Jay Chatterjee

Freelance Writer & Researcher

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Will a cap on (outrageous) salaries & executive benefits promote growth of meritocracy in any creative profession, including research?

I was reading the book, "Heraclitean Fire: Sketches from a Life Before Nature" by famous biologist, Erwin Chargaff and then started another book, "The Price of Admission" by Daniel Golden. My personal experience & information from various sources (including those two books) make me think that American higher education and research is increasingly being dominated by mediocrity since late 70s. The rise of mediocrity in higher education has affected applied research as well, as the supply or assembly line being the same. It has a huge impact on quality of lives for people all over the world; mainly in developed world as higher income now need to come from better products & technology.
Many wrongly think that throwing more money in higher education & research (in form of both more grants and higher salaries) will attract more talented, local candidates who are able to innovate and invent.
Almost all creative professions will dry up without suitable socio-economic environment. People will not dare to play violin for a career, but fight for medical or management or computer science positions!
I think financial attraction towards few professions is taking away many able talents away. There should be a level playing field among different professions and among hierarchy within the same profession as well.
Will it not be a better idea to have a legally binding cap on outrageous salaries and executive benefits for all top executives in big private companies? I am sure that it will not cause any serious attrition of talents. Creative ego, professional success and institutional power (fame) are the most important driving forces for talented people. But such cap will help distributing the money to many other projects and professions (like education and research). Focus on short term gain and overcrowding of mediocre people are some of the important reasons for our current problem in global economy and stagnation of social mobility.

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    Nov 3 2011: you need to look at peoples motivations.

    I believe that this explains my point: http://www.youtube.com/watch?v=u6XAPnuFjJc
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    Oct 15 2011: In some cases something like a meritocracy like you describe might be worth considering.

    For example, American professional sports athletes. Their salaries are based on what the market will pay, but the market has been shrunk to a very small percentage of those who would otherwise want to go but are "outbid" by the rich, corporations, etc.

    Certain financial salaries should be controlled as a deterrent to corruption and greed.

    Certain sectors of the entertainment industry ("movie stars") entertainment industry could also be brought into line to reflect their true worth.

    Companies that produce pharmaceuticals should be monitored/regulated to insure they are not price gauging.

