main
side
curve
  1. In Memory of LAJ_FETT: Please share your remembrances and condolences HERE

Senate Income Inequality in the U.S.: Causes, Effects, Solutions

Discussion in 'Community' started by Jedi Merkurian , Mar 17, 2011.

  1. New_York_Jedi

    New_York_Jedi Force Ghost star 6

    Registered:
    Mar 16, 2002
    349 million and 22 billion are not even close to similar amounts.

    Anyways, I feel like you're making wild assumptions about my views when you go off on tangents about OWS in response to me. I don't have particularly strong views of inequality. However, when you claimed "on one hand you're willing to overlook a group who is the worst potential contributors to income inequality" it kind of annoyed me because it isn't true. I don't really care to distinguish between how people make money*, but if you are going to segment them, like you did, you can't claim actors or whatever are the worst contributors to inequality.



    *I do think CEO/Hedge fund compensation is a little bit wackier than athlete or actor compensation, but I don't think its that big deal. Principal-agent problems are more pronounced in the business world. I'm also skeptical of executive labor markets functioning efficiently since boards setting compensation are often full of CEOs/Ex-CEOs/future CEOs who have an interest in driving up salaries, but I haven't examined that fully so I wouldn't support any policy actions since I'm not really informed.
     
  2. Mr44

    Mr44 VIP star 6 VIP - Former Mod/RSA

    Registered:
    May 21, 2002
    But that's simply the structual realities of an open, public forum. My initial response was to Shinjo. I actually agreed with some of what Shinjo posted, but I questioned his overall focus. When you responded to me, you interjected yourself into the topic, and in a sense, end up taking ownership of that part. That's just the nature of the forum since there is no private feature. It's the same with Ani and I. I haven't addressed any of Ani's posts either way, because generally I like to allow people to answer for themselves, but since we're on the same "side" of the debate, we share some spill over, and Shinjo might respond to something she said and something I said in his same reply. You can't really eliminate that.

    So if your actual viewpoint is being mischaracterized, it's only based on what's been posted here. For whatever reason, you're really focused on how "hollywood stars" aren't the "worst" purveyors of salary inequality, but based on what everyone has posted, I still don't see why this matters so much to you. So they are the second worst purveyors of salary inequality...Woow Hoo! Break out the champaign. Just not Crystal champaign, but locally produced domestic sparkling wine. Them being 1st or 2nd isn't the point. Jabba put forth the closest to my own views when he touched on the fact that movie salaries for a couple of top tier stars directly impact overall production costs, and why this should be important, but isn't. See, my point is that if the system is to actually be changed, then the fastest way to ensure that this doesn't happen is to start interjecting all sorts of perception based exceptions. Not all banks are bad. Not all hedge funds are bad. Not all CEO's are bad. Not all Hollywood stars drive up production costs. So what's the larger goal here?

     
  3. shinjo_jedi

    shinjo_jedi Jedi Master star 5

    Registered:
    May 21, 2002
    Because Matt Damon doesn't oppress his workers from unionizing and other gross worker violations, make more in an hour than one of his employees does in a year, and other such examples we've cited. From some quick Googling, the CEO of Wal-Mart is worth $21 billion. Matt Damon is worth, at most, $100 million. That's why you don't see people upset over how much he makes.
     
  4. WormieSaber

    WormieSaber Jedi Master star 5

    Registered:
    Oct 22, 2000
    New York Jedi writes:

    I never excused celebrity compensation as right. I was pointing out that they are in no way the worst contributors to inequality, as you claimed. That statement was ridiculous.

    And also, celebrities are such a small percentage of the world population. I don't even think they are 1% of the world's population, so I don't understand how it could be such an issue. Business is business; if there a high demand for that actor, a financer will pay that actor his/her going rate. And an Agent will negotiate. Not to mention that the top actors are even less of a percentage of the world population than general celebrities. As shocking as this may seem there are many celebrities who have modest incomes; actors, former band members, etc.
     
