What you will see is that, for example, instead of top managers of a co-op making hundreds or thousands more than the median employee as in a public corporation, they make a more sensible amount which still attracts and sustains the best talent in the enterprise.

And why, do you think, shareholders don't pursue that strategy? They're giving their own money to CEOs - are they doing it just because they're feeling charitable?

In other words, your argument supposes that a LOT of individual actors, independently, pursue a strategy (overpaying execs) that isn't optimal, and you don't even bother with an explanation as to why does it happen. This logical fallacy happens all the time when exec compensation is discussed, and it really bothers me that everyone just assumes that shareholders and board of directors of so many different companies are just plain stupid.

Who should be in charge of how 'sensible' is defined? And how can you argue that it attracts the best talent? Most people outside Spain probably have never heard of Mondragón, but they've almost certainly heard of Google, Facebook, Amazon, AliBaba or Baidu.

I agree that those tech companies have greater name recognition.

The real determination of where the money goes is by the owners of the business. If one looks over the Forbes 400 richest list, we can see the heirs who drain off so much profit each year from the labor of those who work - the Kochs, the Waltons, the Johnson family. The Rockefellers fell off the list in the past few years, $2 billion is the individual cutoff and I suppose Forbes doesn't know of any individual in the family worth more that that. But I can assure you if they and their three siblings are worth 1.5 billion each, and their first cousins are all worth 1.5 billion each, they are not out there breaking the bricks.

It's amusing to hear about meritocracy and the rat race for education, skills etc. when these heirs are the people controlling the economy, and causing so many economic and other problems due to its increasing lopsidedness towards them. What are their skills and professionalism that are valued? The money they suck off from those who work is the truest lowest common denominator, rule by parasites. At least Lenin, Stalin and Molotov rose due to their merits, not their birthrights. Russia went from being a country pushed around by the Japanese, with an GDP equivalent to 1917 Brazil, to a superpower sending satellites, men into space, probes to the Moon (the first country to do so). It also had little crime and little poverty.

I am supposed to get into a tizzy about someone with less skills getting the same pay as me, when the money is being sent off to the heirs who do no work? I certainly would prefer that the people actually doing the work alongside me get the money.

Following your logic so did Hitler. Whew, my first Reductio ad Hitlerum ever, but to my defence you've started with tasteless jokes.

It's easy to fell into this 'communism was good idea but bad implementation' meme. I've lived in communism era in western Europe and believe you me same things were happening as you describe (Kochs, Waltons etc), there was still '1%' just not mentioned in newspapers as 'those who got wealthy by hard work'. Lower and middle classes were basically under oppressive regime.

Russia went from one of the leading european powers to a country ran like a prison. It's easier to score up country-wide achievements like moon probes if you have slaves instead of citizens — a system that even the legendary lead engineer Korolev was a victim of.

If successful people couldn’t pass ownership onto their heirs, the value of ownership itself would drop dramatically. If Bud and Sam Walton knew they couldn’t pass on their business to their kids, they would either have never done it in the first place or they would structure the business to close out well before they died. Neither of these is good.

Most complaints about rational capital allocation, including this one, are based on a failure to generalize or punch through enough layers of indirection.

Pretty sure that if there were a much higher estate tax and other ways to de-incentivize generational wealth inequality that people would still find ways to exploit a semi-capitalist system by arbitraging the interface between public good and private service (c.f., the modern 1099 economy)

How confident are you in those conclusions? There are plenty of very rich people who claim that they don't intend to leave much for their heirs.

Remove this ability, and incentives change dramatically.

Do you want to use your resources to help your children thrive? If so, then you've got to be OK when extremely rich to exactly that. It might not seem "fair" when you asses heirs as individuals, as if they appeared out of thin air - but they didn't. The original founder decided to pass on his wealth to his children, as most of us would.

You can learn from a historical lesson. Do you know why medical insurance so inherently linked to the employment in the US? Because at the time of WWII, wages were fixed in a lot of places (they could pull it off since a lot of freedom suppression can pass in wartime) but employers still wanted to attract more and better workers. Thus, side benefits like employer paying medical insurance proliferated. If that were banned, there would be some other kind of compensation. Only by centrally regulating absolutely every aspect of life you could ensure this is not happening. But why would you want to live in such society? I lived in one, and it's not much fun.

There’s a reason this strategy was coupled with central-planning assignment of graduates to jobs.

Salaries already price in the “interestingness” of jobs.

Well, I wouldn't. Dealing with the general public would drain way more of my mental energy than programming. Which leaves us with two anecdotes.

My idea of the perfect worker co-op is where cashiers/programmers earn the same but that 'same' is above market value for the top level employee... so say devs go for 100k, cashiers also get 100k. Since there's no CEO/board/etc demanding 10 million/yr+ each then there's plenty to split.