    In short, where greed of a few interferes with pursuit of happiness of many.
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      Oct 16 2011: Right you are.
      In short, after a long survey and research I realized that higher remuneration or salary/benefit does NOT increase either productivity or performance of any person, in any profession. The performance vs remuneration (salary+benefit) curve is like a typical enzymatic activity curve- it increases till certain level and then reach a plateau where salary/benefit does not increase with increasing remuneration. I am still not sure if that (productivity/efficiency) in fact decreases with increasing remuneration (after a threshold value).
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    Oct 15 2011: Salaries etc. are really controlled by the free market. Maybe we could reframe the question to ask should salaries be set by the market value of the work done or should some governmental body decide the value of the work done. I for one would not like to have a brain surgeon who is willing to be paid minimum wage because some mindless government body decided that was the going rate. I have to say that most academic research is hard to place a value on. Should an english professor get high pay to write a research paper on how Mark Twain felt during his middle age years or should an physics professor get higher pay when exploring black holes as a method of transportation. You could say both are of very little market value to society as a whole yet, they add to our understanding of the world around us. Mediocre people get jobs because of social engineering. When governments interfere in the market place and force hiring of people based on race, color, sex or other perceived social injustices they interfere with the quality control that an employer has. An employer may be forced to higher someone of lower quality to meet a government quota for a particular gender goal of social engineering. Education can be said to be dummed down due to social engineering in the classroom. Some but not all by any means of special ed students are required by social engineering law to be present in the classroom and they must pass the class regardless of the work they turn in. This lowers the expectations a teacher can have for the class as a whole. In some cases they actually are terribly disruptive to the classroom environment and the teacher spends more time of classroom discipline and management than on teaching.
    Capping wages will not fix the trend unless there is a national or international body that sets the wages for the world and can enforce it. Also,economic differences between countries could make a wage more lucrative in one country than another but the impact of living there
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      Oct 16 2011: You opened an interesting line of discussion in the issue I raised. I was expecting it. Now let's consider what you proposed.
      Paying too might salary to a brain surgeon or price for a drug or treatment does NOT guarantee better service. American health care quality (leave alone accessibility to many common Americans) is no way better than any developed country, if not worse. In fact American quality of basic treatment, for general physicians (for common diseases like cold, fever etc) is far worse than that of many developing countries, e.g Cuba. Average life expectancy in Cuba is better than that of US!
      I use a skin ointment that I can buy at $ 0.52 from India from the same manufacture while the same drug I buy in US with $126, (yes about 250 times costlier). We need to remember that the company does not sale the drug without profit or out of charity in India. A NMR brain scan in Japan costs about $96 while the same scan with same machine will cost a whooping $1300 in US. Expertise of the doctor and technician is no less in Japan either. The "socialized" health care as in UK or Canada does not sacrifice quality of health care in those countries ( I do not care what many lobbyists in US say). The average cost of health care is THE highest in US (with ~ $13,00o/year) the 2nd & next is about half (in The Netherlands). But the quality of care is better in any Scandinavia country, including Netherlands.
      Government run public transport in many West European countries like Switzerland is far better than US.
      Here consolidation of wealth is at its highest in recent time in recorded history.Many US industries and businesses import cheap, easily exploitable foreign manpower to do routine, mundane jobs that does not need great talen (e.g data entry operator, programmer) only to maximize personal profit of few top executives. They conveniently forget their social responsibility to exploit the huge market of US.
      The Duty of an government is to provide level playing field
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    Oct 12 2011: Here I am not questioning the leadership challenge, institutional power those industry captains or executives enjoy. i fully support that. Do they enjoy those challenges & power more than that outrageous income? The limit I am proposing is also very high (in common sense), say $500,00 annually (more than what US president makes). That limit can be debated but why can not we limit salary-benefit cap on paid employees (not shareholders).
    I am only objecting to excessively high salary that put more pressure on everyone else in the company and on the society as a whole.
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    Oct 12 2011: In many cases we realized that true "open market" economy is as Utopian as Marxism, hardly exist in reality. It became clearer during the recent global financial meltdown, manipulation of almost every section of economy by the big players; be it banking or oil or housing/real estate or education or research. The system works far efficiently with smaller or medium players, but not so well when big fishes get involved, who have the money and power to influence national policies. No wonder the big pharma companies spend more on lobbying and advertisement than developing new drugs or treatment.
    There was an excellent interview of Jeffrey D. Sachs (the Director of The Earth Institute, Columbia University) in NPR/PBS TV (Charlie Rose show) where he said that globalization was known to create more division or gap between the rich and the poor. But we expected that national governments will minimize that gap and maintain the stability of the system. That did not happen. Almost all governments are helping to widen that gap of wealth distribution more and it has severe consequences.
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    Oct 12 2011: No, they'll just bitch and whine and figure out other ways to pay themselves the money.

    Smart people without ethics are smart people without ethics. Trust me, if I had no ethical base and if I hadn't set my own very specific set of parameters on how I am willing to make my money, Enron would have looked like child's play.

    Part of the reason we didn't follow through with taking our company through a public offering was learning just what happens to investors when they are being "helped" by their brokers. One tiny little element of it involved buying a large enough block of stock that they would deliberate sell in two steps - first at the initial offering price, and then six or so months later, they will call you and offer another block of stock at a much higher price - regardless of whether it had objectively gone up in value. This is one minor component of the overall game.

