https://papers.ssrn.com/sol3/papers.cfm?abstract_id=966332
I'm not sure how true it is, but the game theory makes sense to me. The alternative, that CEOs are correctly priced by the market but that correct price has grown by 10x in half a century, actually seems less believable to me.
not sure I believe that, but it's a possibility.
Due to a humorous quote from Garrison Keillor's Prairie Home Companion show: "Well, that's the news from Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average."
At best one might say a vote against would be to sell the shares, but if public companies broadly all overcompensate their CEOs then it's this tension between leaving most of the market or investing in companies that might make money despite overpaying.
I believe German CEOs typically make around 1/3rd of what American CEOs make (having trouble finding the source on that, but that's the number I've seen cited before), possibly in part due to these laws.
The requirement for half representatives for company's employees is for (secondary) supervisory board of directors, not for (primary) management board.
CEOs have enormous leverage to affect change in their company, with proportionate increase in company returns. An average worker or even an excellent one has fewer opportunities, and even then influence is usually limited to a single team or product.
An example of leverage would be, investing $x million in product line x instead of y. While anyone theoretically can make this decision, the larger $x is the more you want someone owning this who has made these type of decisions before. Which requires someone who has progressively taken more risks in their career and made the right calls.
Really awful rhetoric (from anti-capitalists) I hear is that nobody works 1,000x times as long or as hard as the average worker. Value is not manifested in how long or how hard you work.
I think it's part of a wider worldview that doesn't believe that talent is very impactful, and in favor of cooperation rather than competition.
Michael Phelps is not just a product of luck, either. You could train your entire life and not be as good a swimmer as him. You'd have to redefine luck to include genetics.
Say the decision of the good CEO makes the company $100m. How much is he worth? A lot.
Plenty of people are good at investing (understanding how it all ties together, and understanding how they take risk) outside of the public markets. And plenty are horrible (i.e. mom and pop investing in the mutual funds of your bank).
I am probably misremembering many key details here, but didn't Bogle make a pretty good case for this?
You might argue that incentivizing CEOs should be more important than getting a good one, but you'll have to ask shareholders at major companies why they don't insist on that instead.
Whether this is "deserved" or not is irrelevant. What matters is profitability, not fairness.
If I can add $20m of profit to the bottom line of an organisation, then there is nothing wrong with capturing some of that value, no?
Call it CEO or entrepreneur, at the end of the day, it's the same job, with the same end result.
How much value did that create or protect? How much of that was I allowed to capture compared to the CEO? A fraction.
But you know all this, so the feudal comparison is pretty melodramatic and ridiculous.
You can be a CEO if you want. Give it a try!
In other words, vote buying is not necessarily why votes correlate with contributions along policy lines.
Fact: You can be a CEO.
Fact: You can be elected to vote on laws.
Fact: There is no financial or divine right requirement to run for office or be a CEO.
[1] https://www.ifs.org/wp-content/uploads/2012/11/Bronars-1997-...
"Multivariate analysis indicates that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence."
And have you seen any discussion of who exactly ends up as CEO of say fortune 500 companies. There is a distinct lack of women, and of the women who are represented there is a slant to those with wealthy family backgrounds.
Here’s some job ads for CEO: https://www.indeed.com/m/jobs?q=CEO
You’ll notice there’s nothing about gender in any of them, or being born to wealthy parents.
Consider that maybe the limiting factor to becoming a CEO is yourself, and not society, men, rich people, discrimination, etc.
You get what you negotiate.
Let's take the human element out of it. Do diamond "deserve" to be a million times more expensive than water? Water's essential for life, whereas diamonds are just decorations. Yet what would happen if we mandated that water must be priced higher than diamonds? It would wreak havoc.
At the end of the day, markets are a social technology. The only one that humans have for effective large-scale coordination of economic activity. It would be great if there was a functional alternative system, but it simply doesn't exist.
The enormous increases in material living standards that humanity has experienced over the past 200 years is only possible because we let markets determine supply and demand. (With a caveat for trained economists to design targeted interventions concerning well-studied and classified examples of market failures.)
If you're concerned about inequality, the correct way to deal with it is with a robust welfare state and economist-designed redistribution schemes. Let markets decide price, and balance supply and demand. Then fix it on the backend with a welfare state. Don't mess with the machinery that literally feeds us.