[alpha1]

I think the whole problem would be sorted if we could legalize owning human "assets" just like what we humans have done to all the other things (and lifeforms) on this earth.

And then, we can proudly state that:
"Only asset owners have a say on how that asset is used. Therefore those who own the company should have a say. Employees are owned assets like tools and machinery. They don't deserve the profits, nor do they share the burden in case there are losses. They can't have a say on how the company is run. In fact they should be compensated only barely to sustain life and productivity"

Unfortunately such a system (slavery) was abolished some time back by many fools who unknowingly distorted the market forces to make everyone free and equal.

[nakul0888]

Originally Posted by alpha1

Unfortunately such a system (slavery) was abolished some time back by many fools who unknowingly distorted the market forces to make everyone free and equal.

I bet you created a lot of farm jobs today because that is a damn nice looking straw man right there.

No one who takes the free market side is arguing for forcing an employee whether its the floor cleaner or the CEO to do anything that is against their self interest. The argument is that force should not be initiated against employers into doing something they don't want to do.
Now I can already see from a mile away what the comeback for that is. "oh but if there are no government regulations everyone in India will have no choice to work for 10 paisa a month which is slavery". Gosh if only my Dad could convince all of his staff the same, I could have saved enough monthly expenses to pay EMI for a 5 series. I mean its not like there are 10 other employers just like him within a radius of 10 kms of my town is it?

[civic-sense]

Originally Posted by alpha1

Unfortunately such a system (slavery) was abolished some time back by many fools who unknowingly distorted the market forces to make everyone free and equal.

Either you don't understand slavery or you successfully watered down slavery to win a point. If the latter, you did a great disservice to those who fought to end slavery.

[Jeroen]

Originally Posted by civic-sense

Either you don't understand slavery or you successfully watered down slavery to win a point. If the latter, you did a great disservice to those who fought to end slavery.

Maybe you don’t understand sarcasm? (Well, at least that is how I read the whole post, but I have been wrong before)

Jeroen

[alpha1]

Originally Posted by nakul0888

No one who takes the free market side is arguing for forcing an employee whether its the floor cleaner or the CEO to do anything that is against their self interest. The argument is that force should not be initiated against employers into doing something they don't want to do.

Originally Posted by civic-sense

Either you don't understand slavery or you successfully watered down slavery to win a point. If the latter, you did a great disservice to those who fought to end slavery.

My example about slavery was all about owning assets. It is human tendency to own stuff and slavery was a natural "market driven" outcome of it.

But somewhere down the line people drew a line and said let non-violence, liberty, equality, fairness etc. be the governing principles in interactions between the human beings (each of them at different times). Mind you none of the these principles have any place in the jungle law of survival.
However, enforcement of each of these have lead to a better quality of life of an average human being and society in general.

Your assessment of fairness of free-market capitalism is based on social acceptance to the above principles based on today.

People on this thread and socio-liberlists in general (if that is an actual term) want to push the boundaries of equality, fairness further - so that generations tomorrow can have a better world and lives, as it has done in the past.

This thread is about the fairness angle.

Perhaps once you are done reading Adam Smith, Friedman, Hayek, Sowell, Taleb it may be wise to widen the horizon by reading up Kahneman, Thaler, Airiely also.

Mind you none of them are Marxists.

[civic-sense]

Originally Posted by alpha1

My example about slavery was all about owning assets. It is human tendency to own stuff and slavery was a natural "market driven" outcome of it.

You lost me in the first sentence. Slavery was not a outcome of the markets. Slavery was the outcome of identifying people based on attributes (race) and then classifying them as subhuman and thereby stripping them of their basic human rights. Once they were branded as slaves, they became a commodity that could be traded and that is where the markets come in.

Free market capitalism is not devoid of human rights. Free market works only when both parties in a transaction willfully engages in it. When somebody is forced to work as a slave, he does not willfully engage and that does not make it a free market transaction.

[alpha1]

Originally Posted by civic-sense

You lost me in the first sentence. Slavery was not a outcome of the markets. Slavery was the outcome of identifying people based on attributes (race) and then classifying them as subhuman and thereby stripping them of their basic human rights. Once they were branded as slaves, they became a commodity that could be traded and that is where the markets come in.

