How are you better off if an overpaid VP is laid off and replaced with a cheaper VC? Try to be specific.

The word "irrational" doesn't mean "idiotic", by the way.

The company has an extra $150k to spend on everyone else, R&D or sales, or distribute as profit. I think it's a net positive (for the employee, company and/or society).

Before the VP got his pay cut, you made $100k. After the VP got his pay cut, you made $100k. Explain to me how this is a rational thing, in the economic sense of "rational", for you to care about.

Wanting your employer/society to perform better is pretty rational in my book, and could result in personal economic gains in the future. I think you are working with a very narrow definition of "rational" here (earning more money right now).

Here is an analogy: the business has $150k to spend. Would you rather have it spent on a pair of paintings for the meeting room, or in company-wide renovations? I think it's rational to choose the latter, though it doesn't immediately affect your bottom line.

> Explain to me how this is a rational thing, in the economic sense of "rational"

Ah, I think this explains the disagreement. That kind of "rational" has nothing to do with fairness, and everything to do with maximizing individual payoff. I think you've conflated the two, when they're almost completely incompatible. I knew you were a closet republican ;)

What definition of "rational" are you working from?

Maximizing individual payoff is not necessarily contradictory to more intuitive notions of "fairness". One ignored variable is the timescale you're maximizing over. If your company spends money on other things than exec pay, you (and others) are very likely to do better in the long run, in ways that are not mathematically (or computationally) quantifiable, at least by existing theories (or resources). But just because something is not quantifiable does not mean that considering it is "irrational". Rather the opposite, you are using what computational resources you have personally (emotions and intuition) to judge this, rather than ignoring it completely.

This is why I get supremely annoyed at claims that a specific non-mathematical argument is "irrational".

(Examples of non-computable things: company spends resources on R&D and makes more long-term profit; company spends resources on higher pay for everyone else and boosts morale; reputation of company increases and you attract a wider pool of potential employees; etc.)

In more mathematical terms, greedy optimisation algorithms in the name of short-term "rationality" most often lead you to a local, not global, maximum.