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Why is it that every time you address economic inequality you get accused of being a socialist?

I have been saying for many years that senior executive salary packages are excessive in comparison to the value they bring to companies.

I do not want some major left uprising, merely a re- setting of what share holders consider reasonable.

I personally feel these payments should reflect the value of employees to the company.

A base salary, a percentage of the average salary paid to all workers (eg 150% of average) then bonus payments based on increased market share, increased profitability or increased share value. In other words large salary based on performance and value to shareholders.

Like many share holders I am horrified at massive salary payments to individuals that do not bring value to the enterprise.

waynus 7 Apr 19
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6

There are only two classes of individuals that should legitimately be concerned about senior executive compensation in my opinion.

The first class is the senior executive.

The second class is the board of directors or voting shareholders(depending on how your company is structured) that hired the senior executive and produced the contract (signed by the newly hired senior executive) that detailed the senior executive's compensation package.

That's it! If you are not one of those two classes, then you should do some serious soul searching and find out why it is that you care so much about what they earn. Yes I said earn. If being a senior executive was easy, then anyone could do it. If that were the case I would highly encourage you to apply for the position. The board of directors or voting shareholders know what they are doing when they make these contracts. They know that you get what you pay for when it comes to attracting competent senior executives.

If your senior executive is not producing the promised gains, or what their resume says they should be achieving, and your shares give you a vote; I would get off this Internet forum post-haste and campaign your fellow voting shareholders to buy that senior executive's contract out quickly before they do any further damage. Alternatively if their contract doesn't allow for an early buy out, then campaign your fellow voting shareholders to not renew their contract when it comes up again.

If your shares do not give you a vote, and you still feel this strongly about how the company is run, then I would suggest that you sell your shares immediately and invest your money in another company that runs their business in a way that you agree with.

In any case, complaining on an Internet forum about economic inequality reeks of the class-envy based philosophy of Marxism. My guess is that right or wrong, this is why people reading your ideas label you a socialist.

I am a shareholder and my concern is in that capacity. I

@waynus
Apparently you do not hold enough shares to make your vote felt.

@Bay0Wulf As an individual no. It is still valid to attempt to persuade other shareholders of the merit of my position. This in my opinion is not Socialism.

@waynus
I don’t think that what you are advocating is necessarily “Socialism” though it IS “Anti-Capitalism” and further, it IS Bad Business Practices.
If a company follows your script and refuses to pay the PRICE required to attract and retain people who are the Top of Their Discipline ... it will simply be another “also ran” ... another “second rate” entity who will be unable to compete in the Highest Strata of Whatever Industry they’re in.
That’s fine as long as You and Your Fellow Shareholders are willing to continue to support a lackadaisical entity.
Most shareholders are not so ... altruistic.
In MY portfolio I will not accept ANY lackadaisical return or response and I would pull my retirement funds (401k) from ANY Investment Company that turned in a lackadaisical performance.

As much as I agree with your sentiment, I will point out that there is absolutely a "glass ceiling" for people to be able to (or not) rise through to get to the level to be recognized for doing good enough work to move to the boardroom level.
If you don't go to the right school, belong to the right country club, city club, know the right people, and (moreover) they know you, and also respect you, you aren't going to move into the boardroom without a whole lot more work (if at all) .

This isn't a color or gender thing - this is a class thing - and it boils back to Ivy League in the case of the Fortune 500 and/or to other various schools for smaller businesses. In order to really make money if you grew up on the wrong side of the tracks or went to public university because you paid your own way instead of mommy and daddy buying your way in, you have an almost insurmountable climb compared to some frat kid who is a legacy and daddy or grandpa paved the way in.

Just sayin.

I will temporarily buy your premise and agree that there is a "glass ceiling" for the sake of discussion. Even though I disagree with this defeatist line of thought, if this was really as widespread and prevalent as you suggest, that would create such a power vacuum at the top of these companies, due to gross incompetence of their senior management.

If these senior executives only got their positions due to a secret handshake and not through their abilities and resume, their companies wouldn't survive a fiscal year. And if the executive board or shareholders signed some suicide pact and kept to this poor selection decision, they would deserve to lose their fortunes for thinking that the only requirement for a senior executive was whose crotch that they got yanked out of as a baby.

