CEO salaries aren’t set by the market.
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I really don’t get that in many cases the board of directors are pals of the CEO.
Deep personal friendships are a particular joy of life. They should be treasured, whether they arise between neighbors, co-workers, classmates, teammates or any other myriad of relationships. Except, perhaps, when they arise between corporate board members and senior executives of the companies they serve. That’s when friendship can become a real problem, should the board member be otherwise considered “independent.”
Yep put a pal on your board of directors. Mebbe his pal puts him on his board of directors.
https://www.nytimes.com/2014/06/29/business/the-ceo-is-my-friend-so-back-off.html
The C.E.O. Is My Friend. So Back Off.
Harvard determined that current & former CEOs are the most common background of directors.
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Yep. Board of directors made up of largely CEOs or former CEOs maybe even CEOs pals. Just like the Tesla BoD. LOL
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Which part of Konstantine’s critique of Gary is inaccurate? I find it difficult to listen to Gary. He is like many online stars, self described experts, that are not seeking to inform or solve problems. He is catering to a group that wants to believe what he says and in turn, he is happy to oblige them.
Tucker Carlson, Sean Hannity, Candace Owens, Gary, Hasan Piker, Destiny and so on and so on. They all fit in themes preaching to the devout follower, what they want to believe. All of them willing to sit behind a microphone as self anointed experts and yet fall apart on the rare occasions they have to engage in face to face debate.
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Your criticism of the average board’s oversight is perfectly legitimate. It still, IMO, is not the right of the public at large to determine whether the pay package is too large or if those dollars should be allocated for public use. Should shareholders make executives accountable and should Boards act independently in the best interest of the business? ABSOLUTELY.
Herein lies the value of the open market, each of us as investors can choose to put our capital in businesses where that accountability exists and the CEO package is appropriate for his or her impact on the business. Part of what I look at personally when investing is how big is the pay package, how does it incentivize the ceo, and how accountable is the board to the shareholders? I think we will see with a whole slew of companies that special voting rights for the CEO and overly generous SBC is going to long term mute the performance of the company. I have learned that lesson the hard way with the Trade Desk.
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They shouldn’t be set by the public and politicians based on some arbitrary measure of what is enough.
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That where we differ. The board is acting in the interest of the CEO not the shareholder.
The board likely approve the CEO’s compensation on the country club golf course where they all are members. The K economy don’t ya know.
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I’m not sure where we disagree. I’m reposting my full statement. You cut it off and I don’t know if that was intentional to have it read differently or just a mistake.
I don’t think we differ. I think there are lots of businesses where the board is not acting independently of the CEO. One should invest carefully in those businesses or not at all. My original response was a critique of the comment that the public at large deciding when a CEO’s pay is too large.
There’s always been a K economy since the beginning of economic times.
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That fair taxation is not about envy. And that Gary doesn’t understand the difference between naught-six on a billionaires wealth and fifty percent on wages. He does.
The point Gary makes is only taxing at naught six, when billionaires can easily make at least five percent, allows them to grow wealth so enormous as to be able to out bid everyone on everything, including government. This destroys governments and drives up all asset prices, out of reach of present and future workers. It’s corrosive to a healthy society.
His slogan, tax wealth, not wages, flips the tax burdens so wages are taxed less than dynastic wealth.
And before you say that can’t be done, or they’ll throw their factories in the sea, or that Gary doesn’t know how to do it, it has been done and we can do it again.
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Yes, the French did it and saw an exodus of 60,000 millionaires and an exodus of 200 billion in taxable capital.
Here’s a thought, how about if you reduce taxes on wealth and income and cut govt spending?
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Yes, they would, but no one is leading and telling the public the benefits if it is well done.
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It is true, they would agrue that, and it is all they heard. It is complete and utter lying.
Given roughly a 50% corporate tax reinvestment here would soar. This means a 70% tax rate on the top bracket or the executives would say well we made this happen lets just pay ourselves.
We need heavy reinvestment. Not only do we need that but the global economy needs us to do this. We are wasting time.
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Sure, whatever’s reasonable, and doesn’t cut the muscle or the bone. And therein lies the debate; how to make a reasonable functional society, serving all for the greater good.
Where it breaks down is when plutocrats have undue influence to siphon wealth all to themselves, through monopolies and government largesse, and ultimately destroy the very system that made them wealthy.
Let that continue, with low taxes and government spending, and no oversight, and we have a libertarian paradise, with every man for himself, in a battle royale. The people would be fighting for scraps, dependent on the good graces and fickle philanthropy of the very few at the top, who own everything.
We’ve been there before. It called feudalism.
