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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.
David Chitty
I believe that this explains my point: http://www.youtube.com/watch?v=u6XAPnuFjJc
Jay Chatterjee
Jim Moonan 30+
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.
Jay Chatterjee
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).
James Turner 10+
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
Jay Chatterjee
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
Jay Chatterjee
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.
Jay Chatterjee
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.
Gisela McKay 30+
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.
Jay Chatterjee
Ethics and morality in almost every profession is a major casualty, in business, in research, in education, in politics.
Gisela McKay 30+
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.
Jay Chatterjee
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.
Gisela McKay 30+
Jay Chatterjee
Krisztián Pintér 200+
Jay Chatterjee
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.
Krisztián Pintér 200+
Jay Chatterjee
Krisztián Pintér 200+
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?
Jay Chatterjee
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.
Jay Chatterjee
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!
Krisztián Pintér 200+
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.
Jay Chatterjee
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".
Krisztián Pintér 200+
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.
Jay Chatterjee
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.
Jay Chatterjee
Krisztián Pintér 200+
Jay Chatterjee
Krisztián Pintér 200+
instead, i recommend you another blog that pays attention to facts:
http://www.rationaloptimist.com/blog
Jay Chatterjee
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.
Krisztián Pintér 200+
btw the blog i gave you also cites scientific research.
Jay Chatterjee
One more try from me. Just read this Editorial from one of the most respected research journal, Nature.
"It is time to abandon GDP as the overriding measure of social development and economic health". Nature 463, 849-850 (18 February 2010) . http://www.nature.com/nature/journal/v463/n7283/full/463849b.html
You also can read the excellent BBC article "politics of happiness": http://news.bbc.co.uk/2/hi/programmes/happiness_formula/4809828.stm
and then "The science of happiness": http://news.bbc.co.uk/2/hi/programmes/happiness_formula/4783836.stm
Krisztián Pintér 200+
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.
Jay Chatterjee
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.
Bob Shingles 10+
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.
Jay Chatterjee
Outrageous is not any absolute term, but a relative one.
Robert Galway 20+
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.
Jay Chatterjee
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.
John Potocny
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!
Jay Chatterjee
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.
John Potocny
Jay Chatterjee
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.