Out of curiosity, can you tell me who bought Bill Gates, Jeff Bezos, George Soros, Larry Ellison, John Paul DeJoria, Pierre Omidyar, John Ferolito, Don Vultaggio, Matt Maloney, Mike Evans, Joe Coulombe, Howard Schultz, Ursula Burns, Phil Robertson, Konosuke Matsushita, Steve Wozniak, Steve Jobs, Roman Abramovich, Mohed Altrad, Kenny Troutt, Ken Langone, Oprah Winfrey, Shahid Khan, Ralph Lauren, Lakshmi Mittal, Francois Pinault, Leonardo Del Vecchio, Li Ka-shing, Sheldon Adelson, Jan Koum, Do Won Chang, Maria Das Gracas Silva Foster, or Zdenek Bakala's way in through the "glass ceiling"?

Then there's the trust-fund baby that everyone envisions as being the stereotypical senior executive; that entertainment has successfully lampooned for decades into people's collective consciousness. Sure, it's easier to envision that every successful senior executive is a cartoon villain, the one pulling strings that keep the rest of us schmucks down in the mud. If that's true then we don't have to feel as bad about our failures, because "the man" is just keeping us down, right? But the truth of the matter is that the overwhelming majority of these people worked there asses off to develop the ideas, skills, and work portfolios to not only get where they are, but remain where they are.

Real business competition is a cutthroat, dog-eat-dog world, where if you can't pull your weight you will be replaced either by your directors/shareholders or your competition. To the extent that this doesn't occur in a given company, reveals a company protected by government regulation that has warped the marketplace in this mixed-economy. If your position is that this type of cronyism is a problem, then we agree 100%.

Just sayin'.

@waynus Sell your shares and start your own company. That's the beauty of capitalism.

@NYTrumpLover I did sell my shares in that company because I thought it would hurt its profitability, though I invested elsewhere rather than start my own.

@waynus You should probably start reading some books on investing and economics. Selling your shares had no effect on the company's profitability; it simply meant someone else bought your shares. Your investments should be for the purpose of obtaining capital gains . . . buying stocks that go up in price. Investing is not a place for 'social justice.'

@NYTrumpLover Who is talking about social justice? I felt the payment system that was put in place was unsustainable and I was not prepared to support it. When more sustainable changes were not made I moved my money elsewhere. Turns out I was correct profitability continued to decline and share price dropped alarmingly until it stabilised at much lower levels, under a new management structure.

5

Why? Perhaps because some amongst us tend to find reductionist arguments persuasive, or at least easier than having to really think about, and answer, a complicated point.

To my mind, whilst a market economy is clearly the way to go, the market for senior executives isn't working at all effectively, or even in accordance with the law of supply and demand. It is also the case that the small shareholder is extremely limited in insisting that pay and performance are correctly linked. Thus, essentially, a small elite have constructed an artificial market where they have set the rules of the game, and are paying themselves vast sums without any justification or reflection upon / of their actual performance. As the majority shareholders are large institutions, run by senior executives who benefit from this artificial market, the 'rules' are likely to go unchallenged. This is unhealthy, as indeed is any culture whether where there are extremes of rich and poor.

@Mtrac Where the market is not operating as it should, the most practical solutions are (1) taxation: amend the taxation system to extend the 'windfall' tax provision, but this is a blunt tool which would be complicated to enforce (2) apply social pressures on companies to bring the market into line - through publicity, public statements, etc, but this would take time and its effectiveness questionable or (3) provide a legal requirement for executives to be paid no more than x% of the lowest paid employee.

5

If you want a bigger piece of the pie work harder. It's that simple. Doing the minimum your whole life and pointing to someone who made something of themselves and saying "that's not fair" does not make you right. It makes you lazy.

I don't agree with your apparent assumption that working harder is what gets you ahead in the corporate world. For the most part the only people who believe that are ideologues outside the corporate world and people who got ahead in the corporate world and want to attribute their success to having worked harder than the rest.

@Crikey ok, so how did they get to the top then? Luck?

@bil2276 There are a variety of skills involved in climbing the corporate ladder. Covering your behind so that if something goes wrong, you can always pin it on someone else. Picking your friends and allies carefully, and making sure that the right people know that you’ve always got their back. Positioning yourself to take maximum credit for the successes of your team (while graciously telling everyone how you couldn’t have done it without such a great team behind you). Learning to appear confident and in charge even when you have no idea what you are doing. Having narcissistic or sociopathic personality traits also helps at times, you don’t want your conscience chirping in your ear as you do whatever is necessary to get ahead.