So, not wanting to go back to that, we’re left with an imperfect system of checks and balances, taxes and expenditures, to manage as best we can. And the only way we have to manage that as we each work towards a decent life is through laws, votes, and a redistributive tax system that builds the roads, etc. and sets the stage for something good to grow, fair for most, not the few.
As ugly and imperfect as that is, I’ll choose it any day over a winner take all society.
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Agreed, that is always the debate where well meaning people can disagree as to the solutions.
Agreed, hierarchies tend to tilt towards corruption. In the US, our founding fathers thought to address the risk by keeping govt small and with checks against the various powers of the branches of govt.
I would agree that even the best solutions are imperfect. As Thomas Payne said, govt is a necessary evil tolerable at best, completely intolerable at its worse.
I don’t think it is a winner take all society where individuals are largely free to conduct their own affairs with limited influence from govt.
Again, the devil is in the detail so I need to understand what you mean by redistributive. Unfortunately, there is a loud voice now demanding something way beyond roads and basic services. They want universal medical care, daycare, and income. More than that, they detest capitalism and individualism. They simply have a problem with what they view as any disparity in what they view as “Fair”. Effectively, they want to seize what others have earned based on their view of equity looks like.
Free markets have risks and they too can tilt towards corruption. In addition, there are those that cannot compete and we should collectively find a way to take care of them. So, I recognize there are faults with that approach as well. But, right now, the greater risk in my mind is vesting greater and greater authority with a govt that seems incapable of solving these issues, lacks the the competency to even do so. With that, it vests larger and larger power away from individuals and with those that might want to reorder society. We have seen that tragedy play out many times.
I suspect that at the end of the day we share some things in common in terms of what we need and want to address.
We have LOOOONG moved past just roads and “basic services” (whatever those are). I infer from your statement that you think some form of universal care is a bridge too far.
When our country was founded, we did not have social security, labor rights, EPA, NASA, FBI, CDC, FDA, and probably another dozen necessary agencies.
If you agree that many of those I listed are a necessity (at least in some form), then some form of universal medical care should not be unreasonable. As our country grew, our needs have changed. Universal care, much like a CDC and FDA, may have become a necessity. We don’t rely on states to have 50 different FDAs or CDCs - it is not unreasonable to believe healthcare should be administered the same way.
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Not exactly, I think it may be inevitable but will neither fix the cost of care or improve longevity. I suspect the wealthy will move to concierge services and the public will have care that will not resemble the prior standards in terms of quality and timeliness. Most will get free preventative care but have to wait a year to get the appointment. Further, if we follow the example in Europe, it usually means the lower income tax brackets pay more in taxes both in terms of income and sales taxes to feed the beast.
The larger problem in my mind is the sheer incompetence, graft and corruption that has permeated Washington and monolithic agencies. What was once just a concern about cost has shifted to whether we even have people in place capable of managing and administering 18% of the US GDP.
Chamath and Joe Lionsdale have sort of voiced the view that I share. They are more than willing to commit large portions of their wealth to solving these problems to keep democracy intact. But at the moment, given the players, there is no value in throwing good money after bad. Chamath, while his partners on the “all in” podcast have left California has decided to remain there and pay the wealth tax. He is putting his money where is mouth is but has said they will waste it anyways. By some estimates, the Biden administration lit almost $1 Trillion dollars on fire on DEI initiatives.
We are going to get forced to do something. I just looked at what new private healthcare costs are through the market without RX and a 10k deductible. It’s $1.8k-2.5k per month, that’s not going to work.
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And yet, DOGE found nothing.
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Taxation, by definition is redistributive. So, yes, the devil is in the details.
I think we all want a society that’s best for the greatest number of people, to seek our happiness and thrive. Whether that is a large or small government is up for debate. But, as many people have been convinced government is bad and taxation evil, we’re going to have a very hard time preserving what good we have.
‘Democracy is the worst form of government, except all others.’* I’d like to preserve it, monitor it, and improve it, rather than let the richest few run it into the ground for only their personal liberty. So, we’re going to have to tax them stiffly to slow down their wreckage.
*This is a paraphrase of Churchill, who paraphrased Plato: “… the government of the multitude [democracy] is weak in all respects and able to do nothing great, either good or bad, when compared with the other forms of government, because in this the powers of government are distributed in small shares among many men; therefore of all these governments when they are lawful, this is the worst, and when they are all lawless it is the best; and if they are all without restraint, life is most desirable in a democracy, but if they are orderly, that is the worst to live in . . .”
So, Plato is basically saying that democracy sucks until keeps people from abusing the rest of us. As I see a growing outsized influence of the very wealthy, I vote for democracy!
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I don’t think this is true. This is the viewpoint of many on the right; a federal prison employee during the shutdown in 2019: “I thought he was going to do good things, he is not hurting the people he needs to be hurting.”
JimA
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You’re right. I was being generous and referring to rational people.
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