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Comment by bhauer | Hacker News Reader

This is utterly unsurprising.

By the same token, consider the vehicle market which has seen prices balloon in 2022 due to high demand. Consumers are less tolerant of dealer markups (which enrich a low value-add dealership) versus OEM markups (which ostensibly flow to the manufacturer and its employees).

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There is no value add in dealers. At all. Pushy sales people. Add-ons that you don’t need. Giant inventories.

I wish I could build & order my next BMW online. And then get my own financing or BMWs, without having to sit with the finance guy who is going to be pushing a warranty plan and his financing for a kickback.

All that to pay for stuff I don’t need.

I find it surprising that people prefer companies that pay their employees poorly as long as the CEO is also paid poorly over companies that pay their employees well and their CEO even better. My assumption would have been that consumers always prefer the employees being paid well over paid poorly.

It's especially surprising because, assuming equal revenue, the shareholders "sitting back and doing nothing" derive greater benefit when everyone is paid poorly. Bias towards retirement stocks that the majority of the population (in the US) hold?

I disagree with your characterization (or I read it wrong). These are pay cuts, so customers prefer those where the cuts fall on CEOs first and greatest. Your assumption that revenues remain constant seems to be one not shared by customers

So, yes, people prefer to patronize companies where the pain is shared regardless of the size of the pain.

I was referring to the referenced earlier study contained within. It wasn't focused on cuts, although it is assumed in this study that the same would hold true in a cutting situation.

My assumption of equal revenue was meant to be across companies. Obviously a company with no money can't pay as well as a company that can print money. But if two companies have equal revenue, but one pays less for its workers, then the net will stay in the company with a disproportionate benefit realized by the shareholders.

I was surprised that consumers favour the shareholders getting rich over the workers, but perhaps that is because the odds are they are shareholders themselves.

I suspect it is a salience effect. If everyone can be paid well, that's just a company doing well. There is no tough decision to be made.

If a company is perceived as reacting to bad finances and leadership makes a show of taking the hit, that's likely to perceived as good leadership - long term thinking, protecting the team, whatever.

But, within that, what's the difference between a company doing well and a company not doing well but leadership reacting to it well? I would say that is good leadership in both cases, but this suggests that consumers show a strong tendency to prefer the latter.

Pay the CEO well and the employees even better.

It's much more competitive than that. Like only 10% of wealth is created, the other 90% is won or maintained. There is such a thing as excessive innovation like telecoms complain about. The focus in on the generated wealth, grow the pie, so that people think they don't have to fight for their piece of their pie. Real estate is a pie. Spheroid not a cylinder, same thing. Tiny slivers and that's all there is. So like if somebody encroaches on your land and tells you to build twice as high a building on what he didn't encroach, you do that? Like it's your fault you don't build pencil buildings? Japanese pencil buildings.

One hand to make and one hand to fight. Everyone must do both.

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