quote:Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
Or...buy them from Wal-Mart, where the lower quality doesn't matter because the kids will outgrow them before they wear them out.
Because, you know, poor people should never have new things. It's better for them to LOOK like they are poor for easier identification. Wearing out of style clothes that don't quite fit and not being able to get something pretty and new is the perfect way to shame those without extra cash.
There is clearly a place for low-quality but still new and stylish children's clothing. I can't believe that you want to decide for someone else that they had better LOOK poor unless they want to shell out serious money for clothes that will be worn for less than a year.
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quote:I really think a lot of the condemnation of Wal-Mart is a class war.
It sure seems that way to me.
I'm not sure I understand that statement. Are you saying that people who have a problem with Walmart have this problem because they feel that it helps out poor people?
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quote:Originally posted by FlyingCow: Out of curiosity, kat, did you read through the links above?
I did. The arguments in most of them are either incorrect, bad economics, things I don't really care about because I don't think they're morally wrong (i.e. suppliers being "bullied" by WalMart), or things I do care about and think are morally great (i.e. jobs being shipped overseas).
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Squick, I think the argument is "people with money can afford to care about things that people without money find trivial hairsplitting"... and also sort of a "let them eat cake" impression, that those that can barely afford poor quality things should pay for better things.
It's similar to the "poor people are overweight because McDonalds is cheap" argument.
I don't see it that way.
I think class is a factor in the discussion because Walmart most directly benefits those with less money, giving them a vested interest in protecting it. As those with more money don't benefit *as much*, they have more freedom to shop elsewhere (and thus less of a vested interest).
Therefore, Walmart has little fear of backlash from those in lower class segments because their vested interest dissuades them from questioning Walmart's practices.
So, while those in lower income brackets may claim that those in higher brackets are "attacking their way of life" - it's just not true. Those with more perceived freedom to shop elsewhere simply have less vested interest in the continued success of Walmart, and look at the company's actions without fear of "biting the hand that feeds them".
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quote:Originally posted by fugu13: ... Their executives are paid low wages compared to those at other companies.
This seems unlikely. I'm looking for the Atlantic article on manufacturing, but I do know this.
Wrong comparison to what fugu was saying, I believe. Compared to other executives running equally large corporations, WalMart executives are not paid that much more.
Comparing one company's executive vs. average employee salary is a really silly thing to do, since industries differ so much. If I'm the CEO of a cutting-edge biotech firm of course the gap between what I'm paid and what my average employees - i.e. research scientists - are paid is going to be less than if I'm the CEO of a retail firm. Seriously, dude. That's going to be true whatever country you're in. That's why reputable studies comparing CEO pay across countries control for industry effects, since the industry spread across countries is not identical.
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Jhai, I'm actually curious about your comment that shipping jobs overseas is "morally great".
Part of what I do is manage projects to outsource job functions overseas, and I work with many vendors that have both on- and off-shore associates. Personally, I don't have a problem so much with the concept of sourcing work overseas, but the words "morally great" stuck out for me.
If every manufacturing, clerical, call center, technical support, etc job in the US was sourced overseas, leaving only face-to-face jobs such as doctors, store clerks, landscapers, plumbers, etc. in the US... would that be your idea of a morally ideal environment?
I think I'm just curious about degree. I understand the need for sourcing at times (and even more the need for automation), but I don't know if I would agree with shutting down every manufacturing plant in the country.
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quote:I'm not sure I understand that statement. Are you saying that people who have a problem with Walmart have this problem because they feel that it helps out poor people?
I actually think Kat has a (partially) good point here. A lot of problems in the world stem, not from the upper class deliberately "fighting" against the lower class, but merely from acting in self interest in ways that happen to hurt poor people without regard to the consequences, often with some kind of "justification."
I'm not sure whether I think WalMart does worse things than other giant corporations do, either way I think there are certain practices that many larger corporations partake in that are worth criticizing. But it's worth considering how the things we advocate would impact all aspects of society.
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posted
Jhai, I'm also curious about your not having any problem with the largest economic mover in the country bullying smaller businesses. Following in that vein, would you want current anti-trust legislation to be repealed?
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quote:But it's worth considering how the things we advocate would impact all aspects of society.
