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/sci/ - Science & Math

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3848206 No.3848206 [Reply] [Original]

What would be the economic consequences if all corporate executive salaries was contingent on a vote by their employees?

>> No.3848210

Bumping fro strong interest, naively considered the idea before myself. It would need to be a worldwide shift.

>> No.3848219

>>3848206
People will vote for a raise in salary, and try to prove to their CEO's that the voted 'for', hoping for a reward.
The system is very sensitive to corruption.

>> No.3848222

>>3848219
Strongly disagree. A few might try this, but most would probably vote salaries down out of envy.

What would happen seems to depend strongly on whether who made what vote could be discovered. If it was anonymous, the salaries would drop (which, I admit, I see as a good thing)

>> No.3848230

Employees would have a much stronger incentive to actually understand what their company is doing rather than just treat their job as grunt work for a paycheck.

>> No.3848236

>>3848222
The standard notion of anonymous isn't strong enough, here. That's my point. Not only should you be able to keep your vote private, you should _have to_ keep your vote private. That is extremely difficult to achieve, especially in a corporate (ad hoc) setting.

>> No.3848246

>>3848236
Let me give an extreme example:
"I want you to deliver a proof of your 'for' vote tomorrow morning, otherwise I fire you. A fotograph of you putting a 'for' form in the ballot box suffices."
How many people would vote 'against' now?

>> No.3848255

>>3848246
I'm pretty sure there are already laws against that sort of thing.

>> No.3848260

>>3848255
>There are laws against corruption.
No shit sherlock.
We should still design the procedures to be resistent against corruption regardless.

>> No.3848269

>The last crusade, sean connery drinks the holy grail

>Doesn't look any different 20 years on

BRICKS HATH BEEN SHAT

>> No.3848310

Huge decrease in employment and enterpreneurship motivation, economic recession.

>> No.3848318

>>3848310
I never got why people think that.
Why would I get demotivated to become an enterpreneur, if it's still the best paid job around? Furthermore, there is an even stronger incentive to do your job correctly than in the old system.

>> No.3848319
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3848319

No effect.

Compensation packages would shift so that the portion under employee review would be minimized. There are always loopholes and end-arounds in any legal set up. Business is always faster then regulation.

>> No.3848325

The stock market would drop as shareholders fear that employees will vote in CEOs who are uninterested in making profit for shareholders.

>> No.3848335

>>3848325
Good. The stock market is full of shit anyway.

>> No.3848343

>>3848335

Enjoy not having companies produce anything, as the majority of their cash comes from investments.

>> No.3848362

>>3848343
>the majority of their cash comes from investments.
And here I thought the whole point of a company was to make money by providing goods or a service. Shows me what I know.

>> No.3848366

>>3848362
zing!

>> No.3848370

>>3848362

Do you think that companies spring up with no start-up money?

Because that's what investments are. If a publicly listed company has all of it's investments taken away from it, it takes away it's funding. Do you get how companies work?

>> No.3848375
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3848375

>>3848335
You see this is the problem with your mindset, you think that because IBM couldn't run a bakery much better than a regular baker this means a baker could run IBM, in reality he wouldn't even be able to get an entry level position. This is why you think the stock market is full of shit, it's like the dunning kruger effect or whatever.

Education and technology is the only way to emancipate the poor and downtrodden, so just let corporations do whatever the fuck they want.

>> No.3848376

>>3848370
So I guess everyone is just going to stuff their money in the mattress, huh?

>> No.3848381

>>3848318

>I never got why people think that.
Why would I get demotivated to become an enterpreneur, if it's still the best paid job around?

Because of you employ more than 1 person, they could legally vote your salary to minimum wage and their salary to max. Company founder would SERIOUSLY consider employing more than one person, because he would risk losing control of the profits entirely.

>> No.3848382

>>3848362
>Farmer A has no tractor, he starts harvesting by hand. After 15 years, he can buy a small tractor, and some more land. He can almost double his harvest. After another 20 years, he sells his land, and retires.
>Farmer B asks for an investment, to buy a tractor and some more land. He immediately doubles his harvest, but has to pay 33% to his investors. After 5 years, he asks for another investment, and doubles his harvest again, while paying 50% to his investors. He is now making double the money of farmer A. After another 10 years, he starts hiring people. After another 20 years, he buys out farmer A, and lets his son run the farm, while retiring.
Where did all his money come from?

>> No.3848387

>>3848376

>>3848335 said that he'd like to see the stock market fall. If the stock markets fall, that implies that people have taken their money out of investments, and metaphorically put it under their bed. I was pointing out how ridiculous that was.

>> No.3848388

>>3848387
It doesn't imply that, because it wouldn't happen. Investment would be realigned, it wouldn't vanish. The stock market as we know it might fail.

