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Newsgroups: bit.listserv.politics
Date:         Sat, 12 Dec 1992 02:02:34 CST
From:         Titivillus <T9AA@SDSUMUS.SDSTATE.EDU>
Subject: Re: charts and other implements of torture part II
Comments: To: POLITICS@ucf1vm.cc.ucf.edu

> >>Paying executives a lot is necessarily bad management?  Or, is O'Andy
> >>claiming that lowering executive pay will result in better executives?

> >Compensating executives out of proportion to the value of their
> >work is poor management. Rewarding failure is poor management.

> That's all well and good, but either O'Andy is ducking the question
> or he's equating "out of proportion" with "a lot".  His choice.

Not to really jump into this conversation, but I've heard the ratio of
20-1 for highest paid-lowest paid employee. Meaning, if the lowest paid
mop-jockey gets paid $5 an hour, the highest paid person should get, at
best, $100 an hour. I DON'T KNOW: 1) any scientific basis behind it
2) any evidence, anecdotal or scientifically, that says it is effective
3) any secret communist goals behind this or 4) what it is supposed to
accomplish.

My personal thoughts about this are: this plan would keep the actual
actors the business, those who build or service, and those who manage
those actors on a somewhat even basis. Hell, I'm not married to the
idea, though.

> >Increasing compensation for executives while cutting pay for workers
> >when the productivity of workers is increasing is poor management IMHO.

> Really?  What if the cause for the increasing productivity is
> MANAGEMENT activity.  More stuff, lower costs - most people think
> that's "good".  Does O'Andy disagree?

1) I'd like an example of that. Most times management numbers go up,
those numbers accompany a labor increase. Large amounts of management
and a lack of correspondingly large amount of labor prophesy decline
and ossification. Look at the mid 1800s navy. Good example

2) I'll boil that down to language we all can understand. If the workers
are doing well, as they are, their paychecks should at least stay the
same. Maybe they should get a raise, but let's not get into that.
If the factory is doing well (or even if it isn't), the managers should
not get rewarded with money taken from the paychecks of the workers.
In O'Andy's explaination, production is rising, so the workers are at
least working, if not working hard. I'd accept an increase in pay for
the managers, but the workers deserve a reward, not a punishment, for
their work

> >>Suppose we have two managers, both equally skilled.  In O'Andy-land,
> >>neither can be paid what they're worth - their compensation is tied to
> >>some arbitrary index.
> >
> >I didn't say that they *couldn't* be paid more; I said that the
> >company couldn't *write off* in excess of a certain amount.
>
> Yup, and marijuana isn't banned at the federal level, it is just
> heavily taxed.
>
> What social good justifies this extra tax?
>
> >>One happens to have a lot of money, so she can
> >>buy a lot of stock in the company she works for and benefit from any
> >>stock price increase resulting from her skills.  The other doesn't
> >>have a lot of money, so she only gets her salary.  Is this good?  Or,
> >>does O'Andy have a stock-option loophole in his plan?
> >
> >Presumably the person with money can invest it anywhere and will
> >put it wherever it will receive the largest return regardless of
> >whether it is through her own skill at management or her/her broker's
> >skill at investment. If she chooses to invest it in her own company
> >regardless of the return, she is merely placing it where she feels
> >that she is getting the most value for her investment. (there may
> >be some intangible value associated with investment in her own
> >company, even if the direct return is lower than another investment
> >might provide) This is an irrelevant argument.
>
> No, it isn't.  O'Andy wants to cap the salaries of poor but skilled
> managers.  He doesn't want to admit that, but ....
>
> >>How do we determine the appropriate ratio of managers to workers?
> >>(What's a worker anyway?)  Does it depend on the company or is it
> >>industry-wide?
> >
> >Industry wide, they will naturally be somewhat arbitrary, but,
> >in general it should not be difficult to come up with an average
> >ratio of management/supervisors/workers.
>
> So?  Why is the AVERAGE "correct"?  Why should it be tax-advantaged?
>
> It looks like O'Andy is confusing coming up with a number with coming
> up with a number that has the relevant properties.
>
> >A worker is a non-supervisory person whose labor creates or adds
> >economic value.
>
> That's a rather useless definition in many high-tech occupations.  In
> many cases, the "supervisors" are the low-paid employees.
>
> Moreover, is the appropriate salary for a supervisor correlated with
> the number of people supervised?  (In some cases, I'd argue that
> the more people supervised, the more valuable the supervisor while
> in others, the fewer the better.)
>
> Why does O'Andy want to use measures other than "bottom line"?  That
> is a direct measure of the effectiveness of an organization in
> translating inputs to outputs.  What does he want from GM besides
> decent cars at a low price?  Why isn't he willing to pay for those
> other things?
>
> >>So?  Sensible people with positive incomes will double their debt to
> >>double their income.  (In some cases, it may even make sense to triple
> >>the debt to double the income.)
> >
> >Sensible people also exploit the rewritten chapter 11 rules that limit
> >the market's discipline of those who acquire debt too freely, making
> >the corporate bankruptcy business a major growth industry in the 80's.
>
> Huh?
>
> -andy
> --
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