Which cuts both ways. Forcing "low low prices" at all costs has impact on other aspects of society, too.
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quote:Originally posted by Jhai: Compared to other executives running equally large corporations, WalMart executives are not paid that much more.
*shrug* I thought that would help adjust for purchasing power, because if you didn't I would expect the CEO in the US to be paid even more absurd amounts in absolute dollars when compared to other countries.
I think executive compensation in the US is just bizarre when you look at the results, and I don't think the industry spread between the US, Japan, and Canada is enough to account for it. We're different, but not more than an order of magnitude different.
In any case, I don't know why we're focusing on Walmart in my first statement because the first and only time I mention Walmart is "Wal-mart or any retailer sells products from overseas." I reserve my ire not just for Walmart, but all retailers in the US, so pointing out that other retailers in the US are just as bad ... not really relevant to me.
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Mucus, I think the Walmart focus came when I mentioned them parenthetically on page 1 of this thread, and then Blayne asked what was wrong with Walmart in particular.
Then again, the thread drift from capitalism to corporatism would naturally lead to a discussion about the country's single largest corporation, so maybe it was inevitable.
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posted
I know that the thread as a whole had drifted to focus on Walmart, but my initial response was about the "low quality" issue. I don't really consider that to be a specifically Walmart issue, so I responded in general, but I can see how it can be confusing. Ack.
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quote:Originally posted by FlyingCow: Jhai, I'm actually curious about your comment that shipping jobs overseas is "morally great".
Part of what I do is manage projects to outsource job functions overseas, and I work with many vendors that have both on- and off-shore associates. Personally, I don't have a problem so much with the concept of sourcing work overseas, but the words "morally great" stuck out for me.
If every manufacturing, clerical, call center, technical support, etc job in the US was sourced overseas, leaving only face-to-face jobs such as doctors, store clerks, landscapers, plumbers, etc. in the US... would that be your idea of a morally ideal environment?
I think I'm just curious about degree. I understand the need for sourcing at times (and even more the need for automation), but I don't know if I would agree with shutting down every manufacturing plant in the country.
Basic argument: Poor people in developing countries need jobs far more than any individual in the US does. A manufacturing job in a developing country will add far more utility on the margin to individuals there than the loss of a manufacturing job will to individuals here. Generally speaking, as long as that remains true, I'll support jobs going overseas. I don't see why I should care more about the happiness of a random American stranger than I do about the happiness of a random stranger elsewhere in the world.
Slightly more complicating details, which nonetheless do not change the main point: the US's competitive advantages (and positioning for future industries), the marginal costs of pollution here vs. in developing countries, industry build-up as a development tool, fringe benefits that a manufacturing plant brings to communities here vs. overseas, increased economic freedoms overseas leading to other freedoms, I can expand on any of those if you wish.
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quote:I really think a lot of the condemnation of Wal-Mart is a class war.
It sure seems that way to me.
I'm not sure I understand that statement. Are you saying that people who have a problem with Walmart have this problem because they feel that it helps out poor people?
Here's what I'm saying. Comparing WalMart practices with the rest of the industry and the criticism of WalMart with the criticism of the rest of the industry, it appears that WalMart gets far more criticism than it deserves, relatively speaking. It appears that there is an emotional (or some other non-rational) component in a lot of the criticism against WalMart. I think that a good part of that is a negative emotional reaction to WalMart's association with the lower classes and rural America.
My personal problem with WalMart is that so much of their stuff is junk. More and more I'm moving to paying more for quality merchandise. But that's a personal preference, not a moral judgment.
posted
Interestingly, people have studied that. For instance, executive compensation is very strongly correlated with firm size. There are more very large firms in the US, so there are more executives with very high compensation.
This makes sense. If the impact of an executive is some percentage of firm activity, then it makes sense to pay a lot more to get the best executive one can afford, even if they are only a little better than the next-best executive. A 1% increase in executive quality can mean billions of dollars a year in revenue, making it a no-brainer to pay hundreds of millions in pursuit of that. That companies are seeking that (and are fairly successful at doing so) is also borne out in studies.
But anyways, Wal-Mart employs 1.8 million people. For the top executive to forego pay entirely would give each of them something like an extra ten or twenty dollars a year (the CEO's total compensation in 2007 was about $23 million -- quite low for a CEO of such a major corporation).
