Capitalist Philosophers And Fundamentalist Protestants

[tolbiny]

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I'm not into economics, but what would be the damage to the economy if she got 9.9 mil. or 5M. Or if we told he to perform or we'd cut her balls off or. I don't see the connection between her salary and the efficiency. i see the connection between the efficiency and the economy.

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Because its been shown that people work better when gien incentives to.

[akaLogic]

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People who are rich for technical capitalistic reasons do not truly deserve to be a lot better off than hardworking chemists in Burma. Period. Philosophers who try to claim otherwise are rationalizing.


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Ad hominem.

[luckyme]

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Because its been shown that people work better when gien incentives to.

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agreed in a general way ( dodging the 'cash is the only incentive' issue). I wanted to find out why exactly 10M. not 9.9, not 5. not an extra 4 weeks in lala land. When does the system fall apart, and if 10M produces 20M in efficiency, will 20M salary produce 40 Mi in efficiencey.
I'm trying to figure out the direct link between a specific salary and a specific increase in productivity ....and how we know it.

luckyme

[tolbiny]

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Because its been shown that people work better when gien incentives to.

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agreed in a general way ( dodging the 'cash is the only incentive' issue). I wanted to find out why exactly 10M. not 9.9, not 5. not an extra 4 weeks in lala land. When does the system fall apart, and if 10M produces 20M in efficiency, will 20M salary produce 40 Mi in efficiencey.
I'm trying to figure out the direct link between a specific salary and a specific increase in productivity ....and how we know it.

luckyme

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We don't "know it", but thats where competition comes in. Those companies who either accidentally or intentionally get closest to optimal will do better than those that don't. The less "interference" by government the better the system ought to work.
As an aside on CEOs- a big name might not encourage 10 million in extra effeciency, but might easily make it up in confidence in the public which would lead to more investment.

[luckyme]

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We don't "know it", but thats where competition comes in. Those companies who either accidentally or intentionally get closest to optimal will do better than those that don't.

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hmmm.. I guess it was a tougher question than I thought. I'll try a different route...
Did Warren Buffet screw up bigtime giving him money to Gates to manage not realizing that Gates wasn't getting any big bucks to manage the organization and therefore will screwup badly.

I read that Expo 86 in Vancouver had a CEO that took it on for $1 and it was the only Expo that came in on time and on budget.

I understand incentive, I understand efficiency gains, PR gains, etc. I'm trying to nail down this linkage so that 'poorly paid CEO = badly run company' or well paid CEO = well run company and how we can be so confident that the market isn't full of Enrons, etc. As well as the specific amounts always ending up to be correct.
no hurry.
hope that's clearer, thanks, luckyme

[BCPVP]

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Or if we told he to perform or we'd cut her balls off or.

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[img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img]

[luckyme]

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we'd cut her balls off or.


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from the sexist 'she's got balls' school of thought.

[Borodog]

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I'm trying to nail down this linkage so that 'poorly paid CEO = badly run company' or well paid CEO = well run company

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There is no such linkage. At least not in the form of a guarantee. All else being equal, companies that consumers prefer to other, competing companies will achieve higher revenues. Companies that "overpay" their CEO will achieve lower profits for their owners. Companies that underpay their CEO may not be able to secure the caliber of CEO they require. Some companies may have Forrest Gump at the helm and not be able to lose. Other companies might have Einstein at the helm but the public turns fickle that year.

In the long run profits and capital will accrue to those who best satisfy the public.

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and how we can be so confident that the market isn't full of Enrons, etc.

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It was the market that exposed Enron. It was the government that put the regulatory environment in place that created Enron. Lastly, what was done at Enron was not even illegal, nor particularly unethical. It amounted to shifting some numbers from one section of the books to another in order to spin a rosier picture.

Lastly, whatever fraud or theft there might be in the market it is illegal (unless someone gets special legal dispensation from the government). The fraud and theft of the government is legal by definition, and occurs on a scale vastly larger than anything in the market.

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As well as the specific amounts always ending up to be correct.

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Define "correct." If everyone in the system exchanges voluntarily, how can you possibly claim that the negotiated price of any transaction is "incorrect"?

[luckyme]

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Define "correct." If everyone in the system exchanges voluntarily, how can you possibly claim that the negotiated price of any transaction is "incorrect"?

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I meant correct as a concept that relates to something being optimal. I agree to have my house painted for 1K, next day I find out I could get it done just as well for half that. There would seem no connection between the price I pay and the job being done. IT's not an issue that the 1K is 'unfair' or 'he doesn't deserve it', I agree with the 'freely entered into' part.
I just don't see how anyone can tell me that 1K is what it takes to get a house painted well.

That is what the CEO claim seems to be. 'We Have to pay X in order to get good results'.

You seem to be saying it's an averaging out thing and it's the overall system that we need to judge..all the CEO's, all the painters. OK, I doubt anybody can be sure about that, but I have no problem with the concept.

How does that mean that we can't say "Hortense was not worth his 10M" Hortense can't take credit for the great workings of the entire system, any more than a butcher surgeon can take credit from the good work of the great ones, or the medical profession in general.

WHy should Hortenses pay be considered 'correct'? I certainly feel I made a mistake hiring that first painter.
that version of 'correct' ..

if that's any clearer, luckyme

[GMontag]

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Attacking the accumulated capital that underlies the productivity of civilization and provides the demand for labor, in some misguided attempt to redistribute "opportunity" in the short term must result in a geometrically compounded loss of opportunity in the long term.

Imagine that the capital stock of society produces a profit of 10%. Assume that 20% of this profit is consumed in orgies, hookers and blow by evil capitalists. The other 80% is reinvested, because evil capitalists like to make money. This vast bulk of this productive capacity is aimed, inarguably, at the masses. For example, far more productive capacity and labor is employed creating Fords and Toyotas than Bugattis and Ferraris.

The capital stock grows at a rate of 8% per annum. After 10 years, the productive capacity of society will have grown by almost 116%.

Now imagine that in an attempt to redistribute the opportunities for hookers and blow, 25% of what would have been reinvested is diverted into public hookers and blow programs for the masses. This leaves the capital stock growing at a rate of 6% per year. After ten years, the capital stock has only grown by 79%. That is almost a 70% loss of accumulated capital, i.e. productive capacity. Society is drastically poorer. The general public is drastically poorer, in absolute terms of standard of living.

These particular numbers are aribtrary. I made them up. The time frame does not matter. The point is that eventually, by attacking the accumulation of capital that forms the basis of productivity, society must inevitably suffer drastic material privation in comparison to what might have been.

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That argument is a load of crap. The profit rate that the society's capital produces isn't some set number. It depends on (among other things) the distribution of wealth in the society. If the distribution is too top heavy (or bottom heavy), then a redistribution effort will *increase* the profit rate, which can more than account for any loss of capital growth.