>In order to figure out whether selfishness leads to wealth (rather than vice versa), Piff and his colleagues ran a study where they manipulated people’s class feelings. The researchers asked participants to spend a few minutes comparing themselves either to people better off or worse off than themselves financially. Afterwards, participants were shown a jar of candy and told that they could take home as much as they wanted. They were also told that the leftover candy would be given to children in a nearby laboratory. Those participants who had spent time thinking about how much better off they were compared to others ended up taking significantly more candy for themselves--leaving less behind for the children.
Trying to take a single minor difference in behavior in a controlled setting and apply it to an entire demographic is bad psychology. Imagine someone doing this with a demographic distinction other than SES.
At what point does someone need to be ashamed of the money they make? Is anything over the $50k figure that is quoted as the maximum happiness per dollar figure considered shameful?
https://en.wikipedia.org/wiki/List_of_European_countries_by_...
When I lived in the US I thought more Europeans lived in gorgeous architecture and had excellent public transport. Living in Europe, I find a lot of people think Americans are wealthier than reality (though if they're thinking of tech salaries, they're probably right - that EU/US disparity is enormous).
Also, your original post needs a qualifier on the scope of "European countries".
An executive making a luxury purchase is different if their company is successful versus laying off lots of employees.
Buying a yacht can be part of an understandable (although expensive) hobby/lifestyle as opposed to something simply wasteful like buying solid gold toilet seats.
Building beautiful architecture, commissioning art, or adventuring/exploring (e.g. being the first person to climb X or to cross Y) can contribute to the vibrancy of society even if it isn't super practical.
Perhaps we're all just flawed, self-centered people trying to keep up with what our environment defines as the good life.
Buy a boat for $100,000 and it'll cost you money to maintain and run.
Buy a boat for $100 million and it'll earn you money if you lease it out or take passengers during the 11 months of the year that you're not using it.
Note that a boat is a bad example on your part. There are lots of other things you can do that are more likely to earn money.
For that matter if you can afford a $100 million boat, the crew cost is a line item that you can ignore and thus your boat sits in port 11 months just so you can have your boat. If you really like that boat it isn't a big deal that you are losing that much money.
If you invest it directly you support whatever you invest in. (you might or might not get it back depending on if the investment is successful) The best case you supported a new things that everybody buys, thus creating a company that employees a lot of workers.
If you buy luxury goods you directly support all the employees of the companies that make those goods, keeping them in a job.
Even if the investment choice was a life saving drug, the luxury purchase means those employees have money and they are likely to donate to research of life saving drugs.
1. You spent the money on consumption. By definition, consumption means that whatever you buy ends up being less valuable after you are done with it (otherwise we would consider it investment - note that unsuccessful investment is also a form of consumption under this definition). Consider an extreme example, where you commission a massive yacht to be built for you, then use the yacht recklessly and sink it. All of the time of many people, all of the materials that went into building it have been wasted. In aggregate, we are all poorer as a result. The fact that the yacht company now has more money just means that they now have a relatively larger claim on a smaller overall economic pie than they did before.
2. You invest. Instead of spending money on yourself, you instead use the resources you have a claim to that the money represents (e.g. the people and the resources that could have resulted in a yacht for yourself) to create real value for others. This makes the overall economic pie larger (and also changes the distribution of claims on this pie that people have).
3. You donate money to other people, burn the money - neither consume nor invest. The overall economic pie is unchanged, but the distribution of claims on this pie by various people has changed.
Of course, there are caveats and nuances, but in general option 2 makes society richer in aggregate, option 1 makes it poorer, and option 3 merely changes who gets to decide what to do with the resources that we have while neither growing nor shrinking this resource base.
This is a great insight which unfortunately doesn't get much attention in the inequality debate. I'm now rich enough to be in the top 0.5% of the world. The marginal utility/value of money is so low for me that I've begun valuing my time and optimizing for it.
I, however, do think about it once in a while. I could give away a non-trivial amount of money without getting materially impacted. The same money though will make a massive difference to someone below or around the poverty line. E.g., sponsoring a student, helping a business loan, etc., The capital that's getting accumulated in the richest top 1% people is such a massive waste that could help a huge portion of humanity.
Purely from a utilization (of money), perspective inequality is a suboptimal state, a massive one at that.
