[phd514]

I work for a mid-sized, publicly-traded tech company that has been inching towards profitability but the last couple quarterly earnings results have been disappointing (and rank-and-file bonuses were slashed to 25% of target) and the company had its first-ever round of layoffs last October. The CEO's last two years of comp were $20M and $10M which is obviously completely incongruous with the size, profitability, and stock performance of the company. It seems that there is a distortion in the market forces around executive compensation that functions in a similar way to venture capital -- investors are willing to pump outsized cash amounts into either funding rounds or executive comp since the occasional home run can result in stock returns that cover losses in other companies. It seems inefficient and certainly demoralizing, but I would prefer that solutions to the problem were driven by market forces and innovation rather than regulation or employee backlash.

[rachofsunshine]

> It seems inefficient and certainly demoralizing, but I would prefer that solutions to the problem were driven by market forces and innovation rather than regulation or employee backlash.

I ask this as a person who takes market forces very seriously: why?

I think it's pretty obvious at this point that these forces are not producing very good outcomes for the population (even if they are on paper efficient in the market-efficiency sense), or at least, that the public doesn't feel like they are. That's causing massive social instability that is threatening nearly the entire developed world. That instability poses a pretty high threat to the approach you're arguing for. Neither protectionist reactionaries, nor leftists, are very well aligned with free-market philosophy, and those ideologies are ascendant nearly everywhere right now. Isn't that a greater threat to free-market economics than relatively mild welfare-state and workers-rights stuff?

(Full disclosure: I am very much pro-labor and pro-regulation, so this is arguing for things I support, but even with your views it seems pretty clear to me that the status quo is dead no matter what you do. Wouldn't you rather have reforms that make the existing system work for the public than a revolution that destroys it entirely?)

[jaredklewis]

> I think it's pretty obvious at this point that these forces are not producing very good outcomes for the population

Just because market failures exist, doesn’t mean a non-market approach will work better. Our markets have a lot of issues, but so do our public policies. For me, the perfect example is land use and housing regulation. With the best of intentions, government policies have made housing costs sky rocket. Meanwhile in places like Tokyo where I used to live, limited zoning laws and straightforward building codes has led to dirt cheap apartments, wonderful, walkable neighborhoods, and clean air. Where I live in California, we’re drowning in parking requirements and environmental reviews. Nothing gets built. Air is dirty, traffic is horrible, and you have to go everywhere by car.

Like you, I’m not at all opposed to government regulation or intervention. But the devil is in the details. Would a government enforced pay cap be better than the current system? I think the only honest answer is we don’t know. We need to be humble when approaching public policy, acknowledging that how we intend our policies to function is often quite different from their actual effects.

[phd514]

Fair question and I don't think there are easy answers to the problem. I think the actions you suggest tend to result in a market environment like Europe's where there are more regulations but businesses are generally less competitive than US businesses and wages tend to be lower than in the US.

[rachofsunshine]

I get that there's an argument for "if we make sure innovation can thrive and make sure people have a lot of resources to work with, we'll come up with lots of solutions to problems and people will be able to access them". But if that were true, wouldn't it be coming through in our societal outcomes? In life expectancy, or crime, or social stability, or a general feeling of peace and safety and security?

We lag Europe by five years in life expectancy, despite spending 2x as much on healthcare. We even spend more public money on healthcare, by far. We're in worse health while we're alive. Our life expectancy is ~the same as it was in 2001, in an age of medical miracles. Our homicide rate is close to the global average, and trailing many poor countries. We have the fifth-highest incarceration rate on Earth, many times higher than countries we think of as having terrifyingly oppressive governments, and on par with several of the world's worst dictatorships. Our citizens don't feel secure: that's one of the few things almost everyone in America agrees on, and part of why we're reaching a level of instability that hasn't been seen in a rich country in a long time.

That doesn't sound like a thriving country to me - certainly not given that we started as a superpower, have had 150 years of relative internal stability, are the beneficiaries of a global brain-drain in our favor for the entire postwar era, enjoy some of the world's richest natural resources, have tons of space to spread out, have friendly neighbors who haven't made war on us in a century, invented the stuff half the world runs on, operate the world's reserve currency, and have both literal and figurative mountains of capital.

We should be a shining utopia, the envy of planet Earth. But we aren't. How can that be if we're doing everything right, or even if we're closer to right than our contemporaries?

[SR2Z]

> We lag Europe by five years in life expectancy, despite spending 2x as much on healthcare.

Delete the bottom 5 states from the data (red Bible belt places) and suddenly this is no longer so true.

This trend holds for a lot of the things on your list: homicide rates, physical health, and so on. I'm not saying that these things you list aren't legitimate, but they are hardly pan-American.

The Deep South is a third world country that happens to be part of the United States, and there's not much the rest of us can or will do to fix problems that Southerners themselves have no desire to fix.

[rachofsunshine]

> Delete the bottom 5 states from the data (red Bible belt places) and suddenly this is no longer so true.

It's less true, but it's still mostly true.

Even the highest life-expectancy state in the US (California, at 80.9 years) isn't very good by rich-nation standards. It ranks below - deep breath - Hong Kong, Japan, South Korea, French Polynesia, Andorra, Switzerland, Australia, Singapore, Italy, Spain, France, Norway, Malta, Sweden, Macau, the UAE, Iceland, Canada, Martinique, Israel, Ireland, Qatar, Portugal, Bermuda, Luxembourg, the Netherlands, Belgium, New Zealand, Austria, Denmark, Finland, Greece, Cyprus, Slovenia, Germany, the UK, Bahrain, Chile, and the Maldives, coming in just above Costa Rica.

> This trend holds for a lot of the things on your list: homicide rates, physical health, and so on.

Rhode Island is the US' safest state at 1.5 homicides per 100k per year. That's seven times Japan's, triple China, South Korea, or Italy's, double Malaysia, Norway, or the UAE, and 50% higher than Denmark, Iceland, or Belgium.

Colorado is the US' least obese state at 22.6%. That's triple South Korea, double France, and 50% more than Switzerland, Denmark, Sweden, or the Netherlands. (I'm including only high-income countries in this list, since many poor countries have low obesity because food insecurity is a problem.)

Even the most cherry-picked favorable stats are still awful. Does the South drag most US averages down? Yeah, but not by that much.

[oblio]

There are sooo many confounding factors that it's not even worth discussing.

The EU is a patchwork for 27+ small countries. There is no unique digital market. There are 27 languages to cater to. 27 different cultures which are radically different compared to say, Texas versus Maine. General risk adverse culture after WW1 and WW2 where there are no VCs, even though for sure they could make money and Europe is full of tax loopholes they could use...

[_DeadFred_]

A company doesn't exist without employees. Their considerations should probably at some point come in to play.

[oblio]

> It seems inefficient and certainly demoralizing, but I would prefer that solutions to the problem were driven by market forces and innovation rather than regulation or employee backlash.

At this rate it's likely those "market forces" will come from the pitchfork, torch, etc markets.

[danny_codes]

Despite wide-hard capitalist beliefs, executive pay is influenced by many factors, including social perception.

So the fact that CEOs think it’s acceptable to make their salary $20M is a big factor in why their salary is $20M