I'm Bob.
I say to Charlie "I want to buy a Tractor". Charlie says "sure, 10000$".
I say "I'm good for it -- but can I pay you 300$ per year (3%) for 10 years, then pay you the 10000$?"
Charlie says "sure, your credit is good with me!".
Charlie then goes to Alice. "Hey Alice. I need some spare parts. I have a note here from Bob that says he'll pay me 10000$ in 10 years -- can I swap for some parts?"
Alice says "sure, I'll give you 7000$ in Parts for that".
Alice then sells the Bob debt to Doug for 7000$ in metal to make Parts with.
Doug then sells the 7000$ Bob debt back to Charlie to buy a Truck.
Notice that Bob Debt(tm) is acting like cash. That 10000$ note says "this is a promise to pay 10000$ on the 1st of Janurary 2017 made by Bob".
If Bob is well enough known to make good on his debts,
that promissary note is as good as cash. Now, imagine if Bob was a bank.
The Bob note would act as cash.
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Originally Posted by pan6467
There is something wrong in this country and with the system when you can pay the top 1% millions upon millions and the poor SOB that works hard for 40 hours a week can barely pay his bills, can't afford a new car, and if he has kids......
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Working hard, without any other knowledge, isn't worth shit. You need to work hard
at something useful to be worth it. How useful is it? Well, how much is he getting paid for doing it?
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I work I guess in "public service" people I work with have Master's, doctorates, nursing degrees, initials at the back end of their name.
None of the people I work with on a daily basis makes more than $15/hour. That's $600 a week. The average person I work with makes $11.50 an hour. Roughly $450/week. And in this area that is a good wage.
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Those people clearly had the chance to be highly educated, right? So, they knew what they where getting into -- they chose a path that lead to 11.50$ per hour jobs. I'm guessing that they felt that the personal fullfillment from their job would make up for the poor wages.
If they chose, they could have gone off and gotten a marketable degree and made more money. But
they chose to follow a path of self sacrafice. I believe in respecing people's choices.
Now, there are people who didn't have the opportunity to choose what to do with their lives. There you have a point -- but saying that people who had the chance to get a masters degree, and chose to enter a profession where they wouldn't get paid much?
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Originally Posted by aceventura3
I respect your position and understand the point of view presented in your post. There are some inequities in our system of compensating people. However, my view is simple. People should be compensated based on the value they add to marketable goods and services.
If a CEO or a person like Warren Buffet as the unique ability to manage and deploy capital and in the process make billions of dollars after taxes for his company and investors, he should be paid accordingly.
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I strongly suspect a good chunk of CEO pay comes from the "rockstar" effect. Ie:
1> If your CEO says "I quit", it hurts your company.
2> If your CEO chooses to embezzle, it really hurts your company.
3> If your CEO slacks off, it hurts your company.
4> If you pick someone without a history as your CEO, and they screw up, you are sued.
5> If you pick someone with a history as your CEO, and they screw up, you are much safer.
6> People will be willing to sacrafice alot to even look like a good CEO candidate.
There could be 50 people who would be perfectly competent at being CEO. But once someone is selected to be CEO, you can't go back. That person has now been dubbed "rockstar".
If you don't pay them that much, they can take their newly CEO'd CV and try to get a job somewhere else. Because they now have a CEO history, they are far more qualified to be a CEO than they where when you hired them. So you have to price your salary for CEO defensively. But so does everyone else. So you have a lovely war over CEO salaries.
By paying your CEO lots of cash, they have far less incentive to use their control to make themselves some money.
Lastly, by paying your CEO lots of cash,
it acts as a very efficient motivator for your lower-level management. They feel "if I work really hard, harder than anyone else, I too can become CEO". For every 1$ of CEO salary, you can get more than 1$s worth of total motivation from the pleeb management.
It is like a Hollywood star. Almost everyone of them is a talented actor or really beautiful person. But for everyone of them, there are 100s of equally talented and beautiful people who slaved day and night trying to get that break and never did. Once they got their break their name and their face got value.
Not all pricing is because "that is what your skills are worth". Sometimes there are two jobs -- one counts the beans (and has to be paid enough to not steal beans), the other shovels dirt. It might not take much skill to count beans, but you need to pay that job more in order to make the bean counter more likely to be honest. And other times merely giving someone a job increases their value, regardless of their skills.