We are going offtopic, but please don't get fixated with the western concept of slavery which is limited to that practiced by European on Afro-americans. (even in their case the underlying reason was economic in spite of the well marketed "white man's burden")

Slavery has been prevalent in ALL human societies and cultures. Even in India. Some reading material for you:
https://shodhganga.inflibnet.ac.in/b...hapter%203.pdf

So why are you so obsessed with human rights?
Why should a human being be treated different from a bull or donkey?

Free market capitalism is not devoid of human rights. Free market works only when both parties in a transaction willfully engages in it. When somebody is forced to work as a slave, he does not willfully engage and that does not make it a free market transaction.

Replace the underlined text by:
"not devoid of currently accepted basic levels of human rights necessary for their frugal survival"

From a time when people were sold and bought as commodities for economic reasons, we have come a long way. But there is still some room for improvement.

[nakul0888]

Originally Posted by civic-sense

You lost me in the first sentence. Slavery was not a outcome of the markets. Slavery was the outcome of identifying people based on attributes (race) and then classifying them as subhuman and thereby stripping them of their basic human rights. Once they were branded as slaves, they became a commodity that could be traded and that is where the markets come in.

Free market capitalism is not devoid of human rights. Free market works only when both parties in a transaction willfully engages in it. When somebody is forced to work as a slave, he does not willfully engage and that does not make it a free market transaction.

Originally Posted by alpha1

We are going offtopic, but please don't get fixated with the western concept of slavery which is limited to that practiced by European on Afro-americans. (even in their case the underlying reason was economic in spite of the well marketed "white man's burden")

Slavery has been prevalent in ALL human societies and cultures. Even in India. Some reading material for you:
https://shodhganga.inflibnet.ac.in/b...hapter%203.pdf

So why are you so obsessed with human rights?
Why should a human being be treated different from a bull or donkey?


Replace the underlined text by:
"not devoid of currently accepted basic levels of human rights necessary for their frugal survival"

From a time when people were sold and bought as commodities for economic reasons, we have come a long way. But there is still some room for improvement.

Leave it civic sense bhai, our fellow Bhpian alpha 1 has transcended and risen above our petty material and economic discussions about executive pay and is now contemplating about much higher morality of life and being. Unless sadhguru ji is also a bhpian , I don’t think any mere mortal here is equipped to argue against alpha 1. This is now done.

[AZT]

Another point to note is stock based compensation is becoming the larger part of pay as that is easier to justify. This further leads to management using a large part of company earnings doing buy backs and senior leadership get to cash out every year. This is apart from the target based stock options that they get. Posting two articles about Boeing talking about this.


https://prospect.org/environment/mak...lders-richer./


https://wolfstreet.com/2020/01/20/af...37-max-fiasco/

[ashokrajagopal]

Originally Posted by nakul0888

Lets call this call for capping CEO compensation for what it is. Price fixing. And like all price fixing schemes its going to have the same results. Distortion of markets resulting in Glut/Shortages. Sadly in the case of some it ends up in suicide like our country's farmers. But hey as long as intentions are all good, that is all what counts for many.

With regards to the classic American CEO to worker pay discrepancy, there are many other factors at play here. Some just whine and regurgitate talking points about how it has exploded since 1970s without a single second thought.
*Firstly the companies themselves are much larger in scale than they were since 1970s. The Asian tigers, China, India opening up their economy means the top CEO is taking on a much bigger task than the average guy stocking the shelf at the retail store.
*Secondly the comp package of these CEOs also include stock options. And when you have an over inflated stock market like you see in US caused by comically low interest rates and money printing by the Central Bank, the bigger the bubble the bigger the on paper comp package of the CEO.

If you can bother to look past the standard 3*5 index card talking points of the media, you can clearly see that most of today's so called capitalist economies are not even remotely close to being anything of that sort. The Central Banks price fixes the price of money, a.k.a interest rates and have caused exactly the same results i have said in my first para. Massive distortions in the market, Bubbles in real estate, stock markets..etc that blow up and pop every decade, stagnant wages for some and over-inflated wages for others, rising prices of goods and commodities.

Originally Posted by nakul0888

Leave it civic sense bhai, our fellow Bhpian alpha 1 has transcended and risen above our petty material and economic discussions about executive pay and is now contemplating about much higher morality of life and being. Unless sadhguru ji is also a bhpian , I don’t think any mere mortal here is equipped to argue against alpha 1. This is now done.