Alternatively, the CEO could forego his pay to reduce the prices of each thing sold at Wal-Mart by about what, a hundredth of a cent?
As I said, the empirical evidence is clear: Wal-Mart is not extracting large amounts of money from its customers by selling things at much above their total costs. They could not lower prices to anywhere near what they are in China (or much more than a few percent, in fact) and still exist. Believing that is ignoring the facts. Indeed, it would be somewhat of a perverse belief; if it were so possible, surely someone would do it -- indeed, you should do it, and become a billionaire.
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quote:Originally posted by katharina: You haven't convinced me that they do.
The facts are extant. Wal-Mart does more than simply dictate price terms to its suppliers; it dictates how its suppliers compete with one another. This is plainly market-distorting.
quote:Until recently, every retailer would draw up its own merchandising plan, detailing which brands to promote, how much shelf space to grant each, which products to place at eye level. These days, Wal-Mart and a growing number of other retailers ask a single supplier to serve as its “Category Captain” and to manage the shelving and marketing decisions for an entire family of products, say, dental care. Wal-Mart then requires all other producers of this class of products to cooperate with the new “Captain.” One obvious result is that a producer like Colgate-Palmolive will end up working intensely with firms it formerly competed with, such as Crest manufacturer P&G, to find the mix of products that will allow Wal-Mart to earn the most it can from its shelf space. If Wal-Mart discovers that a supplier promotes its own product at the expense of Wal-Mart's revenue, the retailer may name a new captain in its stead.(1)
(1) Such blatantly enforced collusion has not gone entirely unnoticed in Washington. Toward the end of its time in office, even the merger-happy Clinton Administration allowed the Federal Trade Commission to launch an investigation of these practices, and an FTC report in early 2001 identified four ways that Category Management may violate even the remarkably loose antitrust guidelines of the last generation. All four of these violations cut right to the core of the free-market system. As the FTC put it, a category captain might “(1) learn confidential information about rivals' plans; (2) hinder the expansion of rivals, (3) promote collusion among retailers; or (4) facilitate collusion among manufacturers.” In Wal-Mart's world, all four violations are present to at least some extent.
Wal-Mart is not the only offender here, but it is the biggest.
quote:Originally posted by katharina: Because, you know, poor people should never have new things.
Who has said that in this thread, other than you?
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quote:Originally posted by FlyingCow: Jhai, I'm also curious about your not having any problem with the largest economic mover in the country bullying smaller businesses. Following in that vein, would you want current anti-trust legislation to be repealed?
I don't think that what WalMart does is properly considered bullying (those the quotes when I used the term that had been used in the articles you linked to). Frankly, I think it's silly to use such emotive terms when discussing economics.
Generally, I think the idea of anti-trust legislation is a good one. However, I am not a lawyer, nor have I studied the economics of anti-trust legislation (outside of the WTO, anyways) in any great detail, so I don't think I can give an educated opinion on specific law in practice today.
My understanding is that economists today generally think that the US' anti-trust legislation is roughly on target - and from what I know of it, I would agree.
I do think that anti-trust laws are less important today than they were in the past due to the increased transparency of our economy, and the incredibly decreased transaction costs. Given my knowledge today (which, granted, is relatively scant), I would not repel any US anti-trust legislation.
I believe that most monopolies today - or industries where you have one extremely dominant player - are that way because of either the natural structuring of the industry or because one player has just been really, really good at what they do. I also think that most monopoly-esque businesses today (like, say, Microsoft & WalMart) add far more value to consumers than whatever hurts they may cause by monopolistic efforts. And I have no moral sympathy for any company as a whole - individuals at a company, yes, but companies as a whole need to be willing to change as the market does or die.
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posted
You are talking about how suppliers get products on the shelf?
I think Wal-Mart is an innovator. Sure, they do things differently, but that's fine. They should be lauded for it. If suppliers don't like their (legal) terms, they don't have to supply Wal-Mart stores.
The issue you are speaking of does not support your stance.
Even your own quote doesn't say anything definitive:
quote:identified four ways that Category Management may violate even the remarkably loose antitrust guidelines of the last generation. All four of these violations cut right to the core of the free-market system. As the FTC put it, a category captain might “(1) learn confidential information about rivals' plans; (2) hinder the expansion of rivals, (3) promote collusion among retailers; or (4) facilitate collusion among manufacturers.”
