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Comment by BJones12 | Hacker News Reader

The core of the article is buried 60% down:

> you have a firm that has lots of lifetime employees who can’t be fired, and whose skills are tailored to what your firm needs rather than to a particular occupational category transferable to any employer

> the system only makes sense if the company is also insulated from outside pressure

> the J-firm [Japan-style company], run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing

> And that basic impulse toward survival is why Japanese companies are so insistent on diversification. If you’ve made a commitment to keep people employed for life, then you need to create jobs for them if their current jobs stop making sense

> If you’re not very worried about profitability, and have lots of well-trained generalist employees, then it makes perfect sense to reinvest your company’s earnings by expanding into new industries

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One other interesting fact about Japanese companies is that their CEOs get paid far far less than Western companies.

Checkout this article that talks about it: https://www.theatlantic.com/business/2010/07/5-lessons-of-ja...

edit: added article.

As it should be. The pay gap from CEO to bottom tier worker is now obscene (21 times in 1965 and ~285 today). It's the foxes looking after the henhouses.

Not sure why the left cares so much about CEO to work pay ratio these days, especially when Marx himself recognized that ownership was the true source inequality. A CEO is just a really well paid worker. Even CEOs who become billionaires do so from capital appreciation more than compensation.

Because Marx theories do not hold up to reality, and most people can plainly see it.

How is it working for the US to have every company mostly owned by the general public's retirement funds?

> Because Marx theories do not hold up to reality

Sure, but ownership being the root of inequality was the one thing that he was actually correct about. CEO to worker pay ratio is something that is completely irrelevant. Companies spend orders of magnitude more money on its shareholders (dividends, buybacks, and reinvestment) than executive compensation.

Maybe others see it differently than I do, but the actual spending isn't so much the issue. It's the fact that these people with so much money exist at all. That much money translates to a tremendous amount of power which allows them to bend the law to their will.

Is there any large-scale economic or political system which does not contain a group of elites possessing "a tremendous amount of power which allows them to bend the law to their will"? Not a theoretical one, but one existing in real life.

Global societies were still mostly agrarian in his time. His analysis doesn't work well for the modern era with <5% engaged in farming. Central planning won't work. You need distributed decision making to be flexible for changing circumstances. You need capital for industrialization and you need a cadre of people who can take risks to invest surplus capital into new ventures. The large disparity in wealth is a problem, but some is necessary.

>How is it working for the US to have every company mostly owned by the general public's retirement funds?

It’s working quite well for retirees.

>How is it working for the US to have every company mostly owned by the general public's retirement funds?

10% annual returns over previous 30 year returns for a fully liquid investment, 15% annual returns over previous 10 years.

Glorious for the beneficiaries of the retirement funds.

A CEO is a worker incentivized to maximize profits to maximize compensation. And nowadays they see other workers not as a profit center, but as a blockage to their next big payout.

So yes, it is a problem when leadership doesn't have long term aspirations for the large company.

A CEO is not "just a really well paid worker", don't be ridiculous. If you have the power of hiring and firing, or have enough money to not have to work for your subsistence, you are not a worker in any leftist sense.

Last I looked at the most cited version of that ratio, it was comparing Fortune 500 CEO total compensation—including incentive-based stock appreciation—to economy-wide average hourly wages.

That makes about as much sense as comparing top 500 Hollywood actor earnings (including residuals) with the day wages of the folks showing up in TV commercials and as film extras.

The BLS keeps statistics on Chief Executives in general, and pegs their median wages around $200k:

https://www.bls.gov/oes/2023/may/oes111011.htm

What's your proposal for changing this? Government regulation?

Eh, less of new regulation and just more of actually enforcing anti-trust.

Hard to overpay the CEO when you're facing actual competition.

Competent CEOs get paid more when you are facing actual competition, because otherwise your competition will hire your CEO.

Except that if you don't pay the line workers very much they also leave ...

You can shaft TSMC works pretty well because where they going to go? Intels fab?

That's kinda a story behind China's start into fabs is "poaching" TSMC workers.

My argument is more of a rising ships than a falling CEO; overpay being relative.

If we declared concentration of too much wealth in an individual a national security issue, there is no end to the kinds of levers we could pull. I’m hoping things like this will be the natural consequences of allowing the current administration to run almost unchecked.

This approach is basically crying wolf, only works once or twice.

After that ‘national security issue’ becomes a running joke. A bit like calling everyone a terrorist, or (very fashionable in the 1960s) communist to achieve your goals.

Promoting an environment in which worker-owned companies might thrive could help. (ie favorable business loans or other ways of securing capital other than private investment)

Japanese might value status more than money. That is, status confers them higher societal 'value'. Some people are motivated by status, some by money, and some by a combination of both. These can be fine-tuned. If you can cheaper CEOs for a lot less money, why not? If you want to think about it, the top bureaucrats in any country command massive empires and budgets. They work for the power/status, not a whole lot of money.

One interesting thing about US is that money is worshipped, sure, the super rich billionaires live differently, they can have massive mansions with domestic staff, drivers, live life large, but they are completely outside of society. For people in the 0 - 100m+ range who are forced to interact with each other, there is no big high-status attached to the rich, their lives are a little bit better, but people aren't talking/treating them special. Compare this to a third world country like India, everything is a status marker, if you have a car you are treated a lot better than someone without a car. The outward displays are wealth/status are critical for day-to-day interactions.

The writing is a joy and the context is useful. Hardly buried.

I clicked on the article to learn, "why Japanese companies do so many different things," and then got hit with pages of low-bitrate context, such that my eyes started glazing over and it was difficult to find the answer to the question. So I appreciate their compression, or at least pointing to where the answer is found.

Yeah not everyone is a reader these days

Not only is that implication rude, it's just not true. I am at least in the 95th percentile of amount of reading. I just think the article is poorly written. Not everyone is a good writer these days (or any days).

the article is pure garbage. most articles are. i love reading but your average article writer is just not a good writer. it’s 90% fluff

The answer is much more deep than those bullet points provide. Hard disagree.

TikTok attention span at work.

Yes, thank you for compressing it. They start their answer with:

> Here is the answer I want to suggest: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.

Which is then backed by some economists saying something similar (generally), but all of which completely ignores Japan’s specific history.

As a better example Of examining Japan, here’s a look at Japan’s monopolies, how they were broken up, and partly how that effected the future of their industry:

https://m.youtube.com/watch?v=5_-Ac68FKG4

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