    People trust their brokers and they're stupid for doing so.
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      Oct 12 2011: Those big businesses and its executives are also chocking smaller ventures, new inventions, cheaper solutions. After the recent financial meltdown, market has been more consolidated, bonuses/benefits for top executives are more outrageous than before.
      Ethics and morality in almost every profession is a major casualty, in business, in research, in education, in politics.
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        Oct 12 2011: During the Great and Wonderful Tech Bubble I watched several friends take deals from venture caps that came with the extremely unfortunate strings known as "and you must take our C-suite team".

        Said C-suite team invariably robbed the company blind, drove it into the dirt, then gave themselves a nice parting package and moved onto the next company like a plague of locusts.

        Venture capital seemed like a pretense for handing their buddies a bunch of cash in a surreptitious way - that ended up killing some great ideas.

        Smart people. No ethics.
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          Oct 13 2011: Such unethical practice has huge consequences on job market, quality of living, family lives of common employees and the bigger society. The greed of few people, mostly the top executives force fewer employees to work harder, forcefully fire many employees (who earned peanuts as compared to the top management), force the remaining employees work over time and weekends. It has a direct consequences on job market (rise of unemployment), family values (parents have less time for families) and increase in broken families.
          One great example is Mark Hurd , the ex-CEO of famous HP. He increased his own salary (along with few other top executives) few more millions, while fired more than 6000 common employees in just few months. I know many such examples, from personal experience as well.

          Consolidation of market (in Banking, and many other sector) not only help increasing profit margin for the company but choked smaller businesses (who employ majority in countries like US, chocked innovation and worked against the spirit of free-market. Those big companies who give excessive salaries to its executives employ only 20% of US work force.
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        Oct 13 2011: Which ought to tell you that they will just find new channels to exploit and the legislation would serve no purpose.
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          Oct 13 2011: Yes, they will try and most probably will succeed, at least for short term. But we have to revert back with something new or implement the existing one in true spirit. Remaining sane people in the world need to be more (or at least equally) aggressive to save our planet and our own lives. We must not let those people get away with whatever they want.
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    Oct 12 2011: what is "outrageous" salary? why would any salary be "outrageous"?
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      Oct 12 2011: Here we are talking about million (USD) salary, not thousands. No job can justify that millions of $ salary. US president gets only $ 400,000, US supreme court justice gets ~ $ 223,500. I do not think any private company executive is more busy or having more responsibility!
      On the other hand judge Judy (of a popular soap opera) get about $ 45 million a year. And according to many Broadway analysts about 90% of excellent artists hardly get decent income/salary to survive.
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        Oct 12 2011: can you prove that? i believe if a person manages an entry to a new market well, and thus increases company profit with 100million, it is absolutely just to pay him 2million. or even 10. or if a person invents a new method to extract lithium from sea water, and cuts lithium prices by 15%, this person deserves any money up to the 15% of the total lithium production, which can be billions. why would that be outrageous?
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          Oct 12 2011: The first Question we can ask, who did that innovation/invension? Most of the time (not all though), the actual researcher is different than the person/company using/employing him. Even if we accept that (as happen in few occasions) the person invented a great product or technology, it does not automatically give him the right to offer himself the salary of millions. He can surely earn from his share in the company he established with his invented product/technology. Here I am not talking about earnings from owning, i.e shareholding, a company but executive salaries and benefits.
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        Oct 12 2011: we cannot analyze a situation by denying it. it is certainly possible that someone invents something, so lets assume a case in which a person did invent something.

        there is no "right" to "offer himself" a sum. nobody can give himself anything, it does not make sense. and it is only up to me what i offer to someone else. if i want a person to tell me something, i can offer a thousand, a million or a trillion dollar, provided that i have it. or i can offer 10% of any revenue i make. why not? it is my revenue, i make it with my own tools and the knowledge the inventor provided me. why would anyone step up and say: no, it is unjust that you use this person's invention, and increase revenue, and pay that person 500 million dollars. on what grounds?