>> No.3848406

Why should the employees decide how to run the company rather than the people who own it (stockholders)? Just because durr fuck capitalism? Most employees don't know SHIT about business.

>> No.3848417

>>3848206

They would contractually agree to the wage prior to being hired. Almost no change basically.

>> No.3848423

It always strikes me as odd that we glorify having a democratic government yet also celebrate businesses being run like dictatorships or monarchies. The cognitive dissonance is amazing.

>> No.3848424

>>3848423

> public
> private

Pick one.

>> No.3848429

>>3848423

Yes I agree.
We should abolish democracy in favor of techno/meritocracy.

>> No.3848435

>>3848429

> democracy exists in any country in the world
> true

Pick one.

>> No.3848447

That wouldn't make any sense. Employees don't own the company, shareholders do.

>> No.3848457

>>3848435
>continuum fallacy
>no true scotsman fallacy
pik1

>> No.3848469

>>3848457
Don't respond to invisible posts.

>> No.3848493

>>3848469
sorry

>> No.3848538

>>3848206
CEOs would still be rich, not just filthy rich. They could get away with "ceo salary is 2000% of lowest earner in company"

They could not, like today, get away with "ceo salary is 50 000%(to 500 000%) of lowest earner in company"

>> No.3848553

>>3848538
This is probably true. Instead of focusing on generating money for shareholders, the new focus would be generating money to pay employees. Of course, businesses will still require outside investment, so there is a limit to how far we can move in this direction.

We're nowhere near that limit, however.

>> No.3848574

>>3848538

No, they would not be hired if they support a low CEO salary.

>>3848457

> democracy defines all gubbmints

No.

>> No.3848602

They WILL find a way around it.

Believe me, the average CEO (and his lawyers) is smarter than the average wage drone.

>> No.3848608

>>3848538
>>3848553
Employees would be unable to buy or sell their shares, without the price mechanism the business's capital allocation decisions would be increasingly distanced from reality causing a bubble and eventual collapse. The only way this could be maintained is if the business is very simple and doesn't need efficient administration, like a bakery. A textile mill might collapse after a few months. IBM would crash immediately.

>> No.3848624

>>3848608
> without the price mechanism
um, what? Why would the price mechanism suddenly stop working? Oh, you mean wrt to CEO salaries, which are already not correlated with performance at all?

>> No.3848648

Liberty in => this anon out

>> No.3850291

Seems CEO paychecks aren't connected to their performance, so you could very well pay them less and still get the same (poor) results we're already getting

http://www.washingtonpost.com/business/economy/cozy-relationships-and-peer-benchmarking-send-ceos-pa
y-soaring/2011/09/22/gIQAgq8NJL_story.html

>> No.3850313

Free market advocates would flip shit, employees would be forced into non-complaint contracts by large companies with big legal departments but not by smaller companies in which it wouldn't do much.

/pessimism

>> No.3851675

Isn't this basically what collective/employee-owned companies already do?

>> No.3851764

I got a question, whats stopping employees from just not paying their bosses anything? besides it being a horrible idea.

If you are willing to give those wackies in behavioral economics any credence, you might suppose that by making regulation about voters deciding boss salaries just makes people conscious of salary to begin with, and they might perceive their work environment more as distrusting work environment. If you dont highlight payment people might perceive their job as an ends rather than a means. Their job is their purpose. If you make the process complicated, and between two conflicting parties (employers and employees), they might perceive the work environment as a means to getting the best deal for some exterior purpose.

But what do those fellows know?

>> No.3851782

>>3851764
Presumably, the same thing that stops bosses from not paying their employees.

>> No.3851783

>>3851764
>I got a question, whats stopping employees from just not paying their bosses anything?
I'm pretty sure that's called embezzlement.

>> No.3851795

>>3851782
Unless they're a college student or recent graduate. Then they can just call it an internship and completely get away with not paying the poor sap.

>> No.3851799

>>3851782

Okay that makes an embarrassingly high amount of sense.

Its a lot harder for employers to give people a pay cut than a pay increase in real life. In this hypothetical voting system, I bet employees would vote on rules and contracts. They wouldnt just vote every year on a different proposed salary?

I suspect that its a lot more efficient for employers and individual employees to negotiate a wage than it is for a team of people voting and a potential "employer."

>> No.3851828

>>3851799
But that's a union, and we can't have that. As recent events show us, unions are evil and apparently lead to the downfall of civilization (and drum circles).

>> No.3851839
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3851839

>>3851828

I dont know how those finance guys handle all that drumming. I know I would crack.

