It's a delusion to imagine that everyone could choose to go live in the woods and revert to a subsistence lifestyle. For most people, there's no meaningful alternative.

You're ignoring secondary effects, which are hugely important here.

An economist (maybe Brad Delong?) pointed out that one of the things that's changed in recent decades is that even among rich people there's more inequality. A rich person is likely to know somebody way richer, which scales their expectations up. People, being primates, tend to be status driven, so relative wealth drives a lot of behavior.

If we get CEO pay down, everybody else is going to be more chill about pay, because they'll feel less behind the Joneses.

What we don't seem to have is enough people embarrassed about being wildly wealthy compared to others. We need more Mackenzie Scotts.

No single human needs a billion dollars. The end.

Does one single human have a billion dollars or do they have ownership shares in companies which generate jobs and economic value?

Big difference if you ask me — this is what I like to call the Scrooge McDuck Fallacy.

Are we punishing Future Crime now?

Whenever this topic rears its head people always assume the latter and try to convince others to do the same.

But even that's conceding too much to your fantasy. The gauzy notion that a billionaire owning shares in something means they're "making the world a better place" is sus in all sorts of ways.

One, a lot of shares in things are making the world worse. The fossil fuel industry alone is worth trillions of dollars, and they're vigorously exacerbating an existential threat to humanity. There are trillions more tied up in finance, most of which is not serving anybody, but instead is parasitic on actual productive work. And don't even get me started on private equity's vigorous (and profitable) destruction of value.

Two, another huge chunk of richie-rich money is from rentier activities. Look at all the shitty landlords out there, for example. Are they making the world better? No, not at all. They're going to buy a thing that people need and squeeze those people for all they can get, generally doing the minimum (or well less) in terms of maintenance.

And three, the productive stuff would still happen in a world where we didn't have billionaires. The magic power of the market would still be there to organize flows of value. Indeed, I'd be glad to argue that it would work better. Billionaires face very little in the way of market discipline. Look, for example, at Elon Musk and Twitter. Even he admits he burned $24 billion so far. Has that slowed him down? Nope. He's still stepping on rake after rake. While his car company also isn't doing so great, having lost $500 billion or so in value.

And no human being needs however much you're earning, as people in third world countries survive on far less. Life's about more than "need", and if you give the government enough power to prevent people having more than they need, you inevitably create a horrible dystopia, probably accompanied by genocide, like happened in Russia, Chinaa and Cambodia when they let the government make the final decision on how much wealth people are allowed to have. Because when the people in the government have that power, they'll inevitably decide that they're the only ones who should have wealth.

Note, for example, that the Nordic countries do very well by this measure. I'm no expert, but why do you think Denmark is a "horrible dystopia, probably accompanied by genocide"?

[0]: https://en.wikipedia.org/wiki/List_of_sovereign_states_by_we...

We can absolutely have surtaxes on personal wealth that effectively limit people to a billion dollars.

We could for example have a 100% surtax on building a superyacht or buying an island in Hawaii or any political donations above $50,000.

These taxes could then just offset payroll and income taxes for lower wage citizens. Pure redistribution, tied to work.

Taxing superyachts isn't Cambodia.

To be accurate, these people don't produce anything themselves. The labor that goes into creating the products and services is what's producing things. These people move capitol around. The boards of directors of the corporations that employ them are populated by other people like them. They're all a group who primarily are in the same occupation, and have a vested interest in seeing coordinators of capitol be paid extremely generously.

Compare this with CEO salaries in Scandinavia or Japan, which are significantly lower and yet their companies are highly competitive.

My theory is that this country never got over its yearning for a stratified class system, with a full-blown landed aristocracy and monarchy. We have a little taste of class mobility, but as soon as people move up the ladder they frantically scramble to pull it up behind them.

Are they? Those countries trail the US when it comes to labor productivity.

The main thing to consider is this: what's the point of diminishing returns? Are we missing out on eve greater GDP per labor hour because CEOs are only making ~250x the average worker salary? Could we 10x our GDP per labor hour if we paid them 2500x? Or is it possible that CEOs would work just as effectively at "only" 30x average worker salary?

That's mostly due to fossil fuel reserves rather than the people actually being more productive.

>They have an extremely productive manufacturing sector, but a less productive service sector, and the service sector drags down the average.

That raises the obvious question: why are their service sectors so much less productive, so much so that their overall productivity is lower than the US?