  5. Mr44

    Mr44 VIP star 6 VIP - Former Mod/RSA

    Registered:
    May 21, 2002
    Because Matt Damon doesn't oppress his workers from unionizing and other gross worker violations, make more in an hour than one of his employees does in a year, and other such examples we've cited. From some quick Googling, the CEO of Wal-Mart is worth $21 billion. Matt Damon is worth, at most, $100 million. That's why you don't see people upset over how much he makes.

    And now this is just all pointless and silly. Again, instead of exploring what your long term goals are, or examining which CEO's actually do what you're saying, you default to some strange justifications. It's like I said earlier. You're defaulting to perception based characterizations, not matter what the reality. Some CEO somewhere has to be a money hoarding capitalistic boogeyman, while Matt Damon is just a great guy who makes a lot of money. You're the one who keeps drawing an artificial distinction between them.

    First off, Walmart's CEO's salary last year was 35 million dollars plus bonuses. (20 million in 2009, and 28 million in 2008.) So even using your own argument-using the factors you supplied- Matt Damon makes about 3x times the amount that the CEO of Walmart does. So yes, you should be "upset" over how much Damon makes, if that's your goal. The CEO of Walmart might have other investments and company stock, but even if he did massive sell-off, I don't think he would get the 21 billion dollar figure you're quoting. This year, Walmart took in 422 billion in sales, with, after expenses, made a profit of 16 billion. I seriously doubt that the individual CEO is worth more than the total profit of the entire organization. (I don't know without a link, so I don't know where your figure came from) There are 194 billion dollars worth of outstanding shares of the company held by all the shareholders combined. WalMart employs 2 million people.

    ABCNEWS SALARY

    BASIC WIKILINK

    You just seem to be falling into the same trap that NYJ did, in that he was so adamant to prove that celebrities aren't the worst offenders of income disparity, because they're only the second worst offenders, so they should be excused. Ok, why does this matter? And what does it illustrate? You can't just say because one group is made up of great people who entertain us, and the other group is a bunch of jerks who stomp over everyone else- without offering any kind of specifics.



     
  6. Fire_Ice_Death

    Fire_Ice_Death Force Ghost star 7

    Registered:
    Feb 15, 2001
    I think the point is (and Matt Taibbi spelled it out for you): Americans don't hate income disparity; they hate how the income is made. I think most are fine if a celebrity makes a lot of money for acting or sports--they've earned it. Bankers and Wall Street types seemingly don't make their money. They just sit on their asses and claim everyone else's money by doing nothing. Now, that might be a perception problem, but it's a big one and a huge contributor for why there's an OWS movement afoot. The corruption angle also dovetails into this nicely, because these CEO's and bankers can't make their money without corruption. They also can't make their money without people like Mr44 and ani holding the water for them either. I'm not saying that they have any power whatsoever, but the attitude that they espouse is greatly appreciated by these 1%'ers and while one or two people don't mean **** overall; as long as there are people to swallow it it'll always happen.

    But the big kicker here is that this attitude has become so pervasive that we allow it to happen until it's too late when the US has been raped so thoroughly and completely that complacency sets in and people get discouraged to the point of not caring anymore. It's sad, really, that the people who are protesting have legitimate complaints, but the citizenry is so complacent and hostile to any sort of change that the media's spinning it to great effect that these people are lazy bums who want free money. Anyway, I hate Paul Krugman, but every now and then he does make a salient point. Again, the attitudes on display here from 44 and ani are really helping these people out.
     
  7. Mr44

    Mr44 VIP star 6 VIP - Former Mod/RSA

    Registered:
    May 21, 2002
    I think the point is (and Matt Taibbi spelled it out for you): Americans don't hate income disparity; they hate how the income is made. I think most are fine if a celebrity makes a lot of money for acting or sports--they've earned it. Bankers and Wall Street types seemingly don't make their money. They just sit on their asses and claim everyone else's money by doing nothing. Now, that might be a perception problem:

    I know what you mean brother. Just look at how hard Damon is working here. See, the little fellow looks so cute when he's tuckered out:

    [image=http://www.hollybollyhub.com/matt-damon-hot-image.jpg]

    Seriously FID, I don't know what any of your post means. But wow. This is why I think you can't possibly agree with what you post around here, and you just enjoy being contrary.

