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Comment by k__ | Hacker News Reader

"the people who hire CEOs are the boards of companies and the boards of companies are mainly staffed by CEOs of other companies who unsurprisingly are incentivized to advocate for higher CEO pay."

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Why would investors vote for board members that waste their money?

Class solidarity.

I don't know what you're imagining here.

Imagine a charity or pension fund that invests in a company. What incentive do you think they have to spend money unnecessarily on CEO compensation?

The conversation around Mitchell Baker's compensation was particularly illuminating, I think. Why do nonprofits pay CEOs millions a year? Because executives expect to be paid that much, and it would be demeaning to pay less.

In other words, normal market forces. The same reason you're paid whatever you're paid.

The "invisible hand" of plutocrats isn't the traditional meaning of "market forces", is it?

Rich people's evil plan to give other people money and drive wages up. Got it.

People are always talking about the free market as if it was some kind of self regulating physical law of nature that could never be wrong.

What's so absurd to think that people from one class (CEOs/VC/etc) want to help people from that same class even if it's against the laws of the free market?

If I help someone who kinda identfies with me, it raises the chance that they will help me/my friends/my family in the future.

> What's so absurd

Because it goes against Occam's razor.

People pay CEOs a lot. Why do they do that?

Likely: because they have to.

Unlikely: global conspiratorial private welfare programme.

You think investors pay money out of their own pocket to CEOs out of altruism?

Do you think investors are, as a rule, rational in the sense presumed by the efficient market hypothesis? Do you think they might be subject to biases that lead them to overvalue their own self worth, and by extension, the worth of people like them?

You made the value judgement, not me. I'd put it down to "keeping up with the Joneses", personally.

"keeping up with the Joneses" by... pushing the Joneses up? Does not compute.

The problem is this market is disproportionately influenced by the people it's pricing.

Very often investors sit on boards, too

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