GM Spirals the Drain (Part 2)

[DanS]

Originally posted by KrazyHorse
This is true. And demonstrates why the "starve the beast" technique is a joke.

The only way to cut taxes is to cut spending. And nobody (neither Dems nor Reps) has shown serious commitment to do that.

I wouldn't mind them staggering the tax cuts and spending cuts to accommodate the business cycle.

But if you have no spending restraint, then it all goes to hell. As you say "starve the beast" didn't work. It's more like "pass the buck." The main proponent of this approach is Dick Cheney, FYI.

[MrFun]

Originally posted by KrazyHorse
Unions try to do their best for their members. That's not corruption. One could argue that they were TOO effective in Detroit, not ineffective and corrupt.

The management and board of the company is supposed to be the other side of that negotiation and look after the long-term solvency of the company, and equity holders are supposed to exercise control to ensure that this happens. Both of these failed in their duties (and have been failing for many decades). The auto workers don't need to take a pay cut because they "deserve" one. They need to take a pay cut because the current balance sheet is unsustainable.

Okay; as long as you can see that there is some good that comes from having unions.

[DanS]

Hey, unions are cool and all. But it's a little like a guy with a knife in his hand standing above the bloody corpses of his dead family.

Is he a murderer or was he defending himself all along?

[Jon Miller]

Originally posted by Asher


The problem here is you have no idea why GM is teetering on the edge of oblivion. It has nothing to do with the pay of its executives, which are (AFACT) industry standard.

While I agree that the workers need to be payed less, I disagree with the above statement.

http://joulesbeef.newsvine.com/_news/2008/11/19/2128569-ceo-of-gm-makes-14-times-what-ceo-of-toyota-makes-but-we-are-to-be-outrraged-the-employees-get-double-what-toyota-employees-make

The CEO's should take a (massive) pay cut also.

JM

[Asher]

Originally posted by Jon Miller


While I agree that the workers need to be payed less, I disagree with the above statement.

http://joulesbeef.newsvine.com/_news/2008/11/19/2128569-ceo-of-gm-makes-14-times-what-ceo-of-toyota-makes-but-we-are-to-be-outrraged-the-employees-get-double-what-toyota-employees-make

The CEO's should take a (massive) pay cut also.

JM

Thanks, didn't know his salary.

He definitely deserves a pay cut on a massive scale. Actually, the current management at GM deserves to be fired altogether.

[KrazyHorse]

The Japanese are famous for limiting executive pay by statute. The comparison should be with other American executives.

[Jon Miller]

American executives of big firms get payed more then other executives around the world. This isn't a good thing.

JM

[KrazyHorse]

Why not?

[Jon Miller]

Because it is not based on competition/etc. There are many people eager for the CEO job, who can do it as well (most of these guys, I will agree that some like Jobs are special cases), so the pay should come down to market levels.

The reason why the pay for the big company executives is so high is because it is in the interest of the board of directors of the major firms to increase the CEO salary because they are (often) the CEO of other firms.

It isn't as the result of market forms of supply and demand of labor.

JM

[KrazyHorse]

Originally posted by Jon Miller
Because it is not based on competition/etc. There are many people eager for the CEO job, who can do it as well (most of these guys, I will agree that some like Jobs are special cases), so the pay should come down to market levels.

The pay is AT market levels, unlike the pay in other countries (where things like extremely high marginal tax rates, legal restrictions on pay and social mores make it impossible for companies to pay their executives what they'd like).

I agree that most CEOs are middling and that they do not have any special skills which distinguish them greatly from the many other applicants for their jobs. But it is STOCKHOLDERS who should be exercising restraint on executive pay. If they don't want to then it is their money being wasted, and is not particularly any of my business.

The reason why the pay for the big company executives is so high is because it is in the interest of the board of directors of the major firms to increase the CEO salary because they are (often) the CEO of other firms.

Then STOCKHOLDERS should fire their asses and get somebody else.

It isn't as the result of market forms of supply and demand of labor.

Sure it is. The demand comes from STOCKHOLDERS.

[Jon Miller]

As an example:

http://www-rcf.usc.edu/~kjmurphy/ceopay.pdf

The workers shouldn't be getting payed too much. Neither should the CEO.

JM

[DanS]

This is a ridiculous argument built on scarecrows. The executives are going to be paid less. It's as simple as that.

[KrazyHorse]

I agree that publicly traded companies often exercise too little restraint on their boards. But ham-handed regulation is unlikely to accomplish the goal of increasing this restraint at an acceptable cost.

Executive pay may therefore be too high, but this is really a minor issue...

[KrazyHorse]

Originally posted by Jon Miller
As an example:

http://www-rcf.usc.edu/~kjmurphy/ceopay.pdf

The workers shouldn't be getting payed too much. Neither should the CEO.

JM

As an example of what?

Could you please summarize what point that paper demonstrates so that I don't have to read it and figure out what you mean by posting it?

[Jon Miller]

Originally posted by KrazyHorse


The pay is AT market levels, unlike the pay in other countries (where things like extremely high marginal tax rates, legal restrictions on pay and social mores make it impossible for companies to pay their executives what they'd like).

I agree that most CEOs are middling and that they do not have any special skills which distinguish them greatly from the many other applicants for their jobs. But it is STOCKHOLDERS who should be exercising restraint on executive pay. If they don't want to then it is their money being wasted, and is not particularly any of my business.

The reason why the pay for the big company executives is so high is because it is in the interest of the board of directors of the major firms to increase the CEO salary because they are (often) the CEO of other firms.

Then STOCKHOLDERS should fire their asses and get somebody else.

It isn't as the result of market forms of supply and demand of labor.

Sure it is. The demand comes from STOCKHOLDERS.

It is the Board of Directors who determine the pay. Yeah, that is the 'elite' of the stockholders, but they are also the ones whose interest it is to increase CEO pay.

Even Buffet agrees:

http://www.thecorporatecounsel.net/blog/archive/001402.html

JM