Comments on: Do you earn too much?

By: Bob

Bob — Sun, 23 Nov 2008 01:55:55 +0000

Things like healthcare and childcare are different; we as a society have decided that a few very expensive things (education, nursing, etc) should actually be free – and we use government to force the price right, right down. Unfortunately, that means that, since at any time most people aren’t sick and aren’t being taught, in aggregate we have also decided that we should pay the least we can get away with. Better salaries for teachers and health care workers has to come from higher taxes. If we had only private schools, and only private hospitals; you can bet salaries would be higher.

A comparison of any elected position to something in the private sector is a little off as well; money should not be the reason people get into government – and the salaries are set to discourage it. So I don’t really see it as a discrepancy — politics doesn’t really follow the market, and in fact, there are checks and balances such that it doesn’t — and the majority of industries that are traditionally seen as underpaid are often that way because the alternative is that they end up pushing a whole industry into the unaffordable.

By: Steve Kryger

Steve Kryger — Sun, 23 Nov 2008 01:22:47 +0000

Hey Bob, you make some good points. I agree that there are difficulties with artificial price setting – I don’t want people who earn the least in a company to loose their jobs so that the CEO can keep his/her salary. I also realise that companies need to offer people more money in order to attract the better quality candidate. I don’t have a problem with money, or earning money, or spending money. I do have a problem with excesses and discrepencies.

I struggle with the differences between industries. For example, Kevin Rudd earns approximately 300,000 per year to run the country, whilst Sol Trujilo earns $13 million a year to run one of our telecommunications companies.

Teachers and nurses earn on average $60-70k per year – and they are educating the future of Australia, and keeping the rest of us alive. Sure, we can’t pay every teacher $13 million dollars, but the market has run its course and placed a greater monetary value on people who can make a profit, rather than educate or care for the ill.

By: Bob

Bob — Fri, 21 Nov 2008 00:31:43 +0000

Deserving has nothing to do with it; and I think that whole ‘NO EXECUTIVE SHOULD BE PAID MORE THAN 40 TIMES THEIR AVERAGE EMPLOYEE’ line is just stupid.

A cap on executive salaries, based on average wages, is a pretty direct punishment for success — and it’ll mean that better executives will only work in industries with higher average wages. IBM will have no trouble getting ahold of great executives, and therefore, no problem continuing to improve and generate profit. Meanwhile, McDonalds starts to fall apart because they are required, I assume by law, to offer at most half as much.

It’s also an incentive to pad upper-management. Hiring 200 new above-average earners raises your salary. Worse; *firing* the poorest people in your company raises your salary.

Executive salaries are generally set by the board members and therefore by proxy, by the stakeholders of the company. If they decide that their $100,000,000,000 company is best served by a $500,000,000 CEO — then so be it. If they have to offer a $200,000,000 severance package to attract that CEO; that’s also fine.

I don’t think it’s ok to start telling people how to spend their money – and what, exactly, is the issue with executive salaries? Do you not like the idea that they make that much money? Is it that it seems unfair? It’s not your money; and if it is — it was your decision; do you now regret it?

Even if it is ‘too much’ — if I spend $100,000 on a $50,000 car; and you heard about it — would you start calling for a cap on the price of cars? How is this different, keeping in mind that I knew how much I would be paying, and I decided to go for it anyway?