Re:Barclays CEO pay slashed after he tried to identify whist...
by logicallee on Wednesday April 12, 2017 @03:57PM
(#14101162)
I was specifically responding to this:
>Doesn't this undermine the argument that CEOs need outrageous salaries to be incentivized to work, if you slash their salary, and they keep working?
You say, "if you slash their salary [AS A PUNITIVE MEASURE!!!] and they keep working", doesn't this undermine the argument that they need to be paid that much?
In very precise economic terms, no it doesn't. That is the answer to the question you just asked. Don't shoot the messenger, please.
Please realize that you asked a mathematical statement about microeconomics, which I answered. You asked this specific question: "if they keep working if we slash their salary, doesn't this undermine the argument that they need to be paid this much" and the answer is "no it doesn't."
You will probably grossly misinterpret this but suppose that you are among a group of exploitative managers who pay employees $1.17 per day. The way this is set up 0.17 is a bonus, $1 is the base payment. José, one of your best workers, has been showing up half an hour late every day. Finally you have had enough of this and say, "José, due to this lateness we are reducing your pay to only $1.13 per day next month." The following month José comes on to work on time, and starting the month after his $1.17 is reinstated.
Next at the next manager's meeting, the evil version of YPCrumble makes the same logical mistake that you just did. The evil YPCrumble twirls his mustache and says: "I noticed that José came to work on-time all this month, though he was ony being paid $1.13 due to being so late every day last month. But he came on time. So doesn't this undermine the argument that workers need to be paid $1.17? Since they are also willing to work for $1.13."
Let's step back from the MORALS. Does José's coming to work for $1.13 prove that the plant's 1,000 workers would work equally well for $1.13 that they do for $1.17? Couldn't the plant save $4 per day by slashing everyone's pay from $1.17 to $1.14?
Very simply NO IT DOESN'T. The fact that José showed up to work for $1.13 every day in no way, shape, or form show that $1.17 was too high. It is a simple and precise false microeconomics statement to say that it does imply this.
I am not making a political statement, just answering your question.
>Doesn't this undermine the argument that CEOs need outrageous salaries to be incentivized to work, if you slash their salary, and they keep working?
You say, "if you slash their salary [AS A PUNITIVE MEASURE!!!] and they keep working", doesn't this undermine the argument that they need to be paid that much?
In very precise economic terms, no it doesn't. That is the answer to the question you just asked. Don't shoot the messenger, please.
Please realize that you asked a mathematical statement about microeconomics, which I answered. You asked this specific question: "if they keep working if we slash their salary, doesn't this undermine the argument that they need to be paid this much" and the answer is "no it doesn't."
You will probably grossly misinterpret this but suppose that you are among a group of exploitative managers who pay employees $1.17 per day. The way this is set up 0.17 is a bonus, $1 is the base payment. José, one of your best workers, has been showing up half an hour late every day. Finally you have had enough of this and say, "José, due to this lateness we are reducing your pay to only $1.13 per day next month." The following month José comes on to work on time, and starting the month after his $1.17 is reinstated.
Next at the next manager's meeting, the evil version of YPCrumble makes the same logical mistake that you just did. The evil YPCrumble twirls his mustache and says: "I noticed that José came to work on-time all this month, though he was ony being paid $1.13 due to being so late every day last month. But he came on time. So doesn't this undermine the argument that workers need to be paid $1.17? Since they are also willing to work for $1.13."
Let's step back from the MORALS. Does José's coming to work for $1.13 prove that the plant's 1,000 workers would work equally well for $1.13 that they do for $1.17? Couldn't the plant save $4 per day by slashing everyone's pay from $1.17 to $1.14?
Very simply NO IT DOESN'T. The fact that José showed up to work for $1.13 every day in no way, shape, or form show that $1.17 was too high. It is a simple and precise false microeconomics statement to say that it does imply this.
I am not making a political statement, just answering your question.