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Comment by abeppu | Hacker News Reader

> There is no justification for this enormous disparity.

I dunno that the Google vs Microsoft comparison _is_ compelling. Isn't the question not "how much do the employees cost" but "are they worth what they cost"? This is not my area, but it seems like measuring _profit_ per employee gets a crude measurement of whether in aggregate those employees are generating more value than their comp.

Grabbing stale numbers from yahoo finance,

MSFT: 221,000 employees, Net Income to common $69.79B => $3,157,918.55 / person

GOOG: 186,779 employees, Net Income to common $66.99B => $3,586,591.64 / person

I.e. even with their higher comp, google employees as a group are generating similar but higher profit per person. And if the median compensation is ~$300k, then on most of them it seems like Alphabet is still doing extremely well? Is this not the right way to look at this?

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What this pretty clearly demonstrates to me at least, is that executives and shareholders are stealing 90% of the value each employee creates, as both companies median per employee compensation is around $300k, yet they each produce 10X that amount in profit. Sounds like the employees are actually criminally underpaid. But of course the hedge fund billionaire will say they're getting too much, as heaven forbid some people enjoying comfortable middle class lives prevent a billionaire from getting that third mega-yacht.

Did you just assume Google's infrastructure costs are $0?

That's net income, not revenue. All other costs are substracted.

> shareholders are stealing 90% of the value

I think you are very close to the central point of this debate. Whose value is it to begin with? Current cultural norms point to 100% of the value belonging to shareholders and them deciding how much of that to share with employees and execs in form of salaries, bonuses and stocks. If the employees are not happy with a proposal, then they are happy to go find more generous shareholders.

In that light, I don't think it is stealing.

Yes, if I buy a piece of software for my business for $100, I expect it to save me at least $100, or I shouldn't have bought that software. But I am not a piece of software... While I may employ another person for a set price and expect a reduction in the cost of doing business, or even a return, the fact remains, all that differentiates me from the other person is the luck that I was born in my shoes, not theirs.

A good cultural shift may be to re-align assumptions that personal advantages are due to factors we individually control, and think hard about how we would prefer the other party acted were the tables turned.

An ocean full of yachts is pretty worthless if no one offers them a port.

> all that differentiates me from the other person is the luck that I was born in my shoes, not theirs.

You don't think hard work and personal initiative matters?

maybe the tricky part is that hard work and initiative mean different things to different people

for me, it's a bit hyperbolic, but just in case I wake up in someone else's body tomorrow, my hard work and personal initiative will mean that at least whoever got my body has a decent shot at life. hope I landed in someone who felt likewise

a roundabout way of saying "if we all believed that we would wake up in a different body tomorrow, I bet we would all be a lot nicer to each other", but maybe more realistically, I suppose a mutual feeling like that would at least manifest into people being more pleasant overall, even if it is incredibly unlikely that you'll actually physically switch bodies

lolwut? Was this comment written by ChatGPT?

It isn't stealing. There was an exchange of value, labor for salary, that was agreed upon.

I came across an excellent phrase not but an hour ago (italics mine):

"The political mobilization of envy has led to legal restrictions on productive groups, preferential policies for those unable to compete with them, mass expulsions, confiscations, and mob violence..." [1]

The prevalence of the idea that "shareholders are stealing" seems like an example of "the political mobilization of envy."

[1] Race and Culture: A World View, by Thomas Sowell - (He was talking about the Tamils in Sri Lanka, the Germans in Russia... throughout history, not just current events.)

That seems ahistorical. "Shareholders are stealing" is a modern idiomatic expression of the rightful ownership of surplus value, which is an analysis going back to the 1770s at least.

You can have different perspectives or ideological relationships to this concept, even make an argument for the role envy could play in this expression of it. But there is literally centuries of analysis of this you should catch up on before you try to simplify it so completely.

The value “generated” actually belongs to the consumers who are forced to pay (doesn’t matter whether directly or indirectly) exuberant prices to a monopoly. Which is precisely what Google is.

> consumers who are forced to pay

There were many other search engines at one point. Consumers en masse decided to favor Google. Same for email or map or browser providers. Google just has better products from the lens of an average Joe.

Same with smartphones - plethora of choice and yet people are willing to pay through their noses to get iPhones.

> If the employees are not happy with a proposal, then they are happy to go find more generous shareholders.

If I didn't think you were serious, I'd laugh at your good joke.

I think workers should show up at the owners' homes with a different offer - "Perhaps we will let you live."

> "Perhaps we will let you live."

That's why we need a finely balanced solution. Humanity tried giving workers total control (USSR) and it was a disaster. We also tried giving workers somewhat less control but still more leverage (socialist policies in India until 90's) and that wasn't much success either. For now, various social contracts within a narrow range of what US does and say, what Sweden does, seem to be working well.

In what alternate universe did the USSR gave workers total control? Maybe before Lenin used the German cash to take Russia out of WW1, do you mean during these months?

The gall of calling Stalin a defender of the workers, this is hilarious.

I think there's two lenses here, both of which can yield insights.

I was trying to comment at the level of "even accepting that the goal is to make money for shareholders, what's actually good for shareholders?". Even adopting the value system of investors, if Google can hire more employees of the caliber they have, their track record seems to say they will find valuable opportunities to pursue with those employees. More is probably still more.

If we pick up the lens of "what other kind of good can be pursued given this kind of surplus", yes there's maybe a Marxist view that owners are stealing the value of these workers. But IDK that the fair and just scenario would be these employees making $3M/yr instead. Rather, I think if there's any "theft", it's from the rest of the world. Google could keep the same team, and the same product families, and just charge less / show fewer ads, and the company would still be very successful in absolute measures.

It’s a business, not a co-op. The shareholders are risking capital and can lose it all. The employees get paid so long as they work there regardless of performance (in fact, they get bonuses based on performance and stock options, etc, to get a piece of the pie without risking any capital)

The math is incorrect. It's / 10 on that number, so each employee is bringing in ~$358,659 net income. Meaning Google are getting about $60k per employee. That actually doesn't seem too bad to me

Yes the math is incorrect which jsnell pointed out below. But this is still net income (i.e. all costs, including salaries, have already been subtracted), so google really is getting ~$360k per employee. I was off by 10x, you were off by 6x. Google is getting a pretty good value per head, but not as extraordinary as I thought.

> MSFT: 221,000 employees, Net Income to common $69.79B => $3,157,918.55 / person

> GOOG: 186,779 employees, Net Income to common $66.99B => $3,586,591.64 / person

Your results are off by a factor of 10. The results of those computations should be about 300k, not 3M.

Oops, you're right. I typed `* 10e9` when converting those billions. Unfortunately it is too late to edit my original comment.

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