@Crikey holy cow, that sounds like hard work.

@bil2276 LOL. It's debatable whether such maneuvering is classified as work and whether it makes you "worth more" to the company? Just sayin': it's not how hard you work, it's how well you play the game.

@bil2276 Lol, if they lobbied hard for special favours from the government that sounds like hard work too right bud? Are you going to turn on your brain here and respond to his points or simply put on your clown nose and shill for State Sponsored Capitalists.

George Soros
Jeff Bezos
Mark Zuckerberg

Go on, defend these people.

As a concrete example, Carlos Slim, the richest man in Mexico, and one of the richest men in the world, lobbied the government for a monopoly on telecommunications. Wow, such a hard worker.

@bil2276 I do agree that climbing the corporate ladder is difficult and is not something that most people would be able to do successfully, regardless of how intelligent they are or how hard they work.

It also falls apart if too many people use this strategy. Corporations would function poorly, if at all, if most people were focused on climbing the ladder rather than their actual job. And so, as a strategy for advising people on how to ensure a fairer distribution of revenue within an organization, it doesn't really cut the mustard.

@HonkHonkExpress lol, that comment was totally meant to be tongue in cheek. I'm positive that there are turds at the top, just as there are turds at the bottom. But no matter where you end up the choices you make get you there.

3

There is a whole lot of neoliberalism-flavoured kool-aid being drunk around here.

Look at where we were for most of human history in terms of inequality. Most people living short, hard, often brutal lives in dire poverty. And then, through hard-fought class struggle, organized labour, collective bargaining by the working class and so on, we got to something a lot fairer.

And now, in the name of "freedom", we're are heading in the opposite direction. Greater levels of inequality. Labour is forced to compete with cheap exploited third world labour. Collective bargaining and organized labour has been defanged. Employers no longer need to pay a fair cut of their revenue to workers, they simply pay as little as they can get away with. Because, hey, the wisdom of the markets. And to all the millions who used to be middle class and can now barely scrape by.... pull yourselves up by your bootstraps. Clean your room bucko.

Yeah. The Free Market is starting up some window cleaning enterprise and bringing real value to a community. It is also selling heroin to a three year old. Government programs are anti-white academic hate shops, and they are also the moon landing. Ideology exists as the mask power wears, and anybody who tells you that things should not be looked at on an individual basis is either unthinking or malicious.

And may I say that I think you've captured the hostility and arrogance of these people accurately. However, it's worth mentioning that they aren't even fighting for free markets. These people are shills for State Sponsored Capitalists. In my country, Canada, there is a government created cartel for basic food items, that is explicitly shilled for as increasing the price. None of the supposed "Capitalism is our prosperity" shills can be bothered to explain why this is good, they're just shills.

@Mtrac 3rd world workers are, of course, worthy of jobs. Nothing I said implied that they weren't.

As for how I would approach the issue, there is (of course) no simple answer and I don't pretend that I have the answers. Both sets of workers, the first world workers who lost their jobs and the exploited 3rd world workers doing those same jobs for peanuts, certainly deserve better.

Assisting 3rd world countries to develop their economies would be a great idea. Maintaining robust and diverse economies with job and career opportunities for their own citizens in the first world would also be a good idea. The race to the bottom helps only a very tiny % of either society.

3

I'm not saying you're a socialist, I'm just saying you haven't thought this through.

We have two options:

  • Economic freedom (capitalism), where people are free to choose what to do with their wealth and labor.
  • Economic control (socialism), where the government dictates what people can do with their wealth and labor.

Which do you choose?

It sounds like you want executives to get paid less, but you aren't sure how to accomplish that without government control. You can't.

And why does it matter to you, anyway? What right do you have to dictate or approve a voluntary transaction between other people?

Ultimately the (admittedly bad) situation you describe is a result of the Federal Reserve and over dollar bein fiat currency, not tied to any real commodity value.

As a shareholder

@waynus

Ok ... then "as a shareholder," which do you choose:

  • Economic freedom (capitalism), where people are free to choose what to do with their wealth and labor.
  • Economic control (socialism), where the government dictates what people can do with their wealth and labor.

False dichotomy.

@Crikey I'd be interested in a third option .... preferably one that isn't just a version 'how much control' the government exercises.

