to not understand capitalism

[IceBeing]

Some people work hard (say 60 hours a week all year) and get paid about £20000 a year...and some people work hard and get paid 10 or even 100 times as much a year.

How can 60 hours a week of work from 1 person be worth 100 times as much as 60 hours a week of work from another person?

Aga
Can you objectively measure the skills of a footballer?

Here is something you might find interesting... A third of FTSE 100 CEOs were born outside of the UK, suggesting their job market is very international. So surely benchmarking their salaries against domestic UK employees is totally irrelevant? If we want to attract the best global talent, we have to pay the best global salaries.

That's 20 out of how large a sample population? Not saying nepotism never exists but...

Large companies can be ferociously complex to run, and there is absolutely no way the CEO could just coast around on luck. I'd agree with whineaholics assessment for those I have come across

StatisticallyChallenged, I'm sure that the skills exist, but effectively evaluating the set of them is next to impossible, especially if you cannot even agree on the goalposts (short-term value, etc.)

Even the likes of Jack Welch, dubbed 'CEO of the century', and handed around a billion dollars by GE over his time in charge, have been rather more critically evaluated in retrospect.

Is, hypothetically, a CEO that lays off all half of its staff but grows profits by 25% one that should be encouraged?

Hate to break it to you, but not one of those companies is listed in the UK, and all but a couple are privately-owned. So those examples are about as relevant to the wider argument as me pointing out that the funeral parlour near me is being run by the third generation of the same family...

The reason bankers are paid 100x more than other people is that it takes as massive amount of skill to lose massive amounts of money. RBS, for example, have lost almost the exact amount they were bailed out with, and still insist they have to pay top dollar to get the best staff. Which tells me they would've lost more if it hadn't been for the useless lot they employ currently. Let 'em go under.

The current economic model, which some call neoliberalism, is a huge Ponzi scheme, in that all money rises to the top from those underneath who end up subsidising them. It requires those at the bottom to borrow just to get by. It is doomed to fail, it always has in the past.

Currently stocks and shares are at an all time high, and house prices are rising faster and faster. One reason is that banks and corporations can borrow money for almost nothing. Mostly what banks have been doing the last few years is lending it back to governments at 2% (ish) interest.

Because here in the UK we have a debt based austerity economy those who spend the most as a percentage of their income, the poor, have less coming in. So they spend less, thus shrinking the local economy. So many have had to turn to pay day lenders who charge high rates of interest, meaning, in reality, their income shrinks even more.

What makes things worse, and something that must change, is the way banks create money at the stroke of a keyboard. When you get a loan they access your account details, type the amount you're borrowing and announce that 'the money' is in your account. This non-existent money makes up much of what is out there, about 97% in fact. Money creation should only be done by the central bank, though that should be looked at due to the amount of QE that's going on. QE is going to cost in the long run as it will devalue the currency.

In short, the system is fucked and it's going to crash, and there's nothing we, the little people, can do about it. All we can do is insure against it by using our devalued pound to buy gold and silver (and Bitcoin), because gold and silver prices are being held artificially low to keep the dollar high. Why China isn't calling in all their dollar debt is due to them being able to snap up gold at a discount. As soon as they call in their debt, gold will rocket, the dollar will tank. As will the pound.

But surely these privately-owned companies should be selecting their CEOs on the basis of measurable skills, otherwise all those fantastic CEOs competing in the global marketplace would eat them for lunch, and then there wouldn't be any more privately-owned companies, because the effective, financially motivated CEOs will out-compete those selected by accident of birth.

depends what objective he's been set - if it's a company which had a ridiculously high cost base, was struggling to keep up with competitors and facing going bust as a result then yes, the CEO who lays off the staff could well be a good one

cailin I do care more about my DD than my NDN child...but not 100 times more. I wouldn't want to have more money and my NDN less because then her kid would suffer iyswim....

DoctorTwo,
Think of banks like RBS as department stores. They do lots of things that are pretty unrelated to each other but fall roughly under the same umbrella.

A chef in the cafe has been offered some cheap meat, which he buys thinking he can make a lot more money on the meat pies. The meat turns out to be really dodgy, poisons lots of people and the shop nearly goes under compensating everyone who was poisoned.

Why does that mean that the person working in the shoe department should be vilified, and have their pay cut? They've carried on choosing nice shoes that sell well, and their customers are really happy. In fact, their customers didn't ever eat at the cafe, while the cafe customers didn't ever buy their shoes there.

Banks were called 'too big to fail' for a good reason. If you don't like the mess that has been the last few years, you don't want to even fathom what it would have looked like if many of the big banks had gone under...

Also, what you gloss over is that at the end of each day, banks have to reconcile their books. So yes, they make money appear in your account, but they have to be able to reconcile that with their wider 'pot' of money.

There is an entire wholesale money market called 'overnight' which is basically payday loans for big banks

I think generally CEO's like footballers are measured on the stats - is the company profitable? What does the share price look like?

Also, many CEO's have founded the business they run - they took the risk and now reap the reward.

From time to time the market goes mad and people do really, really stupid things - see tulips, south sea bubble, dot.com boom.

However, much as I am at heart a lentil weaver, I can see that if you want to be employed by somebody, somebody is going to have to get some money together to employ you and if you don't want to be employed by somebody you are going to have to find a way to procure the goods that enable you to survive, and short of being totally self sufficient, somewhere along the line that usually involves a loan, investment in your business or making a profit - capitalism.

Ewwwwwwwwwwww.

Scented tampons?

Really?

