble. If you do not like that, take a look at countries where there is no such right.

nothing and I mean nothing gets me fired up like public union employees pay. They are the single biggest cause ruining the country. They take take take - their pay, pensions, medical just add year after year and are bleeding states and local municipalities dry while infrastructure and service get worse and worse. There is literally no incentive for a union protected worker to do anything more than absolutely necessary because they can't be fired and they expect to be paid handsomely for doing next to nothing for 30 years.

I remember a story from awhile back from the MBTA in Boston some low level employee Base Salary was $85k - somehow he also got $59k in back pay (?????) - and logged 2600 hours of OT earing $315k - 2600 hours of OT are you kidding me!

That is equal to another 50 hours a week of OT on top of the 40 hours he already worked! This guy allegedly worked 90 hours a week for 52 straight weeks without a day off.

Additionally on the MBTA you get a full pension after 23 years and then can go work for another state agency and receive a 2nd pension!

Debs wrote:

It doesn't change anything. They're still getting paid what their employer agreed to pay them.

And the CEO is getting paid what his employer (often a board of directors) agreed to pay him. Bonus pay is usually clearly explained in their contracts.

This tripe is a classic case of feel-good economics (i.e. usually wrong).

Let's look at the facts:

I'm a liberal who voted early for Hillary Clinton. The OP misrepresented my views in two ways.

First, I agree that CEOs are paid a lot because they are worth a lot. I don't have any problem with that. It probably helps the economy be more efficient. That's great.

Second, I don't celebrate (and I don't think anyone celebrates) the bad seeds who take advantage of union protections. It's a fact that there are people who do lousy work since they can't be fired. I've worked with a couple of them, it's infuriating, and everyone can agree that's a problem regardless of your stance on unions.

So what do union supporters actually like about unions? Not the bums who take advantage of the labor protections. Historically, it's stuff like safer factories, caps on required hours of work, overtime, weekends off, higher wages, etc. In other words collective bargaining leads to better conditions for workers, and that is what the supporters think is good.

Now I'm not an expert on this stuff, and I don't have a strong opinion on whether the harms caused by unions get outweighed by the good stuff. But it's kinda dishonest to act as if one of the downsides of unions is the *goal* of your political opponents.

Just about anybody can be fired. Unions create rules and processes that greatly reduce the chances of being fired capriciously.

Unions colluded so you can have bathroom breaks, weekends off, due process, child labor laws....

CEOs et al don't do any real work as far as producing a product or a service.

The workers do that.

The rich make all of the money, do none of the work, and pay none of the taxes.

The middle class do all of the work and pay all of the taxes.

The poor are there for the rich to threaten the middle class with.

You lost me at, "I'm a liberal who voted early for Hillary Clinton."

You mad brah

Pretty sure it's Employers agree to pay what Union Workers force them to pay.

Hellooooooo? wrote:

Union workers get what their employers agree to pay them.

That study is nothing more than an opinion piece with a few citations. They find that CEO pay is comparable to pay at hedge funds and top law firm pay. But that is like saying that the fox is ok guarding the hen house because the coyote guards the sheep in the barn. Most top law firms are working for big publicly traded companies. The hiring decisions and compensation decisions are made by . . . wait for it . . . corporate committees who fall under the same pressure to CYA by paying top dollar for "talent". And the study looks at CEO turnover and claims it is evidence that CEOs' feet are being held to the fire by corporate boards. . . except that is nothing more than a presumption. Turnover in CEO land is largely a function of people moving up and down the Fortune 500 ladder. It is exceedingly rare for a corporate CEO to be terminated for cause. Most of the turnover is due to the fact that a successful CEO will be bombarded by head hunters with bigger and better offers. Finally, the fact that CEO pay peaked in or about 2001 means little. 2008 rocked executive compensation. Since then, it has just been in recovery mode. But pay is recovering and has not fallen below 2001 levels.

Lol. :) I assume this is a sarcastic dig at hyper-partisanship and the tendency to ignore those perceived as ideological opponents?

Precious Roy wrote:

Harambe wrote:

This tripe is a classic case of feel-good economics (i.e. usually wrong).

Let's look at the facts:

http://www.nber.org/papers/w18395

That study is nothing more than an opinion piece with a few citations. They find that CEO pay is comparable to pay at hedge funds and top law firm pay. But that is like saying that the fox is ok guarding the hen house because the coyote guards the sheep in the barn. Most top law firms are working for big publicly traded companies. The hiring decisions and compensation decisions are made by . . . wait for it . . . corporate committees who fall under the same pressure to CYA by paying top dollar for "talent".

I agree. I appreciate Kaplan's effort to bolster his position with numbers, but I find his analysis unpersuasive.

There's no shortage of intelligent commentary on the other side. Lucian Bebchuk, for example, has articulated a very different point of view:

If you have the time -- right now, I don't -- you might want to look for Warren Buffett's comments in response to questions about shareholder attempts to rein in executive pay at Coca-Cola a couple of years ago. I was shocked by his admission that he had never voted against an executive pay proposal by the compensation committee, and he only remembered a time or two when another director dissented from a board's ratification of the committee's proposal, even where individual directors grumbled (off the record) about excessively generous pay packages. Directors of publicly traded companies typically lack adequate incentives to oppose proposed executive pay that may exceed executives' marginal value.

Unless one starts with some sort of quasi-religious assumption about the efficiency of markets in executive pay, I find it difficult to reach the conclusion that executive pay closely approximates marginal value to shareholders.

What labour they are not producing anything.