    I'm not a CEO, and I'm pretty sure you're not one either, but I think it's the height of hypocrisy to suggest that CEO's "sit on their asses," while concluding that "celebrities/athletes earn every penny." Since he's been mentioned, would it matter to you that the CEO of Walmart actually started working at retail companies after he graduated from college (BS in Industrial Engineering) and worked his way up to being CEO after working for Walmart for 16 years? No? I didn't think so. I could accept your argument if you thought that no single person should earn 30 million dollars for doing anything because at least it would be a consistent position. I guess it comes down to the fact that I'll never understand the celebrity worship that you guys are displaying here.



     
  8. shinjo_jedi

    shinjo_jedi Jedi Master star 5

    Registered:
    May 21, 2002
    Again, obviously we aren't talking about every CEO given the number of companies. And when the left criticizes "hoarding capitalistic boogeyman" they aren't going after "some CEO somewhere" but rather the ones at some of the largest and more noticeable companies. In this instance, we are discussing Wal-Mart - you know, rather the opposite of "some company somewhere".

    I explicitly stated I was comparing total net wealth, so we aren't using the "factors I supplied" when you change them. Income, by salary, is different. Going by that standard, the CEOs that took a salary of $0 would be working for free and below the poverty line or something. There are other ways executives get paid outside of their biweekly paycheck. They're called stock options and other forms of compensation and investments.

    Christy Walton is worth $24 billion, and Jim Walton is worth $21.1 billion, and Alice Walton is valued at $20 billion. These numbers are coming from Forbes. So you can choose to believe it if you don't think it coincides with your viewpoint, but those are the facts. That $60 billion between 3 people of a company that refuses to allow their workers to unionize, has shut millions of small businesses through their aggressive tactics, and isn't very keen on wage increases is the reason so many people are pissed off about this income inequality.

    Yet, again, they aren't the "worst offenders." They aren't even close to being a plurality of the 1% but a small fraction, so your trumping their inattention is rather odd at this point. Financial leaders and executives make up about 60% of this group with entertainers under 5%. Yes, they contribute, and are an example of inequality, but you don't see people slamming at their doors because they aren't a majority of it and don't contribute to it in many of the ways that others do. As I've repeatedly said, when a necessity such as gas or a commodity goes up, executives walk away with millions more in profits while the cost of living goes up for already struggling Americans. While I pay ridiculous interest rates on my student loans, financial execut
     
  9. New_York_Jedi

    New_York_Jedi Force Ghost star 6

    Registered:
    Mar 16, 2002
    I don't think hedge fund managers are particularly more common than actors, so that's not really relevant.
     
  10. Fire_Ice_Death

    Fire_Ice_Death Force Ghost star 7

    Registered:
    Feb 15, 2001
    Link

    Oh hey, Scott Walker seems to becoming more of a pariah than he already has become in Wisconsin. The real shame is that the people of Wisconsin were apathetic and the rest who voted for Walker were lied to.
     
  11. Kimball_Kinnison

    Kimball_Kinnison Jedi Grand Master star 6

    Registered:
    Oct 28, 2001
    BUT stock options are directly tied to a CEO's performance. If they help the company do well, they get paid more. If they completely destroy the value of the company, the stock options are essentially worthless.

    If anything, stock options are the logical compensation to offer CEOs and other high executives. I don't see how they give you a basis to complain that the CEOs is paid too much, if they got that through increasing the value of the company.

    The Waltons founded WalMart. The people you named are the children (and widow of the child) of the founder of the company. If WalMart today is worth around $200 billion (the market cap Mr44 mentioned), I don't see how it's unreasonable that the heirs to the founder of the company are cumulatively worth around $80-90 billion. (You forgot to mention S Robson Walton, who is the current chairman of WalMart and is worth around $21 billion.)

    Yes, they inherited pretty much all of that money, but it's not like they are just sitting on it. Instead, they have it invested in their company (and other places) which provides jobs for millions of people. Most of that wealth is on paper only. (They are also all rather generous philanthropists, each one donating quite a bit to favored causes.)

