5 thoughts on “And why don’t they apply this to actors, sports figures …”

  2. Companies probably can refuse to pay. Doesn’t seem equitable that it only applies to publicly traded companies. But, attorneys’ fees may be more than the tax.

  3. My thoughts on this stuff are a little unformed. In principle I’m not a fan of this type of intervention, and I’d vote against it on a ballot.

    In practice, I think that the increased returns to shareholders based on increased salary after you’re paying someone a few million dollars are limited. Mostly it’s just protecting against someone else poaching your talent, which makes me wonder if there’s a market inefficiency here, and you could get great talent from people who would be very happy merely making a few million.

    OTOH, people whose livelihoods actually depend on making the right decisions on this stuff (and are not just tossing around ideas on message boards) are perfectly aware of that possibility, and that so many companies choose not to do so should tell me something..

    On the third hand, many of the people making the decisions about salaries benefit from the system that seems to pay everyone more than you might guess based on marginal returns, and so they’re invested in making sure all the upper levels have some additional zeroes in their salaries, to set the scale.

    It’s common knowledge in investment companies that the correlation between annual returns by even the best portfolio managers is surprisingly low. Moreover, for lots of strategies, the horizon you need on paper to confirm whether the approach was sound can reach into decades; a year or two isn’t enough. But by then it’s too late. So a lot of the information you might want to use to know how much the PM is actually contributing isn’t available, even in such a number-based field.

    Which I guess takes me back to where I started: price-setting by statute is unlikely to be a good idea, because no one’s smart enough to balance all the factors and figure out what should happen.

    1. I agree that price-setting by statute is a bad idea. IMO, a big part of the health care mess is from government meddling.

      There do seem to be serious market inefficiencies going on — after all, can one CEO really be worth 100 times more than the competition? — but I don’t think it’s the business of government to try to fix every market inefficiency. There would have to be some compelling reason.

      Let’s say, for example, that javascript coders were suddenly being paid millions of dollars, and there was no clear market-based reason for that. Should the government step in to “fix” that? I don’t think so.

      1. As for sports, it is one of the more capitalistic/free-market driven industries, since players’ pay is (supposedly) based on ticket receipts and royalties. But CEO salaries of Banks, Tech giants etc. are often preposterous, stupid, unethical, greed-based. However, those salaries should not be ‘regulated’, because government interference/regulation typically makes things worse. And government spending programs and subsidies are a prime culprit for creating market inefficiencies, because such programs funnel money into unprofitable corporations that would die in a free market.

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