Monday, July 24, 2006

A Reply To Gabe

This started out as a response to a comment, but it got long enough I decided to post it on the front page.

Part of the reason exec compensation is high is that Congress has said that it is illegal for CEOs to make more than $1mil in direct wages. So now they get options, stocks, etc which are easier to manipulate and much harder for the median investor to understand.

Secondly, while wages for executives have increased quite rapidly, they are closely correlated to the market. (in agregate, that isn't to say that a CEOs performance is correlated with his companies success)

Lastly, how many of those 3million people in the top 1% are CEOs? 30,000? The vast majority have gained their wealth from the fruits of their own labors. Whether from investment, entertainment, business ownership or whatever. Its clever to paint the wealthy as the evil CEOs that run the country, but I don't think that accurately reflects who is really at the top.

UPDATE: Kip points out in the comments that wages over 1 million are not tax deductible. That creates incentives to not pay over $1 mil, so I think the point stands - at least in degree.

I also realized that 1% of the working population is not 3 million people, I don't know what the number is, but I'd guess its closer to 1.5.

No comments:

Post a Comment