    Kimball Kinnison
     
  12. Lowbacca_1977

    Lowbacca_1977 Chosen One star 7

    Registered:
    Jun 28, 2006
    For what it's worth, the CEO of Wal-Mart has a salary of just over $1 million, and when you include stock and things like that, it's still under $20 million a year. If anyone knows how to find how much he's worth, have at it: http://people.forbes.com/profile/michael-t-duke/85306
    He's not on the 400 richest for Forbes, though.
     
  13. Jedi Merkurian

    Jedi Merkurian Future Films Rumor Naysayer star 7 Staff Member Manager

    Registered:
    May 25, 2000
    [image=http://images.t-nation.com/forum_images/9/f/9f2bf-1bc29_Worf.gif]

    OK, so I neglected to add the disclaimer ?AFAIK? to my response to you bringing up Matt Damon. Mea culpa, now let it go [face_peace]

    For sake of discussion, let?s assume that everything that you?re saying is right. Certain actors get paid a ridiculous multiple of the rank-and-file in the acting profession, professional athletes make huge sums of money compared to the Joe Average who bucks up to see them on the field, etc. and so on. So there?s a big income disparity in the entertainment industry, and we?ll agree that that?s not a good thing.

    However?

    The question that you raised is why the ?99%-ers? are ?Occupying? financial institutions and not Hollywood. I would suppose it to be a matter of priorities, which critics say that Occupiers lack. AFAIK (see, I said it this time!) the target of ire has been the income of certain financial executives (not just ?CEOs in general? or ?munny d00dz,? as has already been discussed), and ?more importantly- how the way they?ve gotten that money has arguably brought the global financial system to the edge of ruin, and how said companies have actively resisted safeguards designed to prevent them from doing it all again whenever they want to. In other words, I propose that the executive board of Goldman Sachs (for example) poses a far greater threat to global financial well-being in the mind of ?99%-ers? than Matt Damon?s latest box-office haul (for example), and have prioritized their efforts accordingly.

    If you dispute my supposition, feel free to verify it with an actual ?Occupier.? With that, I?m done chasing after this particular red herring [face_coffee]
     
  14. shinjo_jedi

    shinjo_jedi Jedi Master star 5

    Registered:
    May 21, 2002
    I agree in part and disagree in Part. It is more efficient to pay them directly related to their performance, but it also provides them with the incentive to to maximize short term profits to boost shares without caring for the long term well being of the company or economy. That's one of the causes of the financial crisis - they bet against knowlingly bad investments to raise stock prices and therefore their own pay without giving thought to it's overall effects on the economy and the long run. As long as their short term performance was good, their stock prices and overall compensation web soaring and we saw how that ended up for financial companies.
     
  15. Kimball_Kinnison

    Kimball_Kinnison Jedi Grand Master star 6

    Registered:
    Oct 28, 2001
    Except that's not how most stock options work. Most of them have a time component, where they cannot be exercised for a certain amount of time after they are issued.

    Most compensation packages with stock options have a mixture of delays associated with them, so you can exercise some options after a year, more after 2 years, and so forth. That is specifically meant to keep someone from focusing only on the short-term stock price and harming the company in the long term.

    Kimball Kinnison
     
  16. shinjo_jedi

    shinjo_jedi Jedi Master star 5

    Registered:
    May 21, 2002
    Except that wasn't the case at many financial companies leading up to the crisis, and is often cited as a major component of the crisis.

    Yes, I know the Waltons founded Wal-Mart. Whether or not they deserve the $90 billion is a different argument, but I was highlighting the fact that many of their employees face harsh working conditions and low wages, while they are 3 of 10 richest people in the country. And that fact was based on 44 saying that the current chairman couldn't be worth that much when, in fact, 3 of the heirs are worth that much.
     
  17. Mr44

    Mr44 VIP star 6 VIP - Former Mod/RSA

    Registered:
    May 21, 2002
    In other words, I propose that the executive board of Goldman Sachs (for example) poses a far greater threat to global financial well-being in the mind of ?99%-ers? than Matt Damon?s latest box-office haul (for example), and have prioritized their efforts accordingly.

