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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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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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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posted
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
unregistered
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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