@jneedler There are many flavours in between the two options you are proposing, some of which are being practiced quite successfully in the world today. Some of which were practiced quite successfully in our own country in the not-too-distant past. Sooner or later, if the disparity and exploitation become too extreme, someone WILL change the system.... and it's not likely to be pretty for anyone. Government has to, at least, give workers back the ability to unite and bargain for a better deal. In the past, when the unions were stronger, companies would not have got away with telling workers that they couldn't afford to pay a living wage to workers while they were paying tens of millions of dollars to executives. But they CAN and DO get away with it today.

@Crikey Wait, don't confuse me - one thing at a time. So, did you have an alternative to what you called a "false dichotomy," or were you just referring to how much control the government has over what one does with their labor and wealth?

@jneedler Sorry, I went on a rant there. What I mean is that there are many shades in between what we have now (which is not nearly free market enough for the market fundamentalists) and the sort of socialism that you describe. It's not a case of choosing one or the other.

@jneedler All human activity is, to some extend, determined by rules, procedures, etc., many set by the government. If a market is skewed or operating as an oligopoly, then shouldn't the goverment be required to step in?

@Crikey I must admit, you won significant respect from me by recognizing that you went on a rant. Sometimes it's tough to see where one gets carried away, and of course I include myself in that. Your comment makes me certain that we can have a civil discussion. For the record, I didn't think it was much of a rant .... just kind of tangential to the discussion.

You are correct: I painted essentially two opposite ends of a spectrum, while almost all life exists practically somewhere on the continuum between those two extremes. I do, however, feel like all economies exist in that continuum - I don't see any other options besides freedom, regulation, or some combination of both. I think you and I are in agreement about that, based on your most recent comment.

I think that it applies to your original question, though, regarding executive wages. Should the government regulate wages in any way? I believe not: wages are a contract between the employee and the employer, and I don't believe it is beneficial for our economy to have the government dictating what compensation is, or is not, permissible.

Regulation like that never increases options for individuals, it only reduces options (i.e., choices, i.e., freedom to choose to earn a certain wage).

I'd be happy to discuss the disparity and exploitation you referred to in your response, but I just wanted to finish our conversation on wage regulation, first. What are your thoughts on the matter? I know you didn't specifically mention regulation, but I don't see any other options besides regulated, or unregulated.

@Rushhead2112 Your flawed assumption is in your question: you presume that the "market is skewed or operating as an oligopoly" because of free markets. In actuality, every example of a market currently skewed or operating as an oligopoly, exists because of government regulation. Government over-regulation is the cause of our current market woes, not the solution.

@jneedler By my standards that was certainly a rant I went off on earlier. Enough said on that. On your other points, yes. It's silly to try and define political or economic systems in other than left/right terms. Also happy to work with the IDW definition of right wing.

As for whether I believe in government imposition of an upper limit on wages: no, I do not believe in that at all. There are ways that the extremes of wages could be moderated, and it's not that. Also how do you tell an executive that he or she cannot earn $10M annually while a pop star can earn that much for a couple of performances and a sports star can earn many times that amount annually. You can't only regulate the captains of industry.

@jneedler In which case, I am compelled to ask, specifically how (in the UK at least) has government action, regulation or control either contributed to, or created a skewed market? I ask this, not least because the are no regulations or laws imposed by the UK government: the market is free from any meaningful government intervention.

@Rushhead2112

Come again?!?!? You said "there are no regulations or laws imposed by the UK government: the market is free from any meaningful government intervention." The entire healthcare industry is controlled by the government, for starters. I am sure there are many other 'meaningful' government regulations that impact the market in the UK. However, the UK still ranks higher than the US in economic freedom, according to heritage.org.

From a perspective of logical examination, you are going about it backwards. You should be asking: is there any instance of an unfairly skewed market that isn't caused by government regulation? I expect you'll struggle to find a single case that isn't readily explained by government regulation.

As an example, people are going blind due to the government's inability to provide healthcare: (https://www.dailymail.co.uk/health/article-5217497/Cataract-patients-going-blind-6-MONTH-wait.html). This is easily traceable to government regulation, as the government regulates who is allowed to receive the surgery.