Setting aside the sarcasm etc above, seriously I dont get at what point the "purist" free market kicks in as per your theory. The markets got bigger in the 70s because of govts meddling, the valuation of the companies got bigger because of cheap money and buybacks, ie. govts meddling, and all the effects you see today are good or bad side effects of govts meddling. So, in this stage, when there is clamour for adjusting CEO pay, the purist free market theory kicks in because the CEO is above meddling by govts somehow ?

[nakul0888]

Originally Posted by ashokrajagopal

Setting aside the sarcasm etc above, seriously I dont get at what point the "purist" free market kicks in as per your theory. The markets got bigger in the 70s because of govts meddling, the valuation of the companies got bigger because of cheap money and buybacks, ie. govts meddling, and all the effects you see today are good or bad side effects of govts meddling. So, in this stage, when there is clamour for adjusting CEO pay, the purist free market theory kicks in because the CEO is above meddling by govts somehow ?

Firstly, market didn’t expand in 70s because of govt. It expanded because after the second world war certain poor former colony countries chose to embrace a significant degree of economic freedom.
Now that’s out of the way, here is my point. Two wrongs doesn’t make a right. If CEO pay is getting inflated because of stock options in a stock market bubble and workers real wages are being degraded because of inflation. The correct thing to do is fix the the monetary policy of the country. Not to regulate CEO pay. The latter is nothing but a jugaad fix.

[ashokrajagopal]

Originally Posted by nakul0888

Firstly, market didn’t expand in 70s because of govt. It expanded because after the second world war certain poor former colony countries chose to embrace a significant degree of economic freedom.
Now that’s out of the way, here is my point. Two wrongs doesn’t make a right. If CEO pay is getting inflated because of stock options in a stock market bubble and workers real wages are being degraded because of inflation. The correct thing to do is fix the the monetary policy of the country. Not to regulate CEO pay. The latter is nothing but a jugaad fix.

To your first point, it expanded because the producer countries of the West decided to make stuff in other places and sell to other places, thereby reducing costs of production and finding markets. This means the goverments there enacted policies to move in that way. There were policies in place to induce capital mobility and a whole lot of central bank adjustments to enable this. It is not just an effect of a new market opening.

Trade networks did not come out of physics or biology, they were created by government policies and agreements. The government action on that was the effect of stagflation of the 70s.

To the second point, I understand you are on a pure market path. Certainly, thats a way to take. But your side is as hypothetical as the utopian communism. Free market did not exist, so history is not on your side as proof. Free market is just theoretical. The "If only they did it right from the beginning...." is the classic USSR apologists line.

And one more thing, since you know it is a meddled market out there, I assume you also will not attribute the theory of "this is against capitalism" and are equally against all "wrongs". Just understanding the thought process.

[SmartCat]

Not sure if you all are aware of this - but Company Act 2013 limits pay of Managing Director of listed companies to 5% of net profits. The top management pay is capped at 11% of net profits.

For loss making companies or if there is inadequate profits, top management pay is then limited to a certain percentage of its networth.

From Ministry of Corporate Affairs website:
https://www.mca.gov.in/SearchableActs/Section197.htm

[Jeroen]

Originally Posted by SmartCat

Not sure if you all are aware of this - but Company Act 2013 limits pay of Managing Director of listed companies to 5% of net profits. The top management pay is capped at 11% of net profits.
]

Interesting! I had no idea. I read through the document, but I still have some questoions:

Most MD will have as a minimum a base salary, some sort of bonus (i.e. cash, just like salary) and share options schemes.

On which components is the capping applicable? Only salary + bonus. Not sure how you would bring share options into this capped equation?

Jeroen

[SmartCat]

Originally Posted by Jeroen

On which components is the capping applicable? Only salary + bonus. Not sure how you would bring share options into this capped equation?

Everywhere in the world, quoted CEO remuneration includes stock options and bonuses. The Tata Motors Annual Report, for example, has columns for stock options, commission and performance bonus :



In the last column of the table, you will see "Ceiling as per the Act" number, as compared to actual remuneration. But 5% of net profits is pretty reasonable restriction/ceiling right? If a company generates $100 million in profits, the MD can take home up to $5 million.

Also, remember that these restrictions are only for companies that are listed on stock exchanges.