A Capitalist Self-Deception

[Xonas Pitfall]

https://www.actualized.org/insights/a-capitalist-self-deception

I appreciate the post! One thing, though, is that I often hear the following arguments from the "other side":

• "Yes, but not everyone can do their job. Yes, but they have unique skills and experience that are extremely difficult to acquire. There are only a handful of people in the world who can run a company of that size."
• "Yes, but they are taking on all the risk when they make these bold moves that no one else can, such as making huge investments, buying businesses, or projecting future market trends."
• "Yes, but they are taking on all the responsibility if the company fails. They are the ones who have to answer for it."
• "Not everyone can be a CEO, etc. Without their leadership, the company might not exist."
• "Yes, but if they succeed, everyone benefits. Employees get jobs, investors make money, and the economy grows."
• "Yes, but they could make more money elsewhere. Companies have to pay a premium to attract and retain top talent."
• "Yes, but their compensation often comes in the form of stock, so they only make enormous amounts of money if the company performs well."
• "Yes, but the value created by someone like Steve Jobs can be enormous. If one person's decisions can create hundreds of billions of dollars in market value, why shouldn't they receive a tiny fraction of that?"
• "Yes, but people like Elon Musk, Steve Jobs, or Jeff Bezos have abilities that are so rare that comparing their compensation to that of an average employee doesn't make sense. There might be millions of competent managers, but only a handful of people capable of building companies of that scale."
• "Yes, but you can't simply replace Elon Musk with 100,000 ordinary employees and expect the same results. Leadership, vision, and the ability to make unconventional decisions are not easily substituted."

I guess the main counterargument is that, yes, they should be compensated to some extent for their skills, risk, and responsibility. But does that really justify earning 100,000 times more? Or 200,000 times more? Where do we draw the line?

How do you usually debate this point, or how do you think about it?

Edited 4 hours ago by Xonas Pitfall

[Leo Gura]

The best counter-argument to my post is that guys like Musk don't just offer labor, they risk capital. The reason Musk gets paid so well is because he risked his own $100M to start SpaceX, which he could have lost, while ordinary workers risk nothing.

That is a valid point. However, their compensation is still ridiculously unfair even then.

They are simply rationalizing hogging all the money.

Edited 4 hours ago by Leo Gura

[Xonas Pitfall]

42 minutes ago, Leo Gura said:

The best counter-argument to my post is that guys like Musk don't just offer labor, they risk capital. The reason Musk gets paid so well is because he risked his own $100M to start SpaceX, which he could have lost, while ordinary workers risk nothing.

Yes, I've definitely heard this argument.

"Well, with investments, if they do well, you'd expect some kind of return. You risk X amount, and if things go well, you might get X amount back, or potentially many times more, or lose it all. They risked $100 million, made the right investments, recognized the market opportunity, positioned themselves well, and ultimately got a huge return. Yes, sure, it's an absurd amount of money, but it's an investment like any other. If you had that amount of money, you could theoretically do the same thing. But would you have? I don't know. I don't think so. That's why there are so few people like him in the first place."

I'm not saying I agree with this viewpoint, but I definitely hear it argued.

[aurum]

The clearly example of capitalist bullshittery is how much the richest people in the world have made since Covid.

There's no possible way to justify how much more they are worth in just a couple years based on merit. Their businesses have not functionally changed in that time period.

[Stick]

@Leo Gura There  is an even better argument which is that humans can't handle equality and they can't handle socialism.
Look what happened to soviet union in the name of equality.
They became an unquestionable absolute dictatorship.
The current capitalist structure provides a more guided hierchy rather than a law of jungle.
If survival needs are met that is already a really powerful system.
Do you think the lady cleaning toilets would rather be cleaning toilets or live in an absolute dictatorship where she could be thrown in the gulag any second.


Of course I am ultimately not a ben shapiro type capitalist.
All that needs to happen is to tax the rich more and most problems with this system is solved.
and the system is so good that it will facilitate tax increase with a election in 2028.
We do not need a stage green communist society; that is for 200 years later.
 

[Xonas Pitfall]

15 minutes ago, Stick said:

All that needs to happen is to tax the rich more and most problems with this system is solved.

“But, but, but then all the rich people will leave for Dubai, Thailand, Moldova and the Cook Islands!!!”

Edited 2 hours ago by Xonas Pitfall

[Leo Gura]

I think a better solution than taxation is laws that force companies to pay their employees more evenly, so the CEO cannot make 10000x more.

In the end socialism boils down to paying people more evenly.

Edited 2 hours ago by Leo Gura

[Basman]

A small paycheck of a 100 million dollars.

[Basman]

Insane paychecks have probably more to do with leverage than anything else. An average person do not have the resources, connections or sheer power to manipulate and negotiate/demand like a rich ceo. 

[Leo Gura]

12 minutes ago, Basman said:

Insane paychecks have probably more to do with leverage than anything else. An average person do not have the resources, connections or sheer power to manipulate and negotiate/demand like a rich ceo. 

Sure, of course. But that way of managing a mass social economy cannot survive. It is akin to slavery.

At the end of the day, a psychopath with a gun can fleece you with leverage, but a civilized society cannot allow it.

A teacher has leverage over his students, but it is still wrong for him to use that leverage to take half their money.

Edited 37 minutes ago by Leo Gura

[OmniNaut]

Quote

We could easily pass a law that says that you cannot get paid more than 100x your average employee. But see, the capitalist class will cry that this is unfair. Is it unfair? What’s the truth?

@Leo Gura
The Dutch president (basically CEO of a country) salary is set to 211k Euro (244k USD). They're income (and side income) are open and there are strict checks in place to make sure it's not exceeded through side income. This rule is basically set for all people in the government. 

This creates the side effect that it's hard to get good talent into government because the commercial industries offer better paychecks. But for years in the Netherlands people are talking about limiting salaries and pay-out bonuses to CEO's. Especially after big scandals come into the news of CEO's abusing the system for personal gain. But there is no real incentive to really push through with the salary cap.

[Leo Gura]

I would be in favor of raising government salaries signficantly as long as they aren't allowed to cozy up to lobbyists.

Edited 21 minutes ago by Leo Gura