        or another example. in a fierce rivalrous competition with another company, i'm assigned to reorganize production to save on logistic costs. i come up with smart solutions, and i manage to cut costs by 100 million a year. that allows the company to cut prices by 5%. in return, i demand 5 million dollars. exactly who is unethical here? what moral rule we broke?
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          Oct 12 2011: That concept of "my" is a really troubling in many so-called market driven society. If I have money, do I have or should I have the right to waste any resource (e.g water, food etc) I can buy? If "my" action has a bigger consequences than I need to follow some norms or laws. that's why we invented laws.
          I think it is hard for many people in American or few other market-economy to understand or appreciate that the concept of "my" also have or should have its limit. Such a concept is there in few other democratic, capitalist countries like Germany.

          In your specific case, you surely can offer company share, partnership/ownership if you think that contribution is great enough.
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          Oct 12 2011: It also raises the question, "if I have the ability, do I have the right to get whatever I like"? In other terms, if I am intelligent and hard working enough how much right do I have to cheat/trick/bully others to get whatever I want! If you extend that logic to country level, If a powerful and innovative country (e.g USA) has the ability, does it give it the right to invade or do "business" with least powerful, underdeveloped countries to rob its resources, dump waste products on that country in guise of "development"?
          Colonialism started with that logic. Even famous British PM, Churchill justified British invasion and rule in India claiming that British are the better, more civilized people to keep the country intact and civilized!
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        Oct 12 2011: why would "my" be troubling? you don't have stuff? you don't think that your stuff is yours, and you are the only one to decide what to do with it? what consequences could it have? i surely don't have the right to damage other people's stuff or body, even by destroying their natural environment. this is not allowed. but as long as i don't damage anything, what other restrictions should there be? why would ownership be troubling per se?

        and what that whole line of thought has got to do with income? there must be limitations what can i do with my stuff, and the nature of those limitations is open to debate. but how and why would this affect whether i can earn the money? how can i possibly hurt anyone by earning money? on what grounds you assume that i will use my money for bad things?

        as far as i know, colonialism was done with weapons, not money. but even if it would have happened using money, it is still does not make money evil. having a lot of money does not make you colonialize countries. isn't it a form of apologism for colonialism? it sounds like those who actively participated in robbing and killing overseas are not guilty, because they acted under the influence of a drug called money. i refuse that notion. we can't blame any other thing or person than them. they were the ones wielding guns and swords. they ordered other people to shoot and loot. only them, and not any circumstances are guilty. stop looking for excuses.
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          Oct 12 2011: It is not the question of earning or income. It is the question of excessive of that which affect general society and majority other people. Of course we do have and should have the right to decide what we do with our own wealth. But that does not, rather should not allow us to do whatever we want. If I can afford, I must not be allowed to waste water or food, particularly in a impoverished society. Imagine a rich person in a country like India is using swimming pool and throwing that much water everyday, while supply of clean water and per capita water consumption is dangerously low in cities like Delhi or Mumbai. The same is true in many issues in US. I purchased a house with some land. That piece of land has few trees. Those trees are in "MY" property, yet I am not allowed to cut or do whatever I like with those trees. It is my social obligation or, one can say, collective responsibility to maintain a healthy neighborhood.
          When your actions negatively affect majority of other people, then such activities need to be regulated.
          Many colonialism was started in guise of business (or money). British started its colonial rule in Indian subcontinent in guise of a business establishment, "East India Company" by paying money to the then Muslim emperors (who themselves were invaders).
          Money itself not be evil, but some of its uses are.