And...the Clinton administration? Do you have anything that doesn't come from the 1990s?
quote:Originally posted by katharina: Because, you know, poor people should never have new things.
Who has said that in this thread, other than you? [/QB]
Theamazeeaz seems to have said that if you can't afford to pay more than WalMart prices, you should shop at thrift stores.
quote:Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
posted
Jhai, very interesting. Do you feel that as a taxpayer and citizen in the United States that you have more vested interest in the success of US Citizens than you do in citizens of countries in which you do not pay taxes (or receive benefits from those tax dollars) or have a vote?
For a microcosmic example, the schools in northern NJ are very good, in large part because of the tax dollars collected in the state from the many, many white collar workers who live here. If those jobs were to be dispersed throughout the developing world, the quality of education, policing, infrastructure, etc would necessarily go down as fewer tax dollars were available to fund them.
Therefore, the continued employment of someone local to me has more impact on my life/family than the continued employment of someone who lives in Bangalore. So, the global benefits of sourcing all of our labor to other countries is tempered considerably by the local impact of such a move.
mph, I think there are other companies that have drawn the same fire. Microsoft is probably relieved that Walmart assumed the "evil empire" mantle from them. Enron is a pretty good example of a big company taking a lot of criticism for exploiting the marketplace, too.
Yet, far fewer people point to Google as a "big bad" company, or Amazon, or Home Depot. I'd imagine it has a lot to do with the quality of product produced - which is why you're moving away from Walmart, yourself.
Walmart's size alone makes its moves more impactful. Its size allows it to do things that most other companies can't (for instance selling a product at a loss to corner the market and drive out competition). And if the supplier doesn't want to lower its prices for fear of bankruptcy, it's no matter to Walmart - the supplier can't live without them because they're the biggest retailer in the business, and if they grind the supplier to dust there's always another around the corner.
Posts: 3960 | Registered: Jul 2001
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quote:Originally posted by katharina: You are talking about how suppliers get products on the shelf?
There are a number of ways in which Wal-Mart exercises control over its suppliers. I've only excerpted one of the many examples given in the link I provided earlier.
quote:Originally posted by katharina: I think Wal-Mart is an innovator. Sure, they do things differently, but that's fine. They should be lauded for it. If suppliers don't like their (legal) terms, they don't have to supply Wal-Mart stores.
I don't grant your unsupported assertion that the terms are legal. In fact, there are reasonable grounds to conclude that they are not legal.
Wal-Mart is such a large customer that its demands place some of its suppliers in lose-lose positions: stop supplying Wal-Mart and go bankrupt now, or conform to Wal-Mart's demands, and go bankrupt later.
quote:Originally posted by katharina: The issue you are speaking of does not support your stance.
They do.
You've repeatedly alluded to the ability of suppliers to "take it or leave it," which only exists in less distorted markets where Wal-Mart is not a major player.
*
One example does not a class war make.
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posted
Did you read the same quote? It doesn't say what you think it says.
I don't grant your assertion that what "may" be happening is definitely what is happening, at all. Clearly this is an area that hasn't been settled, but acting as if it HAD been settled and then extending that to a general, biased, unbalanced of condemnation of Wal-Mart across the board is unwarranted.
And, you asked for an example. You got an example. I get that you don't want to accept it, but my part is done.
quote:Yet, far fewer people point to Google as a "big bad" company, or Amazon, or Home Depot. I'd imagine it has a lot to do with the quality of product produced - which is why you're moving away from Walmart, yourself.
See, and I imagine it's because Wal-Mart's customers are poor, and condemning Wal-Mart serves the happy purpose of distancing the speaker from the people who don't have a choice other than to shop there. In other words, serious snobbery.
I see Wal-Mart getting a disporportionate share of crap for standard procedures as a condemnation of the speakers, not of the target.
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quote:Originally posted by fugu13: Interestingly, people have studied that. For instance, executive compensation is very strongly correlated with firm size. There are more very large firms in the US, so there are more executives with very high compensation.
Dubious.