@Crikey It sounds like you and I are in agreement that wages should not be regulated, or at least not at the upper end. (I advocate for no wage regulations at all, but I don't want to speak for you)

I'm going to initiate a new post in the economic forum, as I don't want to digress too far from the topic chosen by the original poster. I'll tag you; I hope we can continue this conversation. I think I now understand the heart of your objection.

@jneedler I look forward to it. I think you will find that we don't agree about a whole lot, but it will be an enjoyable conversation for both of us.

"Economic freedom (capitalism), where people are free to choose what to do with their wealth and labor."

Like, say, sell heroin to a three year old child? Or like shipping off jobs to some third world country? Or bankrupting smaller competition? Or colluding with others in the industry to raise prices?

Of course, this is all purely theoretical, since we don't live in "muh free markets" society in the first place. Show me someone on the richest people in the world list who got their by "pulling themselves up by their bootstraps and never relying on government privileges". I've gone through the list, and there is not one. So to even have this discussion is some boring and tedious exercise in abstract reasoning that has no bearing on anyones lives.

@jneedler "The entire healthcare industry is controlled by the government, for starters." Really? The independent GMC regulates the standard of care, and outside of the state provision, private health care providers in the UK are free to operate as any other business. My point concerning lack of government regulation, rather obviously I thought, concerned senior executive pay, so I am again compelled to ask you, what government intervention, regulations or rules have resulted in a skewed senior executive pay market? Nice try to deflect, but it ain't working.

In terms of the Daily Mail story, you overlook the fact that whilst there is a 6 month wait on the NHS, the option to take private health care remains an option, but this thread is all about executive pay, not health care.

@Rushhead2112 You didn't specify, so of course I didn't know you were talking about a singular aspect of the economy when you asked about "government regulation." It does make more sense, however, now that you've clarified.

So, when you originally asked "if a market is skewed or operating as an oligopoly, then shouldn't the goverment be required to step in," what you really were trying to ask was "if executive pay is skewed or operating as an oligopoly?"

Check your assumptions: is executive pay skewed, or an oligopoly? If you believe so, why? Why not other industry leaders, such as athletes and entertainers, investors, lottery winners?

@jneedler Well, to be fair, the thread (and my previous posts) all were clearly concerned with executive pay. As for my assumptions, no, they are not assumptions:

  1. Over the 10-15 years, executive pay has accelerated, without any corresponding increase in profits;

  2. Executive pay has accelerated at a rate far, far greater than that of the average worker; and

  3. Accordingly, the pay differential (in % terms) between executives and workers has grown from 30% in the 1970s to nearly 300%.

These are all facts.

So, when the executive pay market is not responding to increases in profits, wouldn't you say that that particularly market is skewed?

@Rushhead2112 I see at least two fundamental assumptions in your case. If either of them are false, they would completely undermine your argument. I honestly don't know that either you or I have the ability (or perhaps, care enough) to determine the veracity of those assumptions.

Assumption #1: the market for executive pay was not skewed before, but it is now (yes, this is really two assumptions rolled into one). If either of these are not true, then your entire case is invalid. I think a professional economist could make a dissertation out of either of these .... but I shall not attempt it.

Assumption #2: there are absolutely no government regulations or economic policies that have directly or indirectly influenced executive wages. Again, if any part of this assumption is disproved, it invalidates your entire argument. In essence, this is your argument: that executive wages have risen, and there aren't any regulations or policies that influenced it .... that you are aware of.

I would like to directly acknowledge that it is possible you are correct. Sometimes markets temporarily overvalue things .... but always temporarily. The market always corrects in the end. That is why government over-regulation is bad: it forces a market imbalance, one which eventually must be corrected (and market corrections are always painful, however necessary). That's also why government intervention, even if the market is skewed, is not the right answer.

Now, I freely admit that I don't care enough to weed through 30 years of U.K. policies and identify ones that have potentially, indirectly affected industries and wages. Unfortunately, you can't prove those regulations don't exist (the saying "you can't prove a negative" exists for a reason).

However, I will submit that if you really think government policies haven't had any effect on executive wages, you may want to review simply the volume of regulations that has existed in your country each year for the past 100 years. It is a simplistic way of looking at regulations, but I feel it does provide some good context as to the overall reach of government regulations.

Finally, it seems to me that most of our economic problems in the United States stem from our implementation of the Federal Reserve, and our abandoning of the gold standard (or any standard) for the dollar. I don't know nearly enough about the U.K.'s monetary policy to speak intelligently on the subject, but it might be something you would find enlightening, should you be so inclined to study it.