Not really; the thing with the rich is that there aren't that many of them. Take the top 1% - their average income (including the people making billions) is $1.15M. Let's redistribute $1.1M of those. ($1.1M * (1% of population)) / population = 1% of $1.1M = $11k. So each person only gets $11k extra.

No, that's clearly wrong. If the top 1% get 20% of the income, redistributing their income to everyone else would give everyone else a 25% raise.

20% of 100 is 25% of 80.

So even the people in the 90th- to 99th percentiles would get a 20% raise?

But these are positive-negatives, i.e. the harm is done by being successful. When the company starts to fail, what then? What happens when a company needs to downsize? Which of the worker-owners will survive, and under what conditions? Will it be political, e.g. we all vote, so the 7 PAs who everyone loves get to stay, but the entire sales department gets voted out? What about if departments vote together? Seems very sketchy.

Ironically, the ability to survive failure is why our system perpetuates. In the hard times, hard choices can be made that are individually distasteful, but required. Evolution is driven by the non-dying breeding, and corporate evolution is similar, with company structures that can navigate the bad times - much more than maximise the good times - the ones most likely to be replicated.

I was thinking exactly the same. I’m spinning up a small technical manufacturing business and my first products will have wireless capabilities. I’d better not pay my wireless engineers and programmers the same price as my unskilled assemblers. The former can save me hundreds of thousands per year with their acquired knowledge; the latter, dozens of dollars over China. And if I ever get big enough to need C-level execs, I’ll never fill the positions with good employees on tech support pay.

This world is set up to reward value, not hard work. It’s hard work to dig a ditch, but not terribly valuable. A well-paid, intelligent, quality C-level exec can create more value in a week than a hundred cashiers can in a month.

It's a good wholesaler where employees “multiskill” so that roles re flexible; virtually all skilled professionals are probably outsourced (which isn't uncommon in firms where professional services aren't the core business, even if they aren't coops.)

Equal pay isn't a universal (or even dominant) norm for worker coops, though they do tend to have flatter pay structures than traditional firms.

> One of the most repulsing stories that I got from Soviet Union from my grandparents was about excellent engineers being on the same pay scale with manual labour workers.

Which would be germane if we were talking about either the Soviet Union or a system with that feature, which we are not.

They only coincide sometimes. Academia is one place in particular where the two do not go together.

You can have a lot of very hard to learn and impressive skills that have no economic sense whatsoever. Don't expect to get paid for them.

This can be about what you can give, it is also about what your alternatives are, what their alternatives are, what you can take away and what you can threaten.

You don't need skill or economic sense to have it.

Sometimes you have to give first.

But only sometimes.

Employers hate it when employees talk about what they get paid.

If people were turly getting paid what they are worth nobody should feel like they need to hide their paycheck from their colleagues.

Yet I'd bet most of the people here complaining about how this wouldn't work for x, y, and z reasons don't actively discuss what they are paid with their peers. Some "free" market alright.

In the US, most employees have a legal right to talk to each other about pay.[1] Supervisory employees may not, but rank and file employees do. State laws go further in some states; in California, non-disclosure terms involving pay are prohibited for all employees.

[1] https://www.dol.gov/wb/media/pay_secrecy.pdf

That's very different from a system where the government sets pay scales for the entire country, and an individual's efforts cannot make a meaningful change in their own earnings. In the system described in the article, it can.

Your reward is not commensurate with the opportunity cost of improving your output. It gets worse with larger companies.

I don't know any system (other than perhaps a carefully planned and unusually benevolent and well-funded central economy) that rewards people for the opportunity cost of increasing their skills, as opposed to the increased output gained from using their skills - one advantage of this system is that it's very clear that if I use my skills more efficiently or in a way that helps the company, a portion of that reward will go to me whether or not I can prove it to management. If I save my current traditionally-capitalist employer $1M/year due to cleverness, I'd expect to see $0.00 of that. I'm far more incentivized to get good at writing self-reviews that portray the things I'm already good at in a good light than to learn the skills to, say, optimize our AWS spend.

> One of the most repulsing stories that I got from Soviet Union from my grandparents was about excellent engineers being on the same pay scale with manual labour workers.

That's the most repulsing? Nothing about children and old people being murdered en masse? See above, more skillful grandparents would have told wholly different stories.

Would you please read https://news.ycombinator.com/newsguidelines.html and not do these things when commenting here? They reliably degrade discussion, and we're hoping for better than internet median.

It's because humans naturally resist what was being imposed upon them. The smart and able-bodied are going to get more, and they will resist any effort to prevent this. Corruption and workplace theft were rampant in the Soviet Union.

Suppression of this resistance requires violence.