          There was a nice talk by Ex-British PM, Tony Blair where he said something like this, "money was invented to quantify happiness in ancient time but now even economists have forgotten the basic objective and we all are busy in measuring and maximizing money and most of the time it translate into sacrificing happiness”. That was published in a article from a beautiful series of articles in BBC that described "Science of happiness" and "Politics of happiness".
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        Oct 12 2011: well, the title of the conversation is about salary cap. how can that be not the question of earning and income? if this conversation is about something else, i'm at the wrong place, because i'm talking about salary caps all the time.

        water and food is plenty in the developed world, and could be plenty in the rest of the world too, as soon as they advance to western level. there is no need to limit one's food and water usage. the goal is to get that development, not to ration food. in fact, amount of food per capita is rising in india, so i would not worry about that. india eliminated famines in the last decades. that's quite a feat.

        also bear in mind that if a person has money, it means he already gave something. if i have X amount of money in the bank, it means that i worked more than i consumed, by X. so if i consume all my X money, i'm still just consuming as much as i deserve, i already compensated for it. if you want to take that away, you are effectively robbing the fruits of my previous labor.
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          Oct 13 2011: You are exactly right to interpret the topic of this discussion but totally missed the point. It is salary cap.
          Your perception that, "water and food is plenty in the developed world, and could be plenty in the rest of the world too" is completely wrong. According to many reports, we already have passed the level of "healthy" sustainability of this planet. One report (from WWF: http://www.worldwildlife.org/who/media/press/2008/WWFPresitem10439.html) suggests that we already need 1.2 earth to sustain just our current population.
          After massive destruction of its natural resources and pollution, China has reached only $ 4000 per capita GDP, while that in US is $ 42,000. Now you can imagine if other developing countries want to achieve the same level of "development" as US, what will happen to the world. It is high time we need to change the model of development" and shift to Steady-state economy and de-growth models of development.
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          Oct 13 2011: If you want to know more what I mean by "Steady-state economy and de-growth models of development", you can go through this article- http://jaychatterjee.blogspot.com/2010/10/de-growth-model-of-development.html
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        Oct 13 2011: such studies does not count scientific progress. in the last few decades, population multiplied, but the land use to make food actually shrank. the world population will most likely top at 9 billion. if we manage to double the output of land again, we are OK to feed the world with zero increase in total land usage.
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          Oct 13 2011: I will suggest you to read that blog ("Steady-state economy and de-growth models of development") before you comment. There are enough research and analysis to suggest that. I never said, in that blog, that total food production need to be stagnant. Just read it, try to understand that and then comment.
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        Oct 13 2011: so my argument is that they disregard progress. then you come back with an article that considers two options, the "steady-state economy" and the "de-growth" (i suppose it is also known as shrinking) model. yes, that's what i'm talking about. these are not realistic models. GDP in terms of stuff is growing exponentially since the beginning of history. it has no reason to stop.

        instead, i recommend you another blog that pays attention to facts:

        http://www.rationaloptimist.com/blog
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          Oct 14 2011: You are wrong again. It is NOT "shrinking model". there I quote from reputed research journals like Nature, not any irreverent website. Many eminent, even Noble prize winning Economists support that "state-state" economic model. GDP does NOT reflect true, representative picture of a National Economy, for average people. There are enough reasons to shift our parameters (from GDP) to judge national economics.
          The strength of a chain is and should be measured by the strength of its weakest links, not the strongest ones, as done currently for national economics and many economic policies.
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        Oct 14 2011: you don't read the article you link to? why do you post a link, and then refer to other articles? make up your mind already. one the article you put here used the exact phrases as i cited, "steady" and "de-growth". this is wrong. the fact that the GDP is growing is blatantly obvious, you don't need statistics for that. 100 years ago in europe, there was no healthcare to most people, they lived in small houses with little heating, they worked 10-12 hours a day, 7 days a week to get poor quality food. today, we talk over the internet, use smart phones, drive cars, live in castles (compared to 1900 standards) with tap water, heating, electricity, sanitation. 300 years ago there were no machines. today machines do everything. that is GDP growth. with less effort, we produce more goods, because we have better tools (capital).