For example, if you fix bank size
quote:You wouldn't know it by his pay stubs, but Jiang Jianqing heads the world's largest bank.
Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That's less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world's fourth-largest bank, JPMorgan Chase & Co.
The contrast illustrates the massive differences in pay among the CEOs of the world's top banks. The compensation of the CEOs of the largest U.S. banks towers above what's paid to banking chiefs in other parts of the world, according to a Reuters analysis of pay at the 18 biggest banks by market value.
quote:HSBC Holdings, the world's third-largest bank by market capitalization, paid CEO Michael Geoghegan $2.8 million in 2008 -- much more than his Chinese counterparts but far less than JPMorgan paid Dimon.
Alternatively, if you fix auto manufacturer size, something like the top 30 executives at Toyota made the same salary as the single CEO at GM when both companies have about the same market share now.
Executive compensation should be much more correlated to culture than to firm size.
quote:... it makes sense to pay a lot more to get the best executive one can afford, even if they are only a little better than the next-best executive.
Assuming that paying a lot gets you a "better" executive rather than just an executive thats better at getting more compensation. I think the performance of those aforementioned American banks and GM is pretty self-explanatory.
Edit to add: Or this
quote:Too often, executive compensation in the U.S. is ridiculously out of line with performance. That won’t change, moreover, because the deck is stacked against investors when it comes to the CEO’s pay. The upshot is that a mediocre-or-worse CEO – aided by his handpicked VP of human relations and a consultant from the ever-accommodating firm of Ratchet, Ratchet and Bingo – all too often receives gobs of money from an ill-designed compensation arrangement
quote:Originally posted by katharina: Did you read the same quote? It doesn't say what you think it says.
I don't grant your assertion that what "may" be happening is definitely what is happening, at all. Clearly this is an area that hasn't been settled, but acting as if it HAD been settled and then extending that to a general, biased, unbalanced of condemnation of Wal-Mart across the board is unwarranted.
No, you've misread. I asserted two things:
1) Wal-Mart's actions with respect to its suppliers distort some markets;
2) There's a reasonable argument to be made that this is illegal.
You're saying that because (2) is not unquestionably, undeniably true [added: that is, because the argument is only reasonable, not proven in court], (1) is also not true. That's incorrect.
quote:Originally posted by katharina: And, you asked for an example. You got an example. I get that you don't want to accept it, but my part is done.
Very well; I'm now asking for evidence that class warfare is the motive of one side of this discussion -- an assertion you've made repeatedly, both implicitly and explicitly.
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quote:If suppliers don't like their (legal) terms, they don't have to supply Wal-Mart stores.
I think this is the essential issue. If a supplier doesn't like a Mom and Pop store's terms, they can leave and do business elsewhere.
Walmart has gotten to the point that there is virtually no elsewhere for certain market demographics. If you want to reach market at all, you'll do what Walmart wants... even if it means hurting your own company, employees, and shareholders.
Walmart is unique in this - it can force companies to change more than any other retailer, simply by dint of its size and share of the marketplace.
Vlasic is a good example, as linked above. They were forced to make decisions that led to bankruptcy because they couldn't lose Walmart's business (which also likely would have led to bankruptcy).
No other retailer could have done that - as Vlasic could have walked away from any other retailer. The power differential between Walmart and the rest of the industry is so great that their actions carry that much more weight.
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quote:See, and I imagine it's because Wal-Mart's customers are poor
Did you miss the part where I said the vitriol toward Walmart was inherited from Microsoft? Are you going to tell me people hated Microsoft because its customers are poor?
And, btw, Google is free... so economic status isn't exactly a factor, there. Their customers are anyone who gets on a computer, ever. And before you jump in and say that poor people don't have computers, *Walmart sells computers*.
It's not the customers, it's the company. Much like one can condemn the actions of OPEC without condemning car drivers everywhere.
Honestly, I don't have a problem with people shopping at Walmart (unless they are shopping on my behalf). I understand the reliance many people have on Walmart that has grown in the last two decades or so - which is even more pronounced now that many of the options that lower income families turned to in the 70's and 80's have now been run out of business.
It is possible to love a smoker and hate Phillip Morris - just because a company draws fire, doesn't mean its customers are the true targets.