I wish you the best, and I did enjoy the conversation (after clearing up the initial misunderstanding). I will gladly read your response, should you choose to leave one. However, I don't think this particular discussion is liable to proceed much farther, as it is based on deeply buried assumptions that neither of us are willing to study enough to adjudicate with confidence. If you do choose to do so, and managed a good job of it, the result would probably be worthy of a dissertation in economics.

3

First of all, most “Senior Executives” are not strictly “Employees” they tend to be “Officers”.
Secondly, you are running into that thing that most people tend to complain about ... Percentages.
There are very few people in ANY Industry who rise above the pack in terms of Ability, Effectiveness or Output.
From where you stand, you don’t see that these Senior Executives are immeasurably more valuable to the company than any 10 or 20 or More people of the “Rank and File”. You also don’t seem to see that dozens or hundreds of the “Rank and File” employees have come and gone as this person worked ... or manouvered ... their way up the ladder to where they are. It is through the efforts of those people usually that ALL the rest of the employees have work to do ... even have a job at all.
Companies don’t simply decide to arbitrarily hand out enormous paychecks or massive benefit packages. That’s not to say that there aren’t some who benefit unduly because of something like being a relative but that’s very rare.
The Skills, the Connections, the Work Ethic, the Knowledge One has are all important points but tge Ability to Tie them all together into an Effective Package AND KNOW Their Own Value is simply beyond the standard 98% though that number is more reasonably written as the 99.999%.
Honestly, Companies get what they PAY for and, if not, they quickly throw the person out BUT that person is usually a well known entity BEFORE they ever get offered the position.

3

Because you are inferring we need a quota or a cap as a solution as opposed to letting the market. You have a collectivists comical view of “executives.” In what world do you live that all executives earn millions of dollars a year.m? That’s an effect of being raised by Hollywood. The vast majority of executives earn good salaries on par with say university professors. However, the obsession with free market executives while ignoring subsidized professions like professors is why you are fairly labeled a socialist. Life is not fair.

3

I don't think that it's the idea of income inequality, itself, that marks someone as socialist. It is the method by which that supposed equality is achieved, and what is meant by income inequality. As heartless as it may seem, there is a real disparity in the value of labor. Someone who is at the bottom of the totem pole has far less responsibility and therefore is far less of a risk. You can have a bad employee at the bottom and they won't destroy a business and they are likely easily replaceable because it's probably going to be a lower skilled job. The higher up you get, the more responsibility and the more risk. A lax supervisor can do more to damage the reputation of a company than a single lax entry level employee, and they have significantly more responsibility. How does it not make sense that they would be paid more? That reality goes up the chain of command; the higher you are the more you can do to make or break a company. It is perfectly reasonable that you would pay someone who you feel is going to help the growth of the company as much as it takes to keep them around, as long as you see the value in the investment.

Let's suppose that you agree with what is stated above, as your post indicates that your issue is with the compensation vs. value. In that case, it's become a situation of bad business practice and not an issue of income inequality. The company will wind up paying in the market for someone who brings nothing to the table, but the value of a good ideas man or financial planner can turn a failing business into one that thrives. Those are the people you want to do anything to keep.

As it concerns a disparity between lower level employees and higher level employees, you not only have to consider the value to the company, but also the effort willing to be put forth by the employee. I have never worked anywhere where the was no opportunity for advancement, and one of the things I have most frequently heard from entry level employees who choose not to pursue those opportunities is that they don't want the responsibility. And in my experience, the places that have the most difficult time keeping people in higher level positions are those who don't provide financial compensation that makes it worth it. If you are going from entry level and making, say, $9.00 an hour, to a supervisory position with twice the responsibility and making $10.50 an hour, the juice might not be worth the squeeze. You're paying for people to take on that responsibility, and the added stress. More responsibility = more risk = more stress. Why should people not be compensated accordingly?

An actual example. A major bank deliberately and consistently broke the rules around giving investment advice to customers. The CEO and senior executive staff encouraged this behaviour. Now the company faces massive fines and law suits and the share price has dramatically fallen. Yet the remuneration and bonus system delivers to those responsible massive rewards.

As a shareholder in this bank I believe those senior packages need significant change, they should not be rewarding behaviour that has significantly damaged the business.

