Eikonal Blog

2013.11.26

Checks and balances

Some mechanism to keep society relatively livable for majority of population.


Capping executive pay

  • “Should the US Copy Switzerland and Consider a ‘Maximum Wage’ Ratio?” (SlashDot; 2013.11.23) – http://news.slashdot.org/story/13/11/23/1657202/should-the-us-copy-switzerland-and-consider-a-maximum-wage-ratio
    • “John Sutter writes at CNN that as Swiss citizens vote on November 24 to consider capping executive pay at 12 times what the lowest-paid worker at a company makes in a referendum. Some say the idea of tethering top executive pay to some sort of concrete metric might stop American execs from floating further into the stratosphere. ‘Here in America, the land of unequal opportunity, the CEOs of top-500 companies make in a single day about what it takes an average “rank-and-file” worker a year to earn, according to the AFL-CIO, the federation of unions,’ writes Sutter. ‘Democracy starts to unravel if a few people become wildly, ethereally successful, while the rest of a country struggles.’ A $1 million salary worked for American CEOs from the 1930s to 1980s, says Lynn Stout. But CEO pay, including options realized that year, jumped about 875%, to $14.1 million, from 1978 to 2012, according to the Economic Policy Institute. ‘What we’ve got is basically an arms race,’ Stout says, ‘where the CEOs are competing on pay because they each want to have higher status than the others.’ Peter Drucker, the father of business management, famously said the CEO-to-worker salary ratio should not exceed 20:1, which is what existed in the United States in 1965. Beyond that, managers will see an increase in ‘resentment and falling morale,’ said Drucker. Stout has suggested that the IRS make CEO pay a non-deductible business expense when it’s higher than 100 times the minimum wage. ‘Limiting CEO pay to 100 times the minimum wage would still allow top execs to be millionaires,’ concludes Sutter. ‘And here’s the best part: If the fat cats wanted a pay increase, maybe the best way for them to get it would be to throw political weight behind a campaign to boost the minimum wage.'”
  • “As Inequality Grows, Swiss To Vote On Curbing Executive Pay” by Eleanor Berdsley (NPR; 2013.11.22) – http://www.npr.org/blogs/parallels/2013/11/22/246678622/swiss-inequality-is-growing-would-curbing-exec-pay-matter | MP3 – http://pd.npr.org/anon.npr-mp3/npr/me/2013/11/20131122_me_09.mp3
    • The youth wing of the Social Democratic Party collected the 100,000 signatures necessary to turn the measure, known as the 1:12 initiative, into a national referendum.
    • … 25 years ago Swiss CEOs made six times more than the average worker; today, they earn more than 40 times as much. … in a country of 8 million, 400,000 workers don’t make enough to live on.
    • Anger at high corporate executive pay is flaring up elsewhere in Europe
    • http://1a12.ch/
  • “U.S. should copy Switzerland and consider a ‘maximum wage’ ratio, too” by John D. Sutter (CNN; 2013.11.21) – http://www.cnn.com/2013/11/21/opinion/sutter-swiss-executive-pay/
    • Here in America, the land of unequal opportunity, the CEOs of top-500 companies make in a single day about what it takes an average “rank-and-file” worker a year to earn, according to the AFL-CIO, the federation of unions. Switzerland has an average CEO-to-worker compensation ratio of 148 to 1, the group says. The average U.S. rate is 354 to 1, according to the AFL-CIO. Others put the ratio somewhat lower, around 273 to 1 in 2012.
    • Either way, it’s bad. And some U.S. companies are worse, still. JC Penney Co. has the highest ratio — 1,795:1 — on a list of 250 businesses compiled by Bloomberg. That department store’s CEO got $53.3 million in pay and benefits in 2012, Bloomberg says. Workers, by comparison, earned only about $30,000 a year.
  • “Blame Rich, Overeducated Elites as Our Society Frays” by peter Turchin (Bloomberg; 2013.11.20) – http://www.bloomberg.com/news/2013-11-20/blame-rich-overeducated-elites-as-our-society-frays.html
  • “Value In Sharing The Ratio Of CEO’s Pay To Employees’?” (NPR; 2013.10.26) – http://www.npr.org/2013/10/26/241030961/value-in-sharing-the-ratio-of-ceos-pay-to-employees | MP3 – http://pd.npr.org/anon.npr-mp3/npr/atc/2013/10/20131026_atc_03.mp3
  • “What are the annual earnings for a full-time minimum wage worker?” (Center for Poverty Research) – http://poverty.ucdavis.edu/faq/what-are-annual-earnings-full-time-minimum-wage-worker
    • The current federal minimum wage is $7.25 per hour. If a minimum wage worker is employed full-time (forty hours per week for 52 weeks), that worker would earn $15,080 annually.
      In 2012, the poverty threshold for a single individual was $11,945 and the poverty threshold for a family of 4 with two children under 18 was $22,283.
      Thus, a single full-time minimum wage worker has an income above the poverty threshold but if a full-time minimum wage worker is the sole source of income in a family of four, that family’s income is only 65% of the amount required to meet its basic needs.
  • “Turning Up the Heat on CEO Pay” (The Drucker Institute; 2011.02.17) – http://thedx.druckerinstitute.com/2011/02/turning-up-the-heat-on-ceo-pay/
  • “Return of the oppressed” by Peter Turchin (Aeon Magazine) – http://www.aeonmagazine.com/living-together/peter-turchin-wealth-poverty/
    • From the Roman Empire to our own Gilded Age, inequality moves in cycles. The future looks like a rough ride

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