It makes no sense to me why the CEO and higher ups of the company I work at still work there. They are already set for life many times over. I can only speculate that they share a character flaw that they all see as virtuous. However it isn't--they are impeding someone's chance to "make it" in life, especially the older executives who could have stepped aside a decade ago or more. Even if you just look at the absurd salaries, it doesn't paint a pleasant portrait of greed in America.
There is a great absurdity to life in America. We basically work for the appearance of something that ends up being eaten away to a large degree. Taxes and inflation keep the goalposts moving away but we don't rebel because it's a magic trick and who doesn't like magic?
I don't work because I enjoy it but because it is a means to an end that is a better formula than some other arrangement. I would happily volunteer my time, travel, read, or simply do nothing if I could.
My theory is that they simply like their work and get satisfaction from it. They get paid a lot but they also work a lot and I can’t imagine anybody doing this to themselves if they didn’t genuinely like it.
[0]: https://en.m.wikipedia.org/wiki/Psychopathy_in_the_workplace
I think most CEOs - used to working extra hours/hard have the least idea what they would do after they retire.
The work argument is bullshit too. I'm convinced with a few months of hands on training, any passionate and competant person can do the job of a CEO. It is really a job that lacks any qualifications beyond managing a small network of people. CEOs don't work 100x as hard as someone working full time and a second job to make 1% a CEOs pay.
I expect a large number of middle/upper-middle class people would already be made for life if they just moved to a low cost area/country and simplified their lifestyle.
But we carry on because we want more.
https://www.givingwhatwecan.org
I really recommend focusing on cost-effectiveness when you give, however much or however little you give. See GiveWell for amazing research!
Should we give up not working at weekends because it's a "non-religious sabbath"?
10% is a nice round figure. It's small enough that many people can afford to give up that fraction of their income without getting into money trouble. It's large enough that many people will be doing a really substantial amount of good to the world if they give that much of their income to well-chosen charities. And, yes, it happens that some religions have used the same figure, which probably helps "give 10% of your income" seem like a reasonable thing to suggest.
Is there anything bad about any of that? If there is, I don't see it.
I don't claim that there's anything optimal about giving 10% of your income. But I don't see any reason to sneer at people for doing it, either.
Doesn't it? What else motivates things like progressive taxation?
Please, do not start believing you will be making a difference through charity.
I observed rich people in the past that out of some half-conscious guilt started thinking they need to give back in some way. But they don't want to be inconvenienced by doing it personally or by evaluating which people deserve a donation or have an important material problem solved, by themselves. They prefer to unload their guilt -- or the need to feel good about themselves -- through a 3rd party. Basically, buying goodwill and good conscience with money.
That's not giving back.
I have known several rich people and they go through a very similar process. It's very saddening to observe.
If you want to make a difference with money -- go out there. Physically! Meet people with less. Talk to them. Ask them what is the hardest thing in their lives at the moment. Ask them what's a regular concern for them. Do that 100 times, or 500 times. Understand their struggle. Many would just squander the money in a week, even if you gave them a bag of it. Try and aim your efforts and money where it will truly count.
It's not an easy thing to do. But it's a worthy cause to pursue, much more worthy that a random charity.
Apologies for off-topic.
IMO, what you're saying is akin to saying: Criminals on the streets? Why pay to hire more cops when you can physically go out on the streets and BE the cop?
You are also very generously assuming that charities actually do what they are supposed to. Here in Eastern Europe where I live this has been proven to be false, many times. Are you convinced it's better where you live?
Granted this is anecdotal evidence but my overlook on a number of average people flaws -- and I am including myself in this group, I am not pretending like I am on some sort of a moral high ground, mind you -- indicates that most people are not... ready to receive money, if that's even the right word.
It's more or less "OMG money money money!!!!" out of them and they just mess up.
But truthfully, and this is not sarcasm, I'd love to be proven wrong.
At very large-scale companies, it doesn't always work as well as coud be hoped. A company ten times the size of this company may not have ten times as many extremely-highly-paid executives, but it probably has ten times as many people further down the pyramid.
For example, the CEO of United Airlines is compensated $18 million-ish. There are 88,000 employees of United. That's $200 dollars per employee per year. You'd have to find a lot more money than that before you started seeing benefits to average employees on the same scale as here. Even if you assume all the highly-compensated execs can account for 5x-10x that, you're still well short of $14k/yr.
