You misuse economic theory by simply using it to make unsubstantiatable claims pretending that it somehow proves anything as long as you use the right magic words from economic thinking.
It’s pretty easy to figure out. Typically there will be exactly one person the board is willing to trust. It doesn’t matter how they reached that conclusion.
Being the only person in the world deemed suitable for the task gives incredible leverage when demand is near infinite.
> You misuse economic theory by simply using it to make unsubstantiatable claims
It would appear that you’re simply overthinking this. We’re talking about basic supply and demand, not a complex economic theory. It is simply an observation of what people agree to. We call it basic because it doesn’t represent anything more.
I refer to what was written above. The only "thinking" I can see on your side is how to prolong a non-argument - you just throw out random stuff, going for quantity and endless repetition, but there is not a coherent recognizable thought. Nice try, but I'd say after your first reply it turned into trolling. You are pretty good at saying a lot without saying anything at all though, I give you that much.
Board Member: "Why are you paying your brother $500k to be your assistant?. Surely an assistant shouldn't make that much money."
CEO: "I really want my brother to do it, and since I only have 1 brother it's just basic supply and demand."
You can basically frame any human interaction in terms of supply and demand, but it's not really useful to do so. And it's certainly not what most of us have in mind when we talk about "basic supply and demand".
Worthless in what way? Supply and demand is far easier to write than this long-winded explanation I have ended up giving to explain what it means. That seems well worthwhile, at least when in company who understand the meaning of the term. It is not like it is some grand unified theory of economics, if that is what you were hoping for.
> You can basically frame any human interaction in terms of supply and demand
Absolutely. All interaction has some cost, and supply and demand observes the willingness of all parties to accept that cost. That is exactly what supply and demand is all about.
> And it's certainly not what most of us have in mind when we talk about "basic supply and demand"
What is it that most of you have in mind? Supply, by definition, is the quantity of a product available at any price. Demand, by definition, is the desire and willingness to pay a price. Supply and demand is simply the observation of both and how they interact with each other. I am honestly unsure of what else you could think it means?
That's just basic supply and demand. Since pay is public, people know how much the other party will balk at, affecting the supply.
> 2. The incestuous relationship between CEOs and the boards of directors that set their pay.
That's just basic supply and demand. Like I said, the people who have that kind of relationship are vanishingly small.
> CEO compensation isn't tied to performance.
There is no pay that is truly tied to performance. Just basic supply and demand.