        btw the blog i gave you also cites scientific research.
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        Oct 14 2011: yeah, it is kind of ridiculous. we were proud of our progress that ended child labor, plagues and suffering, and enabled us to live a full life without worrying about food. and when governments manage to stop that growth for a few years, suddenly organizations start to praise "steady state", "de-growth" and "social growth as opposed to economic growth". yeah, not suspicious at all.

        the fact is that "economic" growth reduced child mortality, increased life length and quality, gave us opportunities we never even dreamed of, gave us education, knowledge, understanding. reduced aggression, wars. increased cooperation. what are these if not "social growth"?? economic growth IS social growth. because economy is nothing else than our joint effort to make our lives better.
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          Oct 14 2011: Either you are deliberately acting very naively or could not understand what is meant by "economic" development of a country. For your kind information, economic development is not the development for few people when judged in a social or country context, not in a democratic set up.

          Your vague idea that, "economic growth IS social growth" is also wrong. Just for your info, "there is no link between economic progress and hunger. Prof Shenggen Fan, director general of IFPRI said," Economic growth is not necessarily associated with poverty reduction": http://articles.timesofindia.indiatimes.com/2010-12-30/india/28257209_1_global-hunger-index-food-bowl-ifpri .
          All those attributes you mentioned (growth reduced child mortality, increased life length blah, blah..) are NOT gong to be negatively affected by the steady state economy. In fact those will be greatly benefited and reach many more people that your GDP based 'development" could not reach or failing for so many people.
          Just read the articles (I do not think you have read any of those articles or understood) and then put forward your points- point-wise.
  • Oct 12 2011: "Will it not be a better idea to have a legally binding cap on outrageous salaries and executive benefits for all top executives in big private companies?"

    No.

    Who defines "outrageous" and "big." What happens when inflation creates an environment when your previously defined outrageous is no longer outrageous. Attempts to micromanage the economy tend to be more detrimental than good.
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      Oct 13 2011: "previously defined outrageous" still remain the same outrageous as all other people are facing the same inflation.
      Outrageous is not any absolute term, but a relative one.
  • Oct 11 2011: Should the government regulate salaries and perks for executives? No. The industry should regulate itself. Winning one of these positions generally involves a long progressive career performance record. This sort of behavior deserves to be rewarded in a market economy. Should there be an increased corporate responsibility to workers so that this wealth is better distributed? Probably. Corporations should have to meet strict and conservative government regulations for employee benefits such as retirement plans and health care.

    Mediocrity is a problem, but its roots are more a result of a political acceptance of 'best effort' vs 'best'. Getting a position in a high dollar field involves some sacrifice, some risk, and you have to keep up with technology, standards, and industry. It is not a free ride and very competitive. Deciding in college to pursue a career path that is a personal 'want to do' subject or curriculum is typically a conscious decision for personal satisfaction rather than financial rewards. This is absolutely a reasonable choice if you believe long term happiness can only be found by working in this career path. How much you earn will be dictated by your talent, work ethic, and the market price value of your skills. Those that take on a career choice based solely on expected financial rewards often find they lose motivation and have a hollow feeling about job choice. Ideally you might strike a balance between what you 'want to do' and what you 'must do' to earn enough to afford a desired lifestyle. This involves some investigation, market surveying, and speculative risk with your career choice. Hopefully, there will be counselors and parents along the way to help with your choice. Once a choice is made, you are stuck with it, one way or another, unless you decide to do the work to change your circumstances. Society's tolerance for mediocrity is no excuse for a person not to try and excel. Work is the difference between mediocrity and excellence.
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      Oct 12 2011: In ideal term, what you say is right. But in reality that is far from truth, as I think. Salary and other benefits, even in the most competitive field is not always based on one's talent or performance. That is more true in any profession that need creativity and/or constantly questioning the existing norms / rules. That promote innovation and invention.
      But more and more academic and corporate culture promote "agree-ability" than constant evaluation or constructive criticism. That is becoming a rule, rather than exception, in higher education and research. That is reflected in the quality of products coming our from such people, be in form of a car or new medicine or a new technology. Publication became the main goal for researchers. Anything else is just a byproduct. In that sense developing new drugs or technology is not the main goal for majority (if not all) of publicly funded research projects, although all officially claim otherwise. Probably that's why very few children of scientists join research for a career, as they are fortunate enough to know the "reality" of "research" at an early stage.

