The rise in CEO pay actually correlates partly with transparency. People thought reporting the pay would shame the waste, but it resulted in CEOs paid more reasonably feeling undervalued, and that drove their pay up.

There needs to be systematic rejection of this nonsense, like all companies agreeing together to pay more reasonably and otherwise pay employees reasonably.

The real best answer is probably a more progressive income tax (ideally with a Universal Basic Income funded by a negative income tax). Then CEOs can brag about how much more taxes they pay than others given how much higher their salary is, but we don't have to have so much waste and inequity.

Also, capital gains gets taxed as income.

That, is the most heart stopping sentence you can say to an American rich person. The tax structure is setup to tax the poor and middle class the hardest. If you are in a class that can do capital gains, 83b elections, double irish -- no taxes.

So that 15% long term rate ends up closer to 30% if you include the fact that your dollar is worth less today than when you bought the stock.

I did some rough math on putting money into the stock market vs. inflation:

http://www.reddit.com/r/politics/comments/38b2u9/once_you_ar...

You know who really suffers from inflation? Minimum wage workers who's wages do not go up despite inflation.

I would be completely fine with charging personal income rates on capital gains, as long as the capital gains are counted above inflation.

A 17 year doubling rate is a PA return of 4% if you're only expecting a 4% yearly return then yes shares aren't great, no shit. Also you can control your CGT liability by choosing when to sell.

On top of that you're doing calculations on stock market investment without looking at dividends? I mean given how cheap it would be for a billionaire to pay shills for this sort of thing, and how terribly damaging an increase in CGT would be for them.

Actually giving you the benefit of the doubt frankly you really SHOULD sell this sort of posted logic as a service. LAAS the next big HN thing perhaps? :D

Sure, if you invested in 2002 then your returns might be 2.5x today and the inflation lower, and the tax rate might be 20% (or whatever, I'd have to redo the numbers)

If you invested in 2000, however, you'd make 40% on your investment, lose money to inflation and THEN pay capital gains tax. You'd be getting taxed for losing money.

So I picked a more neutral date like 1998 where it wasn't a bubble yet, but not close after a crash. I didn't include dividends because I'd have to add those constantly as the divident yield from S&P 500 changes from month to month. It's around 2% (actually under 2% for the majority of the last 15 years), though, so that does change the numbers.

I would say then the inflation is around ~2%, dividends around 2%, stocks grew around 4%, so around 6% year-to-year nominal profit which you would pay 0.9% capital gains tax, and 4% real profit which is 22.5% capital gains tax (0.9/4 = 0.225)

Consider the following: A single individual with $200,000 salary with two personal exemptions would pay $45,000 in total taxes which is the same overall rate even though the marginal rate is 33%

So a rich individual who doesn't work, but only sits on $5,000,000 that yield him $300,000 a year (and that 5M loses $100,000 of purchasing power a year) would pay the same federal taxes as an individual who just works for his $200,000

The only way to make a long term gains tax fair is to allow you to spread it out over the time it took you to make the gain. And even then it isn't really fair.

If you make a company and sell it in three years for 50 million, why is it fair that you only keep 5 million?

Of course. By the time you're selling it, most of the actual value is being created by people beneath you.

I believe that's called wage fixing, and is illegal.

As americans we are trained to forget that it is possible to have collective norms that are enforced by law. And indeed there are many who believe that all government regulations are ipso facto immoral; while conveniently forgetting the government granted monopolies and subsidies that make them wealthy. "Ayn Rand fuck yeah, but don't touch my soybean subsidies." 'merica!

Government regulations can easily be illegal. Happens all the time.

This seems reasonable, and I don't disbelieve you, but do you have any pointers to studies that back-up this conclusion?

Dan Ariely talks about this in his research, how important the comparison issue is. People feel more rewarded being the highest paid and undervalued being the lowest paid. As long as all numbers are above a comfortable base income, this comparative element overwhelms any actual significance of the absolute amount of money.

http://www.vox.com/2015/5/18/8619687/paul-krugman-ceo-pay

http://www.bloomberg.com/news/articles/2013-11-24/swiss-vote...

The article also says that the same law (with public voting) would have had a much larger success rate in Germany where apparently three quarters of the population would vote in favor.

I wonder how such a public vote would turn out in the USA.

My question, out of curiosity, would be, if lowering compensation for top execs would not lower productivity (as the article predicts), why isn't it done then?

What do you think would happen to engineer pay if compensation were determined by a vote of a group of peers and you knew that the person who's pay you were voting on today might well be among the group of people determining your pay tomorrow. Personally I would always vote to increase pay by as large a number as I could possibly justify with a straight face.

Perhaps a movement could be begun where companies use low ceo/worker multiplier as a marketing tool to highlight how pro-staff they are and by extension how pro-consumer they are.

My 2 cents, the 80s is where automation truly started to take off, in the 90s, IT took over.

More work, less costs.

I find that people in tech are outraged by Big Corp CEO pay, but don't bat an eye when the founder of a successful startup walks away with $40M while the employees still live in rented condos and each get a fraction of a house down payment.

Hiring CEOs is a competitive marketplace like anything else and boards need to attract the best individuals in whatever way works best -- maybe the most fair way to compensate CEOs is through one-time, slow-vesting stock grants so that the CEO's "salary" they make each year is closely correlated to the value of the company (and therefore, to their success).

I bet they would outsource all such jobs, even more so than they do now. The typical big company doesn't employ cleaners or restaurant staff, they hire companies who do it for them.

I also bet that 'schools' would be created where what used to be new employees get trained for years, partly on the job, and get some compensation for it (a bit like the partner system in legal firms, but one where the not-yet partners technically work for a different corporal entity)

At the companies providing those low-paid services, there would be pressure to automate away the lowest paid jobs not because they can be done cheaper, but because they would allow management a pay rise.

It would be interesting to see what people would come up with, but I'm not sure I would find it an improvement over what we have now.

And that competitive market place may only exist because those in the set of CEOs artificially keep that set small by only shopping within their group.

This article seems to be saying that a portion of CEO pay can't be attributed to free market competition for talent alone.

1) This is research by a partisan think tank. That's not to impeach the source, only to encourage deep criticism about what the data is actually saying -- whether you agree with it or not. (In fact, I find that stories like this that I agree with I need to be especially careful of embedded spin because of the difficulty I have difficulty in seeing it.)

2) If we're all going to have robots working for us in 100 years, the effective ratio between the bottom workers and the top ones will be infinity -- that is, the entire idea of a happier future is machines doing all the grunt work and people just doing creative things that they find value in. This data may be a sign we are on our way there -- I'd be careful about destroying our future before we get there.

3) The measure here is being made with "comparably-paid workers" So the inference is that you can compare specialty doctors and CEOs, or stock brokers and CEOs. No matter how you justify it, I don't think such a comparison holds water. Are good stock brokers making 20x the money that bad stock brokers make? Perhaps. But does that mean that there would be a similar 20x range among CEOs? No, of course not.

4) I hate statistics-based social policy advocacy because there's always this underlying idea of the old "We take an aggregate number, make some broad generalizations about causality, then announce that the conclusion we had already reached before beginning our work is now evident." mentality. Carrots are poison? Sure, because 100% of the people who eat carrots are dead within 115 years. The only causal relationship I can come up with for CEO pay is the obvious one: highly-paid CEOs get that way because they manipulate the board into paying them that kind of money. This in itself is a skill. Creating large majorities of agreement among diverse stakeholders while maintaining a vision may also be a highly-paid skill among CEOS, and it may be related to their ability to manipulate boards, but even that is a bit of a stretch.

Beware facile arguments about complex topics.

so I can min-max