Lies Your Father Told You - THE CEO PAY LIE

CEOs get paid commiserate with their experience and competence. It takes a unique and rare set of skills to manage a successful multi-national conglomerate so of course they get paid millions and billions in cash and other compensation.

That's a lie. It doesn't take any skill to operate in a favorable market. I could do it. You could do it. All you have to do is hire really good people and require them to provide you with good information. And that isn't hard to do. It's not hard to make decisions when very smart people work for you and are paid help you and want desperately to impress.

It doesn't require that much more skill to operate in a less favorable market. Any first year MBA could do it. Because this is what happens: There are very few ways to reduce expenses. The most obvious way, the glaringly, transparently obvious way is to reduce variable expenses. The expenses below fixed expenses. Guess where the non-revenue driver salaries are, where hourly employees fall, where secretaries, clerks, maintenance, facilities workers fall? That's right. Payroll expenses for non-professionals are usually the largest single variable expense item on the balance sheet and the easiest to experiment with. Guess what usually happens when revenues fall? Yep, that's right. Non-professionals get the ax, or are asked to take pay and/or benefit cuts. This is so asinine. So insane. You know the person who is the LEAST responsible for falling stock prices? The janitor. The administrative assistant. They have nothing to do with company profits. The people who should fired, who are responsible, are above the line, so they never get fired.

The few times when business professionals have actually creatively developed new ways to make money or save money are so few and far between, entire schools of thought, six month-long seminars, books, degrees are given to them (JIT, SIGMA, ect.).

In general business executives are not creative, particularly intelligent or talented people. So they compensate for their lack with degrees from prestigious universities, friendships with well-connected people, aggressive and ruthless tactics. They inflate salaries of entry-level executives for no other reason but to show the extent of their power, and they inflate the salaries of top executives by sitting on each others' boards and bidding up each others' salaries as if money were the only measure of anyone's worth. Which it is. No one can paint, or sing, or nurture, write, teach, or golf. All they can do is charge a premium for a marginal product. That's what they get paid big bucks for.

They sell shit. That's it. They sell shit, and if the market is saturated, they sell new and improved shit, and if that market is saturated they buy some other company that sells another kind of shit and sell that. When we get sick of their shit here, they start selling shit overseas. If they get away with overcharging for their shit for too long, they use that money to make it possible to sell the same shit for more money or to stop other people from selling better shit. They are shitty people who wallow in shit. No one deserves to get paid a million dollars for selling bags of shit.

Business is a cesspool.

Links: MSNBC Live with Cenk Ungyr June 21 2001