Comments on: A Piece of the Pie

By: dave heasman

dave heasman — Wed, 23 Jun 2004 09:43:48 +0000

Claire gives us a sobering example of the sacrifices required to get a decent purchase on the corporate treadmill. Obviously we all have our own opinions about the non-economic effect this behaviour has on peoples’ lives and surroundings. From experience, however, I must counsel against this part of Claire’s success story : – “When I became eligible, I bought every bit of company stock through the employees’ stock purchase plan, since we could buy it at 15% below market”. For your health’s sake, do not do this unless you are able to sell the company’s stock as soon as you have bought it. As a wage-earner you have more than enough risk invested in working for a company. To compound the risk by buying shares, at a lousy 15% discount, is incredibly dangerous. The company I work for introduced a matching share-purchase scheme in Jan 2002. They’d match the shares we bought. “You’ll only lose if the share price halves” they said. The company is relatively secure, is run honestly, has grown at a nice steady 5% p.a., profits rise smoothly, and guess what? The share price has halved. So if you need the money, don’t. The markets are irrational.

By: abb1

abb1 — Wed, 23 Jun 2004 09:30:01 +0000

Not a big deal to spend $5 a week on lottery tickets? Put that same $5 in a money market account and add to it regularly every week instead of buying those lottery tickets, and you’d be surprised where it gets you. It’ll get you $260 a year. Over your whole 40-year career, it’ll get you, considering the magic of compound interest and adjusting for inflation, oh, say, about 12,000. But wait – you would certainly win something on some of those lottery tickets, right? Something like 60% of the money spent. So, your saving $5/week for 40 years will get you ahead by $5,000. Which is what an average CEO makes in one hour.

By: masaccio

masaccio — Wed, 23 Jun 2004 03:26:47 +0000

The chart shows “total labor compensation”, which includes the salaries and all other compensation to the executive class. These salaries have shown a steady increase over the period in question. I think this kind of compensation ought to considered return to capital when considering the issue at hand. This would show the results for actual workers to be much worse.

By: Lynne

Lynne — Wed, 23 Jun 2004 02:34:05 +0000

I had to call some of those Indian call centers and they suck. I think the outsourcing bubble will burst soon. American companies will lose their customer base in the U.S. Other countries will start supporting their own companies. American companies will lose big time.

By: robbo

robbo — Wed, 23 Jun 2004 01:24:05 +0000

With jrv’s post we seem to be getting to the crux of the issue: the degeneration of Americans’ collective perception of the world as being comprised of completely sovereign nation-states that are obliged to provide a viable “safety net” for their citizens. I was born a proud American and later found that I was a hardcore Dodgers fan. That was before the Dodgers—like all professional sports teams—became a temporary collection of free-agents out to maximize their incomes. The only form of loyalty left in the system is that management honors its promise to cut regular paychecks for a given year and players agree to show up to games for that year. How many people feel true loyalty to “their team,” the way one could in the years when teams stayed together for more than a year? Something similar happened to my sense of identification as an American. The Cold War against the USSR was replaced by the abstract and infinitely morphable “war on terror.” George Bush speaks of “Iraqi sovereignty” as if that phrase in any way describes the state of affairs we’ll be seeing there on July 1. An astounding proportion of America’s military functions are now done by private contractors. American jobs become a Indian jobs overnight. Trees cut from America’s public lands are routinely shipped overseas for manufacturing. Our own government is run by folks who hate government and want to drown it in a bathtub, and a considerable proportion of Americans support this course of action. We have declared the U.N. “irrelevant” and find the Geneva Conventions “quaint.” Let’s face it, we’re all becoming free agents in a global market, if we’re not there already. I vote Democrat, and I support a living wage for workers, but my own response to these trends was to opt out and become self-employed. It hasn’t made me rich, and this isn’t a response available to everyone, but I’ve had more luck answering directly to the cold, calculating market than I did trying to get my old company to fairly compensate me for the value of my work.

By: jrv

jrv — Tue, 22 Jun 2004 23:12:24 +0000

I think that it’s interesting the degree to which people have had their attention diverted to the CEOs. These persons are inconsequential in the national wealth distribution scheme. Their percentage of GDP is not substantial. What is interesting is who they are working for: INVESTORS. The reward for ‘corporate profits’ goes to investors. Investors are those that put their money at risk rather than consuming it. Insofar as the jobless recovery, part of the blame goes to outsourcing, it’s true. Now, I’m confused as to why this bothers the left. I guess it depends whether we’re referring to the nationalist or internationalist left. It is interesting the explosion in relatively high income jobs in India. Indians can do the same phone banks that are done in the US for a small fraction of the cost. But don’t misinterpet. The PPP of these Indian workers is rather high, given the cost of living in India. This is a mass redistribution of wealth, from relatively costly and inefficient US workers, to a new elite in India, who are helping charge India’s GDP with 8%+ growth rates. Is this bad? There are always winners and losers. But it is always great to see efficiency rise, resources can thus be relocated. And yes, workers are resources, as are the skills we possess.

By: q

Tue, 22 Jun 2004 22:44:58 +0000

claire- Where did you get the skill to put others down so eloquantly? It does not surprise me you did not go on holiday with your coworkers. :) But, apart from making snide remarks, have you moved the debate on? How do YOU explain the recent changes in the distribution of incomes away from wage incomes? Are you interested?

