Saturday, January 21, 2012

$20,000 an hour

Yesterday a Facebook commenter to my previous post pointed out that Romney earned $20,000 an hour last year, suggesting that no one can be worth that much. Yet he was paid that much. Worth in economics is what the market is willing to pay. The Museum of Modern Art reopened their doors a few years ago charging $20 admission. They are still packed. Is it worth it? Obviously, if people are willing to pay that.

Anonymous wrote,
The wealthy executives and people who have accumulated wealth have done so because they have taken some of the financial worth of their masses of employees. They've already taken money from the bottom, and higher levels of taxes at the top acknowledges that fact and re-balances the system."

This statement could have been written by Karl Marx. The inference that wealth was accumulated because employees are short-changed is highly contentious. "...taking money from the bottom..." suggests that companies should pay their workers more than the going rate. For the vast number of publicly owned companies, paying employees more would mean that the stockholders get less dividends, the companies would have less cash on hand, and/or CEOs would get paid less (or perhaps all three). Either of these actions would start a vicious circle. If the stockholders get less dividends, the stock and the profits will go down. Then there would be less money for the generous CEOs to give away, presumably to rebalance the system. And the CEOs, perhaps not being so altruistic, would go to work for a different company willing to pay them more.

I don't expect to settle this argument. I do wish more people would voluntarily share their riches with those less fortunate. It seems that the great benefactors usually choose to give to the truly unfortunate, or to cultural or educational institutions. And maybe some will pay their workers enough to "balance" the system. I can not think of a business that does that, but maybe one does exist.

Or another note, I would mow my small lawn for $5. Yet, even with the great unemployment we have, I can not find anyone to do it for less that $20. Why is that?

Why is life not fair?

Last year, [Apple] earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google. Much of this money could be distributed to their employees... or it could use the money to hire workers to make their products in USA (instead of China). Is this what they should do? What would happen to their stock if they did this? And what would happen to their research and development?


Kate Freeman said...

This statement could have been written by Karl Marx. --- Mr. Kim

Is that good or bad?

“You’re going to have to fight the communists sooner or later,” said Campbell. “Why not get it over with now?” --- Vonnegut, Slaughterhouse - Five

Anonymous said...

You pose an interesting conundrum, it will keep me in the capitalist camp. H.

Kim Mosley said...

I see that MOMA has reduced its entrance fee to $12.