In Defense of CEO Compensation

By -
An article sure to increase my popularity the next time I do Oprah's show. Be sure to skim the comments. The TownHall posters' economics skills are a little scary for what I thought was supposed to be a "right wing" site.

Comments

  1. Kevin Carson12:20 AM

    That would be a valid defense of executive compensation in a free market--but in a free market, it would probably be moot, because there'd be a lot less astronomical executive compensation to defend in the first place.

    If you at least stipulate for the moment that the dominant firm is larger and more hierarchical than it would be in a free market, then such "excessive" CEO pay is arguably the result of calculational chaos within the corporation. The threat of hostile takeover, if anything, only makes things worse, because absent any reliable metric of corporate performance short-term profit tends to be used as a proxy. So the possibility of hostile takeover and the short time horizons of corporate management lead to exactly the kind of behavior Nardelli was accused of: milking the operation and stripping it of assets to inflate short-term profits, while gutting the productive resources for long-term growth.

    ReplyDelete
  2. Bob Murphy12:18 AM

    Kevin,

    I am open to the possibility of what you're saying, but can you point to what exactly causes the short term thinking? People I worked with in the financial sector agreed with that view, but I never understood why it would persist. I.e. why wouldn't a few companies with long-term vision outperform?

    Or, if it's something to do with the corporate structure per se, why wouldn't that structure die off, with more and more firms being taken private?

    ReplyDelete
  3. Anonymous1:23 AM

    when you haveArchlord gold,you can get more
    Archlord money,you can brush
    archlord online Gold,you can sell
    cheap Archlord gold to others,it is decide to
    buy Archlord goldfor your goal.

    ReplyDelete

Post a Comment

Popular posts from this blog

Libertarians, My Libertarians!

By -
Cruel to be kind means that I love you . Because, while I think you are mistaken, your hearts are in the right place -- yes, even you, Silas --  unlike some people . This Breitbart fellow (discussed in the link above), by all appearances, deliberately doctored a video of Shirley Sherrod to make her remarks appear virulently racist, when they had, in fact, the opposite import. I heard that at a recent Austrian conference, some folks were talking about "Callahan's conservative turn." While that description is not entirely inaccurate, I must say that a lot of these people who today call themselves conservative give me the heebie-jeebies.
Read more

"Machine Learning"

By -
 The name is a misnomer. And a harmful one, because it interferes with understanding the process that is really occuring. What is really occurring is a search of a constrained program space. Let's say you want to be able to identify images of hot dogs . You begin with a plausible program for doing so, that is able to also search the space of nearby programs that might get better results on the problem. You then (in "supervised learning") provide scores that indicate how well one of these possible programs has done on solving the problem. After doing this for some time you settle upon a program that solves the problem "well enough." This is a great technique that can produce truly impressive results on a wide class of problems, such as identifying images of hot dogs. But notice that, except for the phrase in scare quotes, there is no "learning" in the description. Calling this "learning" is importing ideological baggage that just obscures what
Read more

"Pre-Galilean" Foolishness

By -
 I am currently reading The Master and His Emissary , which appears to be an excellent book. ("Appears" because I don't know the neuroscience literature well enough to say for sure, yet.) But then on page 186 I find: "Asking cognition, however, to give a perspective on the relationship between cognition and affect is like asking astronomer in the pre-Galilean geocentric world, whether, in his opinion, the sun moves round the earth of the earth around the sun. To ask a question alone would be enough to label one as mad." OK, this is garbage. First of all, it should be pre-Copernican, not pre-Galilean. But much worse is that people have seriously been considering heliocentrism for many centuries before Copernicus. Aristarchus had proposed a heliocentric model in the 4th-century BC. It had generally been considered wrong, but not "mad." (And wrong for scientific reasons: Why, for instance, did we not observe stellar parallax?) And when Copernicus propose
Read more