By: Mr. Grasshopper

Mr. Grasshopper — Tue, 22 Jun 2004 22:40:48 +0000

Thanks to Claire, we can now see that being poor is all your own fault. No one in the USA, especially those hardworking corporate CEOs, would ever lie, cheat, or steal from you. $50 says Claire is a Republican, and there’s no kind more shrill or mean-spirited than a Houston republican. I know, I grew up around them.

By: Arthur Wouk

Arthur Wouk — Tue, 22 Jun 2004 22:40:26 +0000

Oh, come on Claire, you’re missing the point. Yes, no doubt most CEOs are honest and hard-working, and other corporate leaders are also. And yes, poor people do a lot of stupid things like buy lottery tickets and fail to contribute to their 401k plans. I wish people would save more, and I agree that a lot of people make their own misery. But that doesn’t mean that there isn’t a growing gap in incomes in our society and that this gap is troublesome. (Yes, some leftists see it as a conspiracy; there are always conspiracy wackos.) There is abundant evidence of a growing disparity of income and wealth. The reasons are likely very complex. But don’t suggest it isn’t happening.

By: Arthur Wouk

Arthur Wouk — Tue, 22 Jun 2004 22:39:25 +0000

By: Arthur Wouk

Arthur Wouk — Tue, 22 Jun 2004 22:39:19 +0000

By: Claire

Claire — Tue, 22 Jun 2004 22:07:03 +0000

I know several CEOs, and the ones I know are hardworking and honest people. Enron and GlobalCrossing were anomalies; they are not the norm of how corporations are run today, in spite of what many liberals would like everyone to think. The problem is that most liberals really have no idea how business and the free market really work, because most of them are not part of it other than as either consumers or lower-end wage earners. Note that I said most, not all. No, there is not some big, corporate conspiracy to deprive the little people of all their money. The ‘little people’ do quite well in depriving themselves of it through spending instead of saving, wanting to get something for nothing, or lack of initiative. Not a big deal to spend $5 a week on lottery tickets? Put that same $5 in a money market account and add to it regularly every week instead of buying those lottery tickets, and you’d be surprised where it gets you. It’s surprising to find that a very large percentage of employees fail to take advantage of 401(k) plans where employers provided 1-for-1 matching funds. Free money, folks! But hey, it’s better to spend that money on a skiing trip this year than do without and put it away for the future. Isn’t it? I grew up dirt poor. We didn’t go hungry, but we didn’t have much for extras, either. I worked to put myself through college; my folks could only let me live at home and feed me but had nothing to put toward my schooling. I got a couple of degrees and went to work. I bought my first car using a letter of credit from my boss, since I had no credit history. I didn’t go to movies, buy new clothes, go out to eat much, or go out with friends if it cost money for over two years, until my salary caught up enough that I could make the minimum car payments. When I bought my first house, I scrimped and saved for the 2% downpayment, then for two more years I spent a lot of time eating rice and hamburger helper to stretch out $20 for food over 2 weeks so I could not miss a mortgage payment. When I became eligible, I bought every bit of company stock through the employees’ stock purchase plan, since we could buy it at 15% below market. A year of scrimping for a (possible) 15-20% return on investment. I still buy every bit I am eligible for. Yes, I passed up on all those fun weekends that my coworkers used to have, going skiing, going on cruises, going to Vegas or Cancun. But where my coworkers now have beautiful houses like mine, theirs are often empty because they can’t afford furniture. They have little or nothing in retirement. They still go on expensive vacations every year, and their kids get brand new cars when they get their drivers’ licenses. My house is just as nice. It’s filled with good, quality furniture that I bought a bit at a time over the years. We have a good 7-figure nest egg for retirement, and we’ve got most of our daughter’s college money saved before she starts 3rd grade. NOW we go on those nice vacations, too. But we can pay for them in cash and not add them onto large credit card bills like our ‘friends’. We have a mortgage and one new car payment at a time; other than that, we don’t owe a dime to anyone. What did we do that our friends and coworkers didn’t? Go read the story of the ant and the grasshopper, and I think you can figure it out.

By: robbo

robbo — Tue, 22 Jun 2004 21:14:53 +0000

This yellow liquid on my leg? I had an idea what it was, but some wise economists, statisticians, and media figures developed a compelling theory that it’s actually the result of some unusual and interesting form of precipitation.

By: abb1

abb1 — Tue, 22 Jun 2004 20:35:58 +0000

C’mon. I don’t understand how anyone can seriously talk about CEOs taking risk in this day and age. Even if you never actually worked with a CEO, you do know one: George W Bush. He is not an exception. It’s all based on personal connections, insider trading, exchange of favors. CEOs working hard and taking risk is the greatest hoax perpetrated upon the American public. I worked with a few of them. They play golf and occasionally bullshit wall street analysts. My job was to provide them with “massaged” data for their bullshit sessions.

By: q

Tue, 22 Jun 2004 19:09:35 +0000

Thanks Gavin, that’s very interesting, especially your point about the two sets of figures being different. Despite this variation, we still have labour share of income dropping from 66.1% to 62.9% which seems significant to me, unless everyone owns shares Of course, the accumulation of capital has nowhere to go with real interest rates at close to zero. Probably a good time to start a company selling luxury goods to all these deep-pocketed millionnaires!