>The main thing to consider is this: what's the point of diminishing returns? Are we missing out on eve greater GDP per labor hour because CEOs are only making ~250x the average worker salary? Could we 10x our GDP per labor hour if we paid them 2500x? Or is it possible that CEOs would work just as effectively at "only" 30x average worker salary?

By what mechanism do you think that cutting CEO pay will 10x GDP per labor hour? As other commenter shave mentioned in this thread, CEO compensation is a drop in the bucket compared to rank and file compensation. Getting them to work for free will at best raise the rank and file compensation by a few percentage points.

If fossil fuel reserves determined productivity, Venezuela should have some of the most productive workers in the world. I invite you to compare GDP per hour worked to oil reserves per capita and point out the correlation. Ireland actually also dominates the US in GPD per hour worked, and they're down around 87th in the world for oil reserves.

> That raises the obvious question: why are their service sectors so much less productive, so much so that their overall productivity is lower than the US?

An even better question might be: Why does Japan outrank the US in standard of living even though they have markedly lower productivity? Seems like US workers are getting a terrible deal.

> By what mechanism do you think that cutting CEO pay will 10x GDP per labor hour?

I never said it would, I'm saying that we're well beyond the point of diminishing returns in CEO pay.

Beyond a certain level, wealth isn't about being able to meet one's needs and it becomes a lever of power. This is well evidenced by the fact that the wishes of the voters have almost no correlation with policy outcomes in the US, but the wishes of the upper class are strongly correlated. This goes back to my earlier point, the purpose of stratospheric CEO pay isn't about compensation for value delivered, but rather a way for a class of people to entrench their dominance through an unchecked focus on their own interests.

In that world, specifically Europe, people have gotten much richer but economic inequality isn’t through the roof like it is in the Anglophone countries.

That disproves the idea that it’s some sort of natural law that has led to the massive rise in inequality in Anglophone countries as opposed to deliberate policy choices.

It’s really fascinating seeing Americans, whether on the left or the right discuss issues in the US. At least 80% of the claims and arguments can be dismissed by simply looking at the rest of the world.

Europeans move to the US to start companies. Americans move to Europe to retire.

CEO salaries are actually not that high. All these claims of the high salaries lie by calling total compensation "salary." Some of that is options, some of that is stock. Bernie is great at that, making inflamatory tweets designed to make people angry - like claiming trillions were made by the top 1% during covid. And this angers people. What he doesn't say is that he's lying. Some stocks went up. Heck, the value of my used car during covid went up. Did I make money? Heck no.

What we're talking about here, is taxing unrealized capital gains. What the left does, is lie to a bunch of financially-a-doorknob cashiers, teenagers, and poor people to make them angry and violent. Well guess what, after some of these stocks went up during covid, they crashed. So are we giving back billions in tax refunds after taxing those unrealized cap gains? Bernie seems to be suspiciously quiet about that. Instead he's now yelling how oil companies are making record profits.

Of course when the left says "record profits" that means they're comparing them to some other periods of profits - and they are. They are comparing them to the profits oil companies made during covid lockdowns, when an oil barrel had negative cost because no one was driving or flying.

There are huge compensation difference between the average worker and CEO. The reason CEOs are given huge stock options, is because their income then depends directly on the company value, so it's in their interest to drive it up. The compensation of a cashier does not depend on company value, so he doesn't get those options - he gets minimum wage.

Then the left goes "you can't live on minimum wage" - and they're right. And the cashier doesn't have to. He's a 16yo kid who lives with his parents. People under 25 - school and college, make up half of minimum wage earners. Of those, only 5% of teenagers made minimum wage, and only 1% of people over 25 do. Keep in mind, minimum wage federally, is a lower bound - it's what you get in a small town in iowa where rent is $400 for a studio. In other places where it costs more to live, local minimum wage laws make it higher - like $15.

But that's not how it's presented. It's presented like minimum wage earners are supporting families, and make $7.50/hr in NYC. This is a lie.

https://www.bls.gov/opub/reports/minimum-wage/2020/home.htm

But let's say it's not. Why is it up to a corporation to make sure people make enough to support themselves? Why is it up to a corporation to pay for a mother's time off when she has a kid? What in the world does a company making gaskets have to do with Wendy having a baby?