3

Someone decided their value was worth what they are getting. You may not see that value but it does not mean it is not there. Once you get into those higher echelons of the corporate world, they are working constantly and it is highly competitive. Somehow in the survival of the fittest gauntlet, these people make it and have to continually perform and produce results or they are gone.
I do not worry in the least about "income inequality". Nobody is poor because someone else is rich. The economy does not work that way. It is not a zero sum game. A person with the right skills and leadership can keep a company afloat, not only making money but keeps food on the table for potentially thousands of employees, roofs over head and cars in the garage. The wrong people in those spots can ruin the company. So that seems pretty valuable to me.
Now, does your take on limiting this make you a socialist? Depends how you are going to try to change this. If you are going to encourage shareholders and CEOs to chose to change, no you are not a socialist. If you want to use the power of government to take away the choice and freedom of the companies to pay what they value these employees high amounts..... yes, you are socialist. Why should you be able to dictate their choices and freedoms under threat of government penalties?

3

Generally because when speaking about income inequality most aren't talking about that.
Then some where along the conversation the solution becomes Government hammer.

It's a perfectly fine conversation to have but it's rarely a conversation made in good faith.

3

The largest predictor of social unrest is the gap between the rich and poor.

There are more Socialist billionaires than Capitalist

2

Hunh ...
Might as well be asking;

Why do some actors/actresses make Millions but Most barely make enough to survive?
(Market Forces)
Why do some musicians make Millions but Most barely make enough to survive?
(Market Forces)
Why do some Artists ... Atheletes ... the List is Truly Endless ...
Market Forces and Competition for People of Known Skills drive the Price Structure ...

2

My first comment would be to do away with income tax altogether. Throw up a sales tax - and make it work that way - look at the FAIRTAX. Seriously. It's worth thinking about.

Second, do away with minimum wages altogether! (seems odd, I know) The few studies that looked at them and claimed that higher wages didn't change employment levels missed a few points and were severely skewed. The reality is, minimum wages keep young people from getting a first time job when they aren't even worth the $10 an hour (I know it is less than that, I'm being generous). Instead, we bring in people working illegally under the table for cash or by scamming the Indentity of someone else to work... we got to get a handle on that and stop it.

If we can't work out how to get the FairTax in, and we're stuck with the horrible income tax - then we need to address non-cash payments, bonuses, stock swaps etc. And bluntly, since we're still taxing corps if we do it that way (which, again, I think income tax is a jacked up mess, and we need to do things differently) then if the CEO, CFO, any officer, makes 100x (yes, one hundred times) the base pay per hour of their lowest employee - then anything above that should be taxed as income on the Corporation - and the Corp should NOT be allowed to use any of that as a deduction (as they do now) instead should have that portion excluded.

Again, I'm no fan of income tax at all - I like the idea of the retail level sales tax to capture all the blackmarket money spent already in this country - and if the jet-setters want to go fly elsewhere, well, fine, but every purchase made in USA gets taxed anyway - and anyone here visiting gets taxed as well.. it's just a good system.

You want to tax efficiently, with minimum bureaucracy. You want to tax a system at the source, instead of at the many stages of the transaction food chain.
For example, a large sector of the economy depends on primary energy.

Primary energy -> raw materials -> Manufactured goods -> exports -> wealth.

If you tax the primary energy then you take care of the entire chain all at once. The tax gets reflected
in prices further down the chain.

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I agree! And why limit it to executives of private companies? In Canada, we have public hospitals, community colleges, and universities that are funded by tax payers yet their CEOs and presidents make almost a million dollars a piece, and they create a huge castle of hierarchies and middle management all of whom bring very little value to the organization. Instead of hiring more doctors, nurses in a hospital (or professors in a college), they end up hiring more coordinators, project managers, and each of these middle managers gets paid almost as much as doctors, yet they bring much less value to medical services. The president of the local community college gets paid almost 500,000 CAD per year from taxpayers' dollars. Why?

I definitely believe in "meritocracy", but when top executives still get bonuses while profits decrease? There's something wrong here.

Most of what you describe are govt controlled institutions. The OP seemed to be referring to execs in companies, which I took to mean private companies in the ebb and flow of the market.

I absolutely oppise govt run anything beyond maintaing the laws of the land. And whatever workforce, including execs, that requires must earn 10% less on average thsn the average free