The 2015 SEC filing includes 8 named individuals in its executive compensation program. In 2015, they received between $500,000 and $1.25M in base salary, and between $1 million and $10.7M in long-term incentives. In addition, they received between 110% and 150% of their base salary in annual incentives (bonuses). Two of them received additional monthly cash payments of $100,000 and $40,000 for temporary duties in addition to their normal post.
Granted, that's only the top 8 individuals at the company, but if the lowest-compensated individual among those 8 is taking home >$2M I'm fairly certain that there are a lot more than 10 making more than $500k.
It's also still the case that that pile of money is not much divided among 88,000 people, but you could still raise the income of the lowest-compensated 10k employees by several thousand dollars, or fund employee daycare, or something other than give it to a small group of people.
EDIT: Also, you're taking income off the top of the tax brackets and giving it to someone at the bottom of the bottom, so you get a tax multiplier where you take $1 from me and give $1.50 to someone else. Also, you probably don't need even a 2% or 3% haircut off the engineers' salaries to make every support position a $100k/year job with full benefits and 401k matching, unless your engineer : support ratio is crazy.
EDIT EDIT: Yeah, pushing everyone to $100k/year is probably overselling the idea. You could still free up a life-changing amount of money for people making minimum or near-minimum wage.
I'm not sure a 3% haircut on engineers at Google would give them enough funds to make every support position $100k while also doing what you suggested and bringing all the contracted services in-house.
If we assume a 3% haircut on an average engineering compensation of $250k, and 45% of the organization, you have $6k and change per support headcount. And this is without bringing TVCs in-house.
Unless the support staff are all making right about 95k, this seems like it might not quite work out.
However, one point of definitions, I am not using "support staff" to refer to "non-engineers", I am using it to refer to "workers who perform services that are not part of the company's operations, such as building maintenance, cleaning, and cooking". Most of the non-engineering staff at Google are not support staff, they are non-engineering employees doing non-engineering work equally related to the core operations of the business. Sales, partner relations, data center management.
I also don't know how much these individuals are payed, although I hope to god it is "well above minimum wage".
In any case, sure, you're probably right and you can't actually bring everyone up to SWE-minimum-wage (100k$+benefits) with a small haircut off the engineering staff, but a small haircut off engineering, distributed to the 10-20% of employees and contractors being paid the least is a life-changing amount of money. +$15k / employee / year to the bottom 20% of earners is "quit your second job" money, it's "get the car fixed" money, it's "have money to put aside for a rainy day" money, it's "send the kid to college" money, while $7.5k less per year is "retire three months later" money for an engineer.
I know lots of people focus on less profit-driven motives for their career, but I bet even more do not, especially at places like Google.
I know my engineering curriculum hasn't focused on empathy, or ethics much at all. Unfortunately you can't educate the selfishness out of humanity.
I find these notions curious, and rather at odds with how I expect thinking humans to interact with the world around them.
Perhaps there's something else you think our universities might be failing to teach?
I'll start with this: http://ir.united.com/corporate-governance/company-leadership
This says there are 24 executives at United (I counted). If you assume literally every single one of them is paid as much as the CEO is and redistribute all that money across the whole of United, then that's 24 * $200 = $4800. $200 was rouding a bit ($207 is ungainly to work with), so it's actually closer to $5000.
Now, $5000 a year isn't nothing. It's undoubtedly and unquestionably a life-changing amount of money for a lot of people struggling to get by on manifestly unreasonable and unfair minimum wages.
That said, $5k is also far short of the $14k number above. And we had to make several unreasonable assumptions to get here.
Realistically, the policy proposed here is freezing salaries and re-directing raises among executives. Most compensation would be unaffected. Further, not every executive will be paid as well as the CEO. Assuming generous 10% yearly raises and that other executives are paid around half of what the CEO is, you get a result that looks like $5000 / 2 = 2500 * 0.1 = $250 / yr.
Which isn't far from the initial result. (And still includes some unreasonable assumptions)
I'm actually surprised how merely broadening the calculation a bit already results in a quite significant amount. 5k is quite a bit!
Anyways, thanks again :).
You have to be wildly fantastical to get there, though. Meaning it's not a number that should be taken at all seriously as anything other than a work of numerical fiction. $250 is a number that's likely much closer to reality, though probably still too high unless you can find a much broader swath of people to freeze the salaries of.