These tasks are up to society, which needs to redistribute money so no one is in dire need, and no one is left behind. Taxes need to go up - not just on the rich CEOs, but on the middle class and especially the corporations. And the corporations need to be left alone to pay employees their market rate - even if it's $3/hr. Our issue is, we are assigning social support tasks to corporations making gaskets, and social support is not a company's responsibility. Neither is making sure the CEO compensation is closer to the average worker's. They're a private entity, they can do whatever they want. The gov shouldn't dictate to a company who should get paid what. They need to tax that company, put the money into a pool, and distribute it back to the people to make sure we are all well.

>"At the very same time, the CEOs of the companies they work for are making more salary, making more compensation than they've ever made before."

Moreover to claim that other compensation (you call it unrealised capital gains, how do you know they are unrealised, at least part of them are realised), is not contributing to the" pay gap" seems to me a much bigger lie. And yes the pay gap has largely increased because execs are given much higher stock packages, but it is still an increase in compensation, effectively they are being given more value while normal workers salaries have stagnated.

So you argue that the CEO salary depends on stock options so he is interested to drive the company value up. Well lots of exec emails claim that all those workers should be doing their best because they are crucial for the company, but they are never given the same sort of options. Why should regular workers not get stock options amounting to potentially 100s of times their regular salary, just like the CEO?

> Taxes need to go up... especially [on] the corporations

This is a bit complicated. What does it mean to "tax a corporation"? Do you tax revenue (even on unprofitable companies)? Do you tax profits (when Finance can instead divert profits to stock buybacks etc.)? Do you tax assets (even illiquid ones)? It's difficult to touch this without unintended poor consequences.

It's better to tax personal assets above an exempted minimum, plus capital gains taxes. Allow tax-free: up to x acres of land, 1 apartment up to $x million (indexed to inflation) in value, x% ownership in enterprises valued at $x million or less, etc., then tax the rest annually at x%. As a matter of policy, balancing this against the illiquidity of assets is then a question of the size of the assets, asset types, cash flow of the illiquid asset, other liquidity in an individual's portfolio, etc.

Does this mean that some of those assets will need to be sold or diluted to either pay or reduce the tax bill? Yes, but that's the societal good, because it dilutes the concentration of capital.

In the US? You have far right and right. There's no left.

And where do the heirs expropriating surplus labor time from those of us who work fit into this constellation of efficient people able to produce more? Where does the aristocracy of the Rockefeller/Vanderbilt/Hearst/Mellon dynasties come into this inequality picture?

Tim Cook, Sundar Pichai, Satya Nadella, Carl McMillon (Walmart), Jamie Dimon, John Stanken (AT&T), John Hammergren (McKesson), just to take a random sampling of top companies going down the list. I find that they're all from non-rich dynasty beginnings.

So do we go making policies based on your stories about children of robber barons?

If there are 10 companies competing for the same market instead of 1-2, that's 5x more CEOs, 5x more accountants, 5x more engineers, much less inequality, and much more chances of actual innovation.

This is quite disturbing actually, the "new wave of companies" isn't here anymore.

There hasn't been a significant effort to enforce antitrust in the software domain since United States v. Microsoft Corp in 2001, and we are seeing the consequences.

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[1] https://www.theverge.com/2023/3/13/23637675/microsoft-chatgp...

Will anyone say no to something that's "free"? Assuming it's electronically transferred no interaction is even required.

Even if you asked a billionaire if they'd like an extra dollar, are we expecting them to say "no, my account is too full - don't you dare put it in!". !?

The IRS is trying to incinerate dollars at something like the rate the Fed generates them, which is not a bad system (you’ll notice how many people invented the “gold sink” in game economies). Keeping deficit spending inside some tolerance is about sovereign debt auctions, not like, running out of green ink.

The argument for not doing this kind of shit is that no one will work hard or innovate if there isn’t permanent dynastic wealth and legal immunity as an incentive: wrong. People will work insanely hard for mere absurd luxury and favorable treatments by the courts.

You punitively tax this stuff to make “wannabe serial killer” seem like a comparatively attractive job opportunity vis-a-vis CEO of Herman Miller.

Income taxes makes up 50% of federal tax receipts, and disincentivize productive individuals from working by taxing their income more. According to your theory, income taxes aren't there to collect revenue, they're to... incentivize people to work less?

[1] https://www.taxpolicycenter.org/briefing-book/what-are-sourc...

I’m saying that there’s a legitimate debate about whether Bond-villain, capture-oriented, smash-and-grab, “how many TVs can you carry” career tracks should pay off for anyone.

HN is in general the smartest crowd on the net, but there are a few blind spots, and being able to throw one rock in any direction and hit 9 “temporarily impoverished billionaires” is one of them.