    And that's silly, which you're only bringing up now after your Matt Damon example didn't go anywhere because it was so inconsistent. If you consider it to be a red herring, it was so from the moment you brought it up. Why? Because as of Sept. 2008, Goldman Sachs ceased to be an investment banking firm (because of the subprime fallout) and became a traditional holding company. Is it your assertion that Goldman Sachs is still a "threat to global financial well being?" In what way? What basis are you using to hold this worry? Or is it all just perception? Because Goldman-Sachs currently employs about 36,000 people. (Also, for completeness sake, Lehman Brothers went bankrupt and was broken up, and Merrill Lynch was absorbed into Bank of America, where it is now subject to closer securities regulations.) In other words, all the concerns you have detailed have already been taken care of, which means the OWS movement is about 12 years too late. It's like if you suddenly started protesting against the excesses of Andrew Carnegie and his giant steel company, without mentioning that Carnegie died in 1919, and at any rate, he sold his steel empire 111 years ago, so any protests now would be meaningless. Not to mention the fact that, while yes, back in the 1800's, Carnegie was probably the US's second wealthiest person, he was also one of the US's largest philanthropists, and ended up donating most of his wealth to charitable foundations which still bring all sorts of benefits. So is it wealth that is the sole concern, or is it some other factor?

    The other problem is that all the concerns seem to be so shortsighted. In this thread, someone like Darth Ghost wants everyone to take their money out of "large banks" and put them into credit unions in order to punish the CEO's of the banks. Ok, so when BofA lays off 10,000 people, which has the effect of slowing down the economic recovery even more, I guess Ghost will have the last laugh. What Ghost should be advocating is for more people to save more in banks in order to add a buffer to their finances. Or FID will say that Matt Damon is just a great guy who works hard for his money, while the CEO for Walmart sits around and does nothing...well, actually, I'm at a loss at what this illustrates at all. When protestors shut down Oakland ports and paralyze small business in the community, they only hurt the average person. Shinjo condemns the inheritance given to the children of the founder of WalMart, which I suppose he would have no problem with if they simply earned it by starring in the latest action movie? I'm not sure.

    So again, I ask you, what's the goal here? What "priorities," as you used the term, are supposed to be achieved? I just see a bunch of dodging. So far in the thread the one constant seems to be the idea that Matt Damon's 100 million net worth is fine in the mind of protestors, but I guess any more net worth bumps the person up into the dreaded "evil capitalist zone." Beyond that, I don't see a consistent end goal being called for.
     
  18. Mr44

    Mr44 VIP star 6 VIP - Former Mod/RSA

    Registered:
    May 21, 2002
    Yes, I know the Waltons founded Wal-Mart. Whether or not they deserve the $90 billion is a different argument, but I was highlighting the fact that many of their employees face harsh working conditions and low wages, while they are 3 of 10 richest people in the country. And that fact was based on 44 saying that the current chairman couldn't be worth that much when, in fact, 3 of the heirs are worth that much.

    Sorry Shinjo, this is incorrect, and you are completely mis-attributing an idea to me. On 11/6, 5:55pm board time, you first brought up Mike Duke, the CEO of Walmart:
    You didn't say anything about the heirs, or Chairman, or anything of the sort. If you meant to reference heirs, or chairman, or someone else and incorrectly used the term "CEO," that's a different matter which isn't a big deal. However, I'd argue that the CEO is the person directly involved in the operations of the company, so it changes the overall example to then turn around and focus on what heirs are worth. But I'd still fail to see how the heirs of Walmart getting an inheritance is any better or any worse than someone getting paid a huge amount for being in a movie.
     
  19. shinjo_jedi

    shinjo_jedi Jedi Master star 5

    Registered:
    May 21, 2002
    That is my mistake - I think S. Robson Walton was Chairman and CEO, but he's only Chairman. And I'm also just pointing out the fact that we're comparing billions and millions between the two.
     
  20. Kimball_Kinnison

    Kimball_Kinnison Jedi Grand Master star 6

    Registered:
    Oct 28, 2001
    I'm sorry, but you need to back that up. That's how I've always understood stock options to work, that you needed to vest in them before you can exercise them.