From a business point of view there are pros and cons to raising finance through debt or equity.

Both have their place. Both are part of capitalism.

Equally, as an investor, there are pros and cons to investing in shares or opening a savings account.

Fred The Shred at RBS had been buying up banks and related companies for years, and was handsomely rewarded for this, as the company's market cap grew.

He could have walked off into another job, but he just took one bite much, specifically the acquisition of ABN Amro at the top of the market, and that was the end of RBS as a viable business, and nearly the end of UK PLC as well.

RBS made itself too big to fail, by buying up other companies (which it didn't even bother to integrate into its main business) and was duly bailed out accordingly.

The average RBS employee, buying up the bank's shares through savings schemes, was left with nothing. Fred of course had been so well-paid nothing even Parliament could do would leave him other than fabulously wealthy.

His replacement set about reversing this, selling off assets bought by Fred, and sacking staff.

as far as why are some people's time, skill, expertise worth more than others it would be any of :

scarcity of a particular skill that a person has - most people can do a minimum wage job whereas my brother is a doctor of physics a lot less can do that

vastness of experience - a ceo is not likely to be an 18 yr old with no experience - they will usually have major experience

burden of responsibility - a doctor or ceo have a much heavier burden of responsibility with lives and companies depending on your performance compared to for example a person working in a paper shop and penalty for mistakes is higher

level of skill/education required and time put into building knowledge and skills

value or perceived value of output

the value for money - in some companies one individual may save the company or make the company millions in profit

dedication and loyalty - eg at any level a longer serving and reliable member of staff is worth more to a company

and probably many more factors - however on a scale many jobs are incomparable in salary and then when you look at Hollywood and sports it goes off the scale - but for example in Hollywood an actor or director can be creating billions in profit so although it is an extreme salary it is in line with their "value for money".

unfortunately with any system human nature means you will get manipulative, greedy, selfish and lazy fuckers who will take what they can and want to by whatever means possible.

communism at it's core is a lovely ideology but it is human nature that fucks it up -generally you end up with a corrupt elite with total power.

imo capitalism is closer to nature's way of doing things and socialism is a nice inbetween and balanced view - but all are prone to corruption as again twats get in the way - at all levels from government through to normal folk and down to the criminal no social set is free from greedy/lazy/selfish people but those at a higher level will have a higher impact affecting more people or affecting people in a more disturbing way eg high level politicians or high level criminals.

it's the human condition and don't we come in an amazing array of cultures, ideologies, personalities etc some people are amazing in many ways, some people live amazing lives, some have horrific challenges but you have to take the bad with the good.

and someone in a very generic low paid role gets no say in working for a certain price either. We have a system in which people are taking full time jobs that don't provide a living wage and getting topped up by the government....is this a success for capitalism?

The problem is we no longer live in a capitalist society. When I started my low paid job after school it was with the expectation that as I learnt more and became multiskilled my value would go up and I would get incrementations in my pay.
Then they brought in minimum wage and my less experienced colleagues all received a pay rise which brought their pay into line with mine.
Then the cost of living increased in line with minimum wage. I effectively became worse off.
Then they introduced tax credits, so with dh and I both working full time we had to be subsidised.
Now I work part time and am no worse off.
In a capitalist country we would be rewarded for working and it would be worth our while.
Sorry for rant I think I should stop now.

I agree we shouldn't have people in full time work needing to be subsidised by benefits, and certainly not as many as we do have. But littledrummer has a very valid point about the impact of "interference" on the wage market. Looking at the picture overall (rather than for specific individuals), have tax credits actually helped, or are they part of the problem?

That's not saying I'm opposed to the concept of a minimum wage btw, before anyone bites my head of

but until global salaries are equal then operating in a global community you can't set a livable minimum wage imo - as globally we can't compete cost per unit wise with countries with a lower salary with lower cost of living as well as lower standards of welfare requirements - and a lot of our companies are operating globally - I think we are all suffering due to globalisation - it will take a long time to settle down.

You can't have all economies growing at a higher rate than the global population especially when looking at potential over population and stretched resources - when you have some African and eastern economies growing at 8-10% we can't expect to continue growing - it could eventually level out but I think pain will be felt all round as it happens and hopefully if it can happen peacefully.

I'd be interested to know if those saying that CEO is a job anyone can do well/success is down to luck etc, actually know any or have worked at a senior level?

I know a lot and they are hard working, charismatic and exceptional at several things (May be analysis, deal making, communication, leadership, strategy, or any number of things). These people generally create substantial value for the company and create jobs. They are worth their salaries and absolutely work in a global workplace/market.

"until global salaries are equal"

Global salaries can't be equal because many factors (like living costs, growth and prices) are not equal in every country.

crescent - re "trade and business does not need usury. capitalism as a system though, cannot function without usury."

That sentence makes no sense unless you are using the word 'usury' in place of 'interest'.

Hermione

The answer to that is likely to be 'no'. Granted I've worked with some halfwit directors but in the main there's a reason they get to where they are and it's not a job for everyone.

Re the OP though, people are worth different amounts of money because of their skills and what people are prepared to pay for them. Is this really difficult to understand? Banking is a bit of an odd one but I think it's easier when you consider things like medicine/medical, engineering, building/architecture, entertainment etc.

Not everyone had the skills of Isambard Kingdom Brunel and so the Clifton suspension bridge was probably worth the fame and fortune that came from its design.

What price to you put on a surgeon that saves the life of a loved one? Is 6 hours under the knife worth the same amount as the cleaner that makes the theatre a clean and safe place to work in?