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posted
I don't think that people are so much condemning people who have no choice but to shop at Walmart as being concerned that Walmart is their only choice and suggesting that those of us who are able to, make decisions that alleviate that.
*Except for twinky. He just hates poor people. Why, twinky,why do you hate poor people?
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posted
The Chinese firm is not allowed to pay the CEO more; this is not necessarily preferable, just authoritarian. I would also bet that the CEO at the Chinese bank extracts considerably more political power in compensation, and I don't think we'd view that as preferable.
GM is not a good example at all. If they hadn't been subject to extreme amounts of political protection for years now, they would have gone out of business.
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quote:Originally posted by FlyingCow: Jhai, very interesting. Do you feel that as a taxpayer and citizen in the United States that you have more vested interest in the success of US Citizens than you do in citizens of countries in which you do not pay taxes (or receive benefits from those tax dollars) or have a vote?
For a microcosmic example, the schools in northern NJ are very good, in large part because of the tax dollars collected in the state from the many, many white collar workers who live here. If those jobs were to be dispersed throughout the developing world, the quality of education, policing, infrastructure, etc would necessarily go down as fewer tax dollars were available to fund them.
Therefore, the continued employment of someone local to me has more impact on my life/family than the continued employment of someone who lives in Bangalore. So, the global benefits of sourcing all of our labor to other countries is tempered considerably by the local impact of such a move.
Of course I have a vested interest in seeing the communities I live in do well. That self-interest, however, doesn't override my moral belief that it's better that people here lose jobs than that people abroad starve. (Not necessarily an either/or, of course, but if it were, I'd go with an American losing his job.) Self-interest should not overrule ethics, and I believe an impartial observer would agree that it's better overall that jobs go overseas.
I'm a citizen of the US, but my husband's not. He's a citizen of India. One thing I've realized as part of an international couple is that community - geographically/nationally-speaking - doesn't matter that much. We both care about our local community out of self-interest. So I'll gladly pay my taxes if I think that the taxes will go towards things that will help my living standards (and pay 'em grudgingly otherwise). But that's it. If the community we're currently living in isn't meeting our needs, then we'll move elsewhere. Another state, another country - whatever fits our needs.
We do give quite a bit of money to charity. But we direct our charity money to where we think it will do the most good - which is never the United States or our local community. Compared to developing countries, people mostly have their shit together here. $1,000 towards health care in Africa or much of Asia means 10 or 20 fewer dead children - that's better than any return you can get for your charity dollars here in the US.
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Also, I would take that bet. American bank CEOs have much more control over the US government than the equivalent in China. In China, SEO executives are often assigned by politics, rather than the other way around as in the US.
If you don't like GM, you can use Chrysler or Ford for that matter, I'm confident that their compensation is similarly out of line when compared to their Japanese counterparts of similar size.
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But the "evil empire" of the early 1990s was pretty clearly Microsoft, though you hear far more these days about Walmart than you do about MS.
Not to say MS is loved by any stretch, it just seems that the anti-monopoly folk have moved on from MS to WM. Also, Apple's advertising team has done a great job of making MS seem incompetent rather than uber-powerful these days, which might have added to it.
I am curious, though, if you believe a company can be criticized *without* also criticizing the customers of that company. Essentially, do you feel all criticism of companies is due in large part to the customers, or just Walmart in particular?
As an aside, my sister thinks Walmart is the greatest thing since sliced bread (though she also shops at Target and various other stores). She is pretty solidly middle class, I'd say, as I am. So, my antagonism toward Walmart... do you think its targeted toward her too, or does she make too much money?
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posted
. . two other firms that have been significantly propped up by government action? The only one even remotely close to sensible would be Ford, and even they've been subject to huge subsidies to keep up bad business practices.
As I said, this has been studied. If you'd like, read a few analyses about how CEO pay is related to firm size and firms doing well:
quote:Originally posted by Mucus: First, HSBC isn't a Chinese firm.
Also, I would take that bet. American bank CEOs have much more control over the US government than the equivalent in China. In China, SEO executives are often assigned by politics, rather than the other way around as in the US.
If you don't like GM, you can use Chrysler or Ford for that matter, I'm confident that their compensation is similarly out of line when compared to their Japanese counterparts of similar size.
