Why Corporate Executives Get the Big Bucks

Note: I wrote an overly long comment on this thread at Hit&Run, so I thought I would post it here. The thread was about a Reason debate on executive compensation, why it was so “high” and what could or should be done about it. The tone is snarky because a lot of people on the thread were being silly.

Okay, children, let me explain why executive compensation is so high. Are you ready?

Ahem: If you want someone to run your company for your interest you have to pay them more than they could make running their own company for their own interest!

Admittedly, this a concept as complicated as quantum physics for some people but I will try to boil it down.

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Undertime: Why High Marginal Taxes Are Like Anti-Overtime

For years, I have struggled to explain to people why high marginal tax rates on the “wealthy” create disincentives to work that make the entire society more poor.

I finally figured out a way to explain the problem in terms that everyone can relate to: High marginal taxes function as anti-overtime. Call it undertime.

Many people seem incapable of grasping the idea. They seem to see issues of taxation only in terms of relative wealth. They can only see that people with an upper middle-class income have plenty and that therefore if you take proportionally more of their income, they will still have enough. This comment on a post about taxes creating disincentives [h/t Instapundit] represents a common view:

Your point is well taken, I think the Bush tax-cuts should be extended, and I can see why this woman may be considering her options…..BUT, if the people in your example have a mortgage, 2 kids, etc., and the wife can even consider not working, they may be in an economic pinch, but they are not suffering very much.

What Clair and other like her miss is that this isn’t an argument about fairness or who suffers. It is an argument about how tax policy affects the overall production, and thus material wealth of the entire society.

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Why the Left Needs Its Own Tea Party

Glenn Reynolds doesn’t come out and say it, but in his “The Tea Party Dominance Was Inevitable” editorial he skirts the idea, so I will just say it: The American left needs its own Tea Party movement. Ordinary Americans with leftist values need to launch an insurgency against the Democratic establishment just as the Tea Party has launched one against the Republican establishment.

The Founders well knew that the primary political dynamic in any free society was never faction against faction but the people versus the state. We have forgotten this essential insight at the heart of American governance. Distracted by the struggle of left versus right, we have let a political class form that serves no faction but itself. It is The Combine.

The Combine is the primary enemy of all Americans, left, right or orthogonal. Ordinary Americans with leftist values have a duty to fight against The Combine for what they believe is right.

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To Save the World, How Many Would You Kill?

A thought experiment: Suppose you somehow knew, with absolute certainty, that a century from now some event would destroy the Earth, wiping out all life as we know it. Suppose you somehow knew, with absolute certainty, of an action you could take that would prevent that extinction of life. Suppose, however, that the cost of that action was billions of human lives. To save the world, how many people could you justify killing?

Could you not justify killing billions to ensure that humanity and life in general survived? What moral stance, what other good, could you balance against the death of all? Indeed, the refusal to murder billions to prevent the death of all would be, in itself, the most vain and evil act in all of history.

This abstract thought experiment hinges on something that in the real world we never have: absolute certainty. There is no way in the real world that we could know with absolute certainty that killing billions now would save all life 100 years from now. Without that certainty, these kinds of kill-a-few-to-save-the-many thought experiments lose validity and don’t provide any moral guidance or insight for the real world.

However, these kinds of thought experiments do demonstrate how absolute certitude makes it easy for anyone, no matter how humane and compassionate, to calmly rationalize the deaths of billions. At the extremities of events and the associated moral choices, the ends do definitely justify the means.

As a corollary, ideas that claim to predict extreme events with great certainty create the justifications for associated extreme acts. These types of ideas turn abstract moral thought experiments into concrete realities on which people feel compelled to act.

Advocates of the concept of Catastrophic Anthropogenic Global Warming (CAGW) are very, very certain that a great destructive event is bearing down on the Earth. They reiterate incessantly that science has absolutely proven that this future harm will occur unless we take significant action today to head it off.

Their absolute certitude in CAGW raises the obvious question: To prevent such massive and unprecedented absolutely certain harm, how many millions of people would they be willing to kill today?

From that perspective, the pro-CAGW propaganda shock videos in which people who don’t believe in CAGW are casually and gorily murdered suddenly don’t seem so funny and edgy.

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What’s Missing From This List?

An online poll is making the rounds.

How long you will live.
How much money you will make in your lifetime.
The NAME of the person best suited to you.
How happy you will be compared to the average human.
What profession you will spend most of your life doing.
Where will you live for most of your life.
How many children you will have.
How you will die.

Professor Bainbridge points out that the site originating the poll seems to be directed at a younger audience and the constraints of the thought experiment make the questions inherently personal.

Even so, don’t these questions seem tremendously self-centered?

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