    Can you provide examples of companies that didn't require executives to vest in their options before they could exercise them? Otherwise, I can't accept this claim from you.

    Kimball Kinnison
     
  21. shinjo_jedi

    shinjo_jedi Jedi Master star 5

    Registered:
    May 21, 2002
    From the Wharton School:

    Existing compensation schemes typically have short vesting periods that allow executives to reap the rewards of their actions before their full effect may be realized. As an example, Edmans points to Angelo Mozilo, the former CEO of Countrywide Financial, who made $129 million from stock sales in the 12 months prior to the start of the subprime crisis, which sent Countrywide shares tumbling and led to the firm's acquisition by Bank of America.

    Other executives have manipulated corporate accounting to boost share price, then sell at the peak, as did Enron executives through the creation of shell subsidiaries in which they hid losses. Or, he says, executives could take other actions, such as cutting investment in research and development which would lead to short-term earnings spikes and an increase in share price, but cripple the firm in the future. Placing compensation in escrow accounts with a longer-term horizon of around five years, the paper suggests, would help prevent destructive short-term actions.
     
  22. Kimball_Kinnison

    Kimball_Kinnison Jedi Grand Master star 6

    Registered:
    Oct 28, 2001
    Angelo Mozilo isn't exactly a good example of short vesting periods. He became the CEO of Countrywide Financial in 1998 (having been with the company for 29 years before that - source), and his $129 million stock sales happened in the 12 months preceding August 2007, 8-9 years after becoming CEO. That's hardly proof of a short vesting period. Most vesting periods I've seen have been on the order of 3-5 years.

    In fact, Angelo Mozilo was a co-founder of Countrywide Financial. Unless you can show that his $129 million stock sales came from recently-issued stock options, your citation doesn't support the claim that you make of those stock options being part of the problem.

    Kimball Kinnison
     
  23. New_York_Jedi

    New_York_Jedi Force Ghost star 6

    Registered:
    Mar 16, 2002
    According to this paper, which I haven't read but went to the appendix (page 36), it looks like about 90% of restricted stocks and options for S&P500 executives vest in 3-5 years. YMMV as to whether you consider that long or short term. For what its worth if I were a shareholder I'd prefer to see a vesting schedule that more likely stretched across business cycles because I think 3 years is still pretty short and anyone CEO coming in right after a downturn is going to make a handsome compensation in 3-5 years just based on the economy growing again. Not sure whether its a useful area for government regulation though.
     
  24. Jedi Merkurian

    Jedi Merkurian Future Films Rumor Naysayer star 7 Staff Member Manager

    Registered:
    May 25, 2000
    Actually 44, you're the one who started all this ?Matt Damon stuff.? Here?s the post:
    I responded, and away we go. BTW, ?Mr44 disagrees? and ?didn?t go anywhere? are not the same thing ;)

    Yes, I used Goldman Sachs as an example of financial institutions targeted by Occupiers, just as we both used Matt Damon as an example of an entertainer who is not. As far as the threat Goldman Sachs poses, consider ABN Amro (a subsidiary of the Royal Bank of Scotland) and German bank IKB. Both banks were sold fraudulent mortgage-based financial products by Goldman Sachs, and IKB ended up getting a ?too big to fail? bailout by the German government when those products tanked. And that?s just Goldman Sachs, which does still exist as a financial institution, and is still partnered with multinationals like French/Belgian bank Dexia, which itself is in the throes of its own mortgage meltdown/government bailout issues. That's not going into other financial institutions targeted by OWS.

    The big thing that I want to understand you on is this: Are you implying that Hollywood actors? income from box office proceeds has a comparable national (let alone global) impact as financial institutions that make multinational transactions, and thus warrants attention from the OWS movement?
     
  25. Jabbadabbado

    Jabbadabbado Manager Emeritus star 7 VIP - Former Mod/RSA

    Registered:
    Mar 19, 1999
    Everyone knows the financial sector is a much bigger slice of the economic pie than the movie industry. Why are we still discussing this?

    Here's another good report on income inequality, from the CBO, also addressing the effect of taxation and health insurance on income equality