>> No.3852057

Since Exec's decisions have far more significant consequences for the company, they should be paid in huge bags of cash. Or at least will. Because if you haven't noticed, these people are actually holding business hostage.

>> No.3852097
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3852097

>>3848574

>No, they would not be hired if they support a low CEO salary.

Correct. This is why every country pays their CEOs the same salaries. Any lesser figure would not work.

>> No.3852109

>>3852097

OMG

Its over 500 now? I thought it was over 300. In the 70s it was 16.

>> No.3852112

>>3848206
I think a better system is whenever an executive wanted a pay increase / bonus, it would have to be voted on by all the employees.

I feel that would be more feasible and implementable.

>> No.3852151

>>3852112
But executive salaries are already disgustingly high. By only needing approval for raises you would just be giving them a slap on the wrist, and a light one at that.

>> No.3852155

Considering that a C.E.O. runs the entire company, is a highly qualified individual who's merit and pay has been approved by the board of directors, who are in turn elected by the stockholders of a company. Its simple if you think about a sole proprietorship, where only a single person runs the show. He pulled the whole thing together, is in charge, and makes all the important decisions. After all, its his company! Now, if he wants to pay someone a ridiculous amount of money to run his company for him, so be it! That ridiculous amount of money come out of the company's bottom line which is then subtracted from his profits. (or for a publicly owned company, the profits of the shareholders.) The important thing to note here is that the pay of the C.E.O. does not go unchecked. There is (for those who are familiar with economics) an equilibrium point.

>> No.3852159

>>3852155
>C.E.O. runs the entire company
NOPE

>> No.3852165

>>3852159
You can't argue with me, I got dubs

>> No.3852179

>>3852159

Its certainly the highest and most executive position that has the broadest range of influence, would you disagree?

>> No.3852237

>>3851764
>wackies in behavioral economics

Not a fan of behavioural economics?

>> No.3852272

>>3852237

Kind of...

I think its really valuable research. Its not bad. Its good research to look at the fundamentals to human behavior.

Dan Ariely is in my perspective is like the archetype behavioral economist. And I think hes a bit of a conclusion machine, in that he does some weird study and thinks that suggests something it doesnt.

Then a lot of people on /sci/ are like "Look! Economics is false! Its scientifically proven!"

>> No.3852311

>>3850291
Surprising Fact.
When Bonuses are distributed at random in a company the performance gain is higher than if bonuses are distributed based on achievement.

>> No.3852322

>>3852311
You would have a point if that was actually happening. Instead CEO bonuses are awarded based on how many friends they've managed to put on the board of executives and have among the major shareholders.

>> No.3852328

OK MR. ECONOMICS OP,

what type of vote are we talking? Is a majority required? Are we allowing for collusion between voting parties?

>> No.3852332
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3852332

>>3852322

If massive bonuses, and massive executive salaries are happening now. Why didnt it happen 30-40 years ago lets say? You know, its a recent phenomenon.

>Pic related

>> No.3852418

>>3852332
I'm certainly no expert or historian, but since it started around the Reagen era when trickle down economics gained popularity, I would guess that the executives started using their newly highlighted status as "job creators" to justify ever increasing wages.

>> No.3852452

>>3852418

In Dan Ariely's book, he suggested that regulations that made companies forcefully disclose salary information converted wage from personal information, to information we could brag about and compete in terms of.

In "No Logo" Noami Klein suggests that now-a-days companies realize that it is extremely profitable to fire everyone, sell everything, invest in marketing and outsource to contractors.

Both of these ideas sound kind of far-fetched to me. Certainly not scientific. But they are interesting nonetheless.

>> No.3852476

>now-a-days companies realize that it is extremely profitable to fire everyone, sell everything, invest in marketing and outsource to contractors.
Ladies and gentlemen, I give you the Free Market.

>> No.3853143

>>3852332
do you have a the source of that pic?

>> No.3853152

nothing, as it would not increase wage salaries to lower exec salary it would just increase the corporation profits. and the economy is driven by wage earner spending, which create jobs. Not the other way around. no matter what the koch brothers say.

>> No.3853156

Why would I let employees decide how much money I make in my own fucking company?

>> No.3853160

>>3853156
sake of augment? Also, who said you owned the company? it could be public, or it could be you got hired by the board or were promoted to upper management

>> No.3853161

>>3853156
CEOs dont own the company. They are guys that come in, run the company, and, regardless of failing or doing well, receive ridiculous salaries.

The board of directors decides CEO salaries but guess what? The board of directors, in most cases, is made up of other CEOs.

>> No.3853480

>>3853161

a lot of the huge bonuses are paid in the form of Stock options. so the CEO has an incentive to leave the company no worse off than he found it.

>> No.3853483
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3853483