      The ability to judge potential talents who can generate revenue (for the institution or company) by innovation or invention has gradually evaporated from many typical selection committees. Any sign of disagreement, opposition is crushed ruthlessly, at the very beginning. Such people are branded as “trouble makers”, than to analyse the problem and solve it. Majority are not fortunate enough to counter such forces as Daniel Shechtman, the Nobel prize winner in Chemistry this year.
  • Oct 11 2011: Hi Jayanta,

    You make an interesting point that there should be a level playing field among professions, although I am not sure that capping salaries will create anything more than animosity. From my experience, the most gifted and useful people in a field are there not because they are paid well, but because they absolutely love doing what they do. No self respecting violinist can sit in a cubicle all day when they want to play symphonies!
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      Oct 12 2011: It is really hard for a violinist to sit in a cubicle all day and crunch numbers, as a bank executive. But that is neither impossible nor impractical. In less developed countries like India with limited career option, many talents leave their own field and are forced to join IT industry or take science/engineering/medicine as a career. Many great potential musicians, athlete, even scientists join the IT bandwagon and spend whole day in a small cubicle doing (mostly) routine and boring maintenance job. After all they too have families to support. That culture is arriving fast in many developed countries.
      High salary attract real talents less, but mediocre people more. Talented people will join anyway. A potential leader of a company or a country will never be content with any other position but at a position that makes policies even one give them more money to be a clerk or customer care rep! If we can limit the salary and executive benefits for top executives of big companies, it will allow those otherwise mediocre people to understand what they are good at and join that profession, than to crowd a specific job. It will not only benefit real talents in that specific field to flourish but develop other fields as well.
      In case of India, IT-mania overshadowed many real talents in IT or Computer science there while it is becoming harder to get a decent science teacher in any city school these days.
      • Oct 12 2011: The problem with the scheme that you are proposing is that you would have to regulate more than just "Salary and executive benefits for top executives of big companies". You are talking about people getting lots of jobs in IT in India, but that would not be curbed by regulating salaries on Executive. You end up having to regulate every salary for every job in the economy, and that is frankly impossible to do in anything close to an effective manner. Also, because there is no way an international agreement can be made for such a plan, the end result would be corporations with limits on their executive salaries moving all operations out of the country that limits them.
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          Oct 12 2011: I think if we can place a cap on salaries and benefits (as many European countries proposed after recent financial meltdown), the companies will regulate themselves depending on the cap. Yes, it will not be much realistic for one single country to implement it. It need a global effort. Probably should be done through UN.
          I can give you one more example. The average annual salary for a postdoctoral researcher (the backbone of US research industry, in universities and private companies) in plant biotechnology is ~ $28,000. Now consider the average loan for a US student to finish his PhD (in biology, excepting medical science) is $30,000. There is not much sense for a general student to pursue the risky research career with a naive promise of getting $80,000 at the age of 45. Only 10-14% postdoctoral staff get those academic faculty positions. Intelligent and more practical students leave research at the very early stage of their career, even if they love doing original research. That leaves the field more open to mediocre and/or foreign students, mostly from under-developed countries like China and India, where majority are "scientist", not by choice but as compulsion. It is immaterial to say that there are huge money blocked to pay huge salaries and benefits for many university administrators, bureaucrats, private company executives.
          It also affect the quality of higher education as more and more universities and also many companies are taking low paying "scientists", technicians, temporary faculty (even PhD students are used) to do routine teaching and research to pave the way for higher salary for few selected people. It also does affect price of drugs and many other products.