Mucus, you simply can't argue economics via anecdotes. Cherry-picking two or three companies (or even ten or twenty) isn't going to convince anyone (worth convincing) that your argument is correct. Read the studies fugu has pointed out, and if you have disagreements with their methodologies or find some of their results particularly interesting, let's discuss it.
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posted
So far as I can tell, the studies that fugu presented are only concerned with US companies. Is that correct?
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*shrug* If American culture encourages government action, then what of it? I'm unconvinced that we should write off essentially the vast majority of the US auto industry as special cases.
The first paper and third paper use data only on S&P companies from 1993 onwards. In fact, both appear to have the same authors and use the same data.
The second is explicitly titled as handling only US companies.
Therefore all three are irrelevant when comparing between countries.
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posted
I'm not sure how the papers fugu presented show firms "doing well". They seem to focus only on expanding the firm.
I didn't give them a full read through, but it seems that the papers state that this expansion does not correlate with shareholder value or profitability of the company.
For example:
quote:The effect of firm size on compensation is the primary focus of the earlier studies, for example, Baumol (1959) contends that executive salaries are more correlated with the scale of a firm's operation than with its profitability, McGuire, Chiu, and Elbing (1962), find executive compensation (measured by salary plus bonus) more correlated with sales than profitability, thus lending further support to the "revenue-maximizing" theory of the firm. Baker, Jensen and Murphy (1988) also find that the compensation of CEOs varies with firm size, and strongly note that CEOs can increase their pay by increasing firm size even at the expense of a reduction in the firms' market value.
posted
MrSquicky, the papers cited are from many years ago, and likely use outdated statistical techniques.
Consider these papers: this, this, and this. The first compares US to international CEOs and shows that the earnings are reasonable. The second & third expand on why CEOs earn as much as they do, particularly at larger corporations.
My broader point is to show that this is a subject under much scrutiny by academic economics. There is a wide body of literature available, as you'll note if you read the references for several of these articles. Like many economics fields of study, exactly what is happening is not entirely clear, and there are multiple models, each of which likely shows some portion of the truth.
Skimming a couple of articles & declaring the issue done, or citing one ratio, like the average CEO's pay vs. his average employee's pay, is not going to do anything besides give you a few talking points that don't actually get to the root of the matter or prove anything other than that you (general you) don't understand anything about economics.
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Blayne Bradley
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quote:Originally posted by fugu13: The Chinese firm is not allowed to pay the CEO more; this is not necessarily preferable, just authoritarian. I would also bet that the CEO at the Chinese bank extracts considerably more political power in compensation, and I don't think we'd view that as preferable.
GM is not a good example at all. If they hadn't been subject to extreme amounts of political protection for years now, they would have gone out of business.
Chinese businessmen have very little say in politics, there's only one afaik Alternate member of the Central Commitee who is a businessman.
I also do not see how it is authoritarian for the business firm to now pay its CEOs more, to me it just seems like responsible rules, there's also no evidence to support that any particular CEOs gain any political compensation in direct proportion to how much they are officially paid.
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You have a really touching faith in official channels, Blayne. It doesn't occur to you that in a country with a millennial tradition of working by favours and back channels, formal representation on the Central Committee is not a necessary signifier of power?
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Blayne Bradley
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posted
According to Susan L. Shirk author of 'China: Fragile Superpower' the business sector of China has very little official representation which is the one that matters. 'Unofficial' channels doesn't hold sway over Chinese power politics to the degree you think it does.
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quote:Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
Or...buy them from Wal-Mart, where the lower quality doesn't matter because the kids will outgrow them before they wear them out.
Because, you know, poor people should never have new things. It's better for them to LOOK like they are poor for easier identification. Wearing out of style clothes that don't quite fit and not being able to get something pretty and new is the perfect way to shame those without extra cash.
There is clearly a place for low-quality but still new and stylish children's clothing. I can't believe that you want to decide for someone else that they had better LOOK poor unless they want to shell out serious money for clothes that will be worn for less than a year.
Not all clothes that are hand-me-downs are out of style, nor do they immediately brand a person as "poor". You can't actually tell if a garment in good repair belonged to someone else once you take it home, wash it, then put in it the closet with the rest of your stuff. No, used clothes don't look new, but neither does any garment after you wash it a couple of times.