1) Pegged the CEO <-> lowest-paid worker (or contracted worker, so you can't just contract out the janitors) to no greater than 10 to 1.
2) Balance out the next few layers of management to reflect that cap.
3) And see what pay looks like for the lowest-paid workers.
If you don't like 10-to-1, maybe we do 20-to-1. Find a nice low ratio, though, and if people want to make more, they can run the business such that everyone makes more.
There's this idea we're dealing with here that there's massive, virtually untapped, make-everybody-well-paid amounts of money being wasted on management overhead. It's a very reasonable idea. Managers at the top get paid an amount of money that's clearly and obviously incredibly excessive and has absolutely no connection to anything!
Yet, it might be worth considering that this might not actually be true in the important broad sense. What if there isn't a vast pool of money locked up in management salaries that would dramatically improve the lives of workers? What if there isn't the "fix the car money" or "send a kid to college money" another poster was rhapsodizing about for every worker? Might it be worth considering that in most cases, managers aren't actually paid vastly more than their direct reports?
Besides, there are plenty of ways to structure businesses that would get around something as simplistic as a compensation ratio.
There will always be another "But what if we run the numbers differently?" scenario.
When 10 people own as much as half of the population of the country, there's something there. Calling it not "a vast pool of money" might be semantics, because there's definitely something there.
It's perhaps worth considering that most companies might not replicate that structure internally. Given the numbers above, this strikes me as good reason to suspect that the approach you describe - while definitely a good idea to promote equality! - might not have the the numerical outputs you expect.
I'm not rich per se, but I make enough that I can give away 10% of my pre-tax income to nonprofits without it materially impacting my quality of life, so that's what I do. If my society won't distribute wealth in a sane way, then I'll do it for them. If anyone else has similar feelings, consider taking a percentage off the top of your own salary and allocating it to charities that will help the less fortunate.
That said, we shouldn't depend on the largesse/good nature/etc of a few rich individuals - if there is sensible minimum wage, sensible labor laws (and enforcement of these laws), sensible housing laws etc, we probably wouldn't be in this situation in the first place.
For example health insurance costs 10x or more either via either the public exchange or for a small business to offer relative to corporations in the same market. That's a huge disincentive for employees to work for you.
If we were really interested in making it easier for small businesses we'd improve social safety nets, not weaken them further with re-regulation. We need to reduce the risk/pressure for employee rather than concerning ourselves with how cheaply we can exploit an underclass.
It is entirely possible to put in laws that are reasonable for larger companies to follow, but not hurt small business growth.
We have already tried the "markets will fix things, markets will regulate themselves" blah blah strategy - it doesn't seem to work. When was the last time a big company voluntarily cleaned up its own oil spill or other environmental disasters?
There has to be minimum wage laws (and environmental laws etc etc) and they have to be sensible. It boggles my mind that you'd argue against this. If you want to encourage small businesses to start, there are other ways to help them - interest free loans, tax free zones etc
When I started here the first thing they sent me to a mandatory class: 2 hours to say (in different ways) "All the drains outside go directly to the river, so if you see a chemical going towards a drain you are to find the cover near to the drain (a sticker) and block that drain, then call maintenance to figure out what it is".
The above happens several times a year, and you never hear of it because we clean up our own mess. (almost all the mess is the brake line on a delivery truck breaking)
It's useful to remember, though, what the world looked like before climate regulation. Rivers in industrialized cities were once choked with toxic effluent from tanneries and heavy industry. Even in Silicon Valley semiconductor manufacturers dumped heavy metals down the drain, contaminating groundwater and causing many billions of dollars of damage to be cleaned up by the taxpayer.
I do know the EPA fines are a cost of doing business to some. A few of them have decided that the public relations problems were getting too bad and cleaned up their act.
Minimum wage laws, like employer healthcare mandates, are a feudal solution (specifically, viewing employers as feudal lords responsible for the minimal upkeep of their employer-subjects) to a capitalist problem. They are better than nothing, but worse than making minimal upkeep a public function, taxing appropriately to support it, and doing less to impose additional costs or barriers to mutually beneficial employment.
I wish he had shared the numbers.
For budgeting, you take the hourly x 2080, so $15,600 before taxes. I've filled out one too many government SF-424 forms back in the day.
I was told, when I was a contractor, to use 1920 x bill rate, so I had a realistic idea of the yearly with 4 weeks off.