{"id":1642,"date":"2016-02-04T20:00:54","date_gmt":"2016-02-05T04:00:54","guid":{"rendered":"http:\/\/www.robinstewart.com\/blog\/?p=1642"},"modified":"2016-04-30T16:17:29","modified_gmt":"2016-04-30T23:17:29","slug":"maximum-wage-ratio","status":"publish","type":"post","link":"https:\/\/www.robinstewart.com\/blog\/2016\/02\/maximum-wage-ratio\/","title":{"rendered":"Maximum Wage Ratio"},"content":{"rendered":"

Steven Johnson<\/a> (via Daring Fireball<\/a>): “Steve Jobs, Jony Ive, Larry Page, Sergey Brin, Travis Kalanick\u2014these people didn\u2019t just accumulate wealth [by inventing technology]; they accumulated dynastic<\/em> wealth, wealth that could keep their descendants in the one percent for centuries.”<\/p>\n

It’s clear that those startup founders are\u00a0brilliant people, but it’s equally clear that those people by themselves were not responsible for creating\u00a0millions of times more value than the thousands or millions of other people who helped make their companies possible\u00a0\u2014 from scientists working under government funding to invent the Internet and GPS, to open-source programmers creating widely-used\u00a0code libraries, to finally all of\u00a0the\u00a0employees who worked to create better products, year after year.<\/p>\n

As Clayton Christensen and others have noted, one reason we compensate executives so extremely is because we make the\u00a0attribution error<\/a> that top managers actually have significant control over company performance. That is, we thank the CEO when an organization is performing well,\u00a0and several years later when it’s crashing we blame the very same CEO for causing\u00a0the\u00a0problems. (Much of Christensen’s research into the causes of success and failure grew out of his dissatisfaction with the theory\u00a0that the very same CEO\u00a0is brilliant one year and an idiot the next.)<\/p>\n

“Over the past 40 years, the average pay ratio\u200a\u2014\u200athe gap between the highest and median employee\u200a\u2014\u200ainside an American corporation has increased from 30:1 to more than 300:1. […]\u00a0If you want to defend Silicon Valley in a discussion about inequality,\u00a0[note]\u00a0that Silicon Valley has a much more sensible pay ratio than most other industries in the United States\u200a\u2014\u200acloser to 40:1, not so far from the ratio that predominated in the age of Big Labor. [Also,] the top 100 tech companies granted 19% of their total ownership to non-senior-executive employees (i.e., everyone excluding the CEO and four lieutenants). For the rest of corporate America, that number was 2%.”<\/p>\n

“Let\u2019s say we decided as a society that no private company should have a pay ratio above 40:1. That would lead to a radical decrease in income inequality, and it wouldn\u2019t involve a cent of additional taxes.”<\/p>\n

Sounds reasonable. And even if this particular idea turns out to be impractical, it raises the point that there’s a lot of creativity to\u00a0apply\u00a0to\u00a0the problem\u00a0of income inequality.<\/p>\n","protected":false},"excerpt":{"rendered":"

Steven Johnson (via Daring Fireball): “Steve Jobs, Jony Ive, Larry Page, Sergey Brin, Travis Kalanick\u2014these people didn\u2019t just accumulate wealth [by inventing technology]; they accumulated dynastic wealth, wealth that could keep their descendants in the one percent for centuries.” It’s clear that those startup founders are\u00a0brilliant people, but it’s equally clear that those people by … <\/p>\n

Continue reading “Maximum Wage Ratio”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/posts\/1642"}],"collection":[{"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/comments?post=1642"}],"version-history":[{"count":2,"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/posts\/1642\/revisions"}],"predecessor-version":[{"id":1756,"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/posts\/1642\/revisions\/1756"}],"wp:attachment":[{"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/media?parent=1642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/categories?post=1642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.robinstewart.com\/blog\/wp-json\/wp\/v2\/tags?post=1642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}