With children's' clothes, there's enough people trying to get rid of theirs that nothing is going to look terribly out of date. And given that fitting pre-pubescent children is nothing like fitting a woman's curves. Yes, there are a bunch of items that are out of style, damaged or the wrong size, but there are things at every store you wouldn't look twice at. I will not deny that finding good used items is a skill. Having clothes that don't fit, out of style or are in bad condition are a mark of the stupidity of the parents, not the source of the clothing.
I grew up on a mix of hand-me-downs, clothes from relatives and new things. We got clothes from my cousin Jaime, I got clothes from my older sister and then we passed them all to my mother's friend's daughter Kay. We probably also gave clothes back for Jaime's little sister Kelly. About 10 years after that, Kay, though four years younger than me, turned out to be about five inches taller than me and I inherited a pair of her pants that I still wear. We were not "poor" at all and the two families I have mentioned had more money than us. My childhood included dance lessons, loads of toys, afterschool activities and trips to Disney World. Sharing clothes among growing children is just smart.
Some of my currently most-worn purchases have come from a rummage sale that I cleaned out during my college years, a sale that was exceptional in terms of quality and items available. I dragged a few skeptical friends to that annual sale, and they came out with a lot of items and a very different attitude towards "used" clothes.
When I have kids, even if my finances are healthy, I will be looking towards used items for my children where possible.
It's a really stupid sort of irony that people who are 'poor' don't do things that will save them serious money for fear of seeming 'poor' (but don't make a difference) and yet are limited in what they can do with the money they have because they are 'poor'.
I really hate the Wal-Mart and Target commercials that tout how much money you can save by shopping at their stores when repairing and sharing save more money.
Frugality is not a condemnation. If you still think so, I recommend reading Amy Dacyczyn's Tightwad Gazette, one of the best resources for people who would like to spend less money than they do.
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quote:Originally posted by Jhai: ... this, this, and this. The first compares US to international CEOs and shows that the earnings are reasonable.
Definitely a cut above the previous three. But I would note that the authors themselves do not actually seem to offer an opinion as to whether earnings are reasonable across countries. They merely note that firm size explains "many of the patterns in CEO pay ... between countries" and it is clear that international comparisons are still merely a small side-track in the overall paper which focuses on the US.
They also note
quote:A large amount of the variation in CEO compensation across countries remains unexplained and country specificities may sometimes dominate the mechanism highlighted in our paper. For example, in Japan, despite a very important rise of firm values during the 1980s, there is no evidence that CEO pay has gone up by a similarly high fraction
and hedge by calling for more data and research. If these authors reserve the right to declare that country-specific factors (e.g. culture) can dominate CEO pay, then certainly I can
quote: ... or citing one ratio, like the average CEO's pay vs. his average employee's pay, is not going to do anything besides give you a few talking points ...
Good thing I cited multiple things.
For example, the second link I provided on the previous page notes a number of studies that shed doubt on the idea that executive compensation is not excessive.
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posted
Heh. Mucus, every economic paper "hedges" by calling for more data and research. Writing that at the end of an econ article is like signing your name at the end of a letter. And pretty much no economist writing an academic paper would offer a personal opinion on whether something is "reasonable" or not (that's moving into the normative stuff, that is!).
Anyways, I really don't have a horse in this race. I have no interest in researching this topic further than the five minutes it took me to find the NBER papers (very good source for quality econ papers, btw). *shrug* However, I do know enough about the topic to know that there have been 100+ papers written on the topic - it's a popular line of research. It's also a highly publicized one, which means that you shouldn't trust anything you read in the mass media about what the studies are saying - you should read the studies themselves.
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posted
I don't particularly advocate a particular course of action yet, so not caring that much either.
On the balance, I still find that judged on a moral and ethical framework, I think it is a good thing to shop (and for others to shop) at Walmart or similar retailers.
However, the day is fast approaching when I think I will have to oppose that on environmental and the societal grounds that some others have mentioned.
That said, I still think that the North American consumer is getting a raw deal when it comes to the discount that they're paying versus the safety risks that they are taking. On a personal level, I can mildly counter-act that by skipping the middleman every couple of years or so or more frequently, using Internet retailers, so the issue is hardly critical for me, just annoying.
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