And yet the most productive societies have the highest tax rates...

Clearly, this theory that taxes disincentive productivity does not comport with decades of empirical evidence. Literally nobody who values money says, "I could make 1 billion dollars but since I'll only get $450 million after taxes I'm just going to sit on this beach and do nothing instead."

The first one that comes to mind for me is “GDP per capita” and when I sort that list in descending order my first thought isn’t “those are some high tax rate jurisdictions at the top!”

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?most_rec...

1. Income tax applies to everyone, not just billionaire startup founders. Doctors might be well paid, but I'm very skeptical that they'll be equally willing to work more hours if their marginal returns from working was halved by taxes.

2. going back to the claim that "taxes [...] aren’t first-order about generating revenue, they’re first-order about creating incentives", what are income taxes supposed to incentivize then?

And shockingly, despite the "high" tax rates of CA and NY, almost of my clients prefer to live in these high-tax jurisdictions over low tax jurisdictions like FL where they would keep more of their money. Some of them even choose to live in the EU, where even more of their money goes to taxes.

The CEO pay gap in the US was 399x that of the average worker! that is ludicrous! What that means is that if that company cut the pay for the CEO by half, it would leave enough money on the table to pay about 200 new hires at the average salary - which may bring down the number of hours each person currently works.. or if you decide to just pay employees a bit more, they may be able to meet their expenses a lot easier.

And getting 200 new jobs in a 100,000 employee company won’t even move the needle.

https://www.newswise.com/politics/widening-wage-gap-between-...

It is indicative that the boards and the CEOs are extremely self-serving. If you believe the company is doing well, reward the employees more than yourself. That is what ethical human beings do.

To quote the article above: “Businesses are mostly rational actors that pay what they need to, to find the right talent. On the other hand, the US differential exceeds other sophisticated economies by far,” Professor Bailey says. “Why in Europe and other economically evolved economies, is this differential so much less? In Switzerland -- one of the richest countries in the world -- the difference is $150 to $1. Our salary gap between executives and workers isn't in sync with the rest of the world.”

It's not measuring CEO pay to median employee, it's "The CEOs at America’s largest low-wage employers". So they basically looked at the largest companies that paid the lowest wages.

CEO pay tends to align quite well with not just performance, but also company size. Would you expect a CEO of a low wage company that has revenues of $10B to be paid more than the CEO of a similar company with $100M in revenues? I would. Larger companies are more complex, the CEO is managing a lot more employees, the stakes are higher and you'd like hire a very different CEO for a $10B a year company versus a $100M a year company. Hence, you'd normally expect that larger companies would have a higher ratio of CEO to lowest paid employee.

That is likely one factor in why the US stands out compared to Europe. The country USA was compared to was Switzerland! A country that is 41x smaller than the US.

And look at the top Swiss companies by revenue [1]. They are commodity trading companies! They were likely entirely excluded from the analysis.

But the point stands - what is the right ratio? 100x? 50x? Should it be exactly the same for every company? Why link pay solely to the lowest employee wage and ignore all the other factors - size of the company, revenues, profits, median employee wages, wage distribution, etc?

[1] https://en.wikipedia.org/wiki/List_of_Swiss_companies_by_rev...

Well, of course, a CEO's pay is indicative of what board considers as the CEO's contribution towards the bottomline/topline vs the contribution of all employees and when a CEO's pay is so much higher than that of other employees, it is in a sense, a statement that devalues the contribution of other employees.

Given that most boards are full of top-tier executives from other organizations, clearly it is in their narrow interests to favor high payouts to CEOs. But that is also indicative of a very high sense of entitlement and so the question is not - what should the ratio be? the question should really be - is the CEO really a team player? and does he/she value the team they have setup and if so how do they honour the team when the company does well and how will they as a team deal with a situation when there is a big downturn in the company?

I am not at all arguing for a socialist/communist type of mindset - but there is a point at which the sense of entitlement that CEOs feel that does damage to their own teams in ways that they don't realise. And I say this as someone who is a CEO.

How is that? The board sets the CEO salary, not the other employees.

is the CEO really a team player?

I'm confused. So if the CEO is a "team player" then it's ok if their pay is super high?

If you pay someone disproportionately higher than others in the same team, what message are you sending to others in the team? When a CEO goes with that decision, they are devaluing their own team

I worked for a large corporation and the CEO makes at least 100x what I do, but she is also running a company of 150,000 employees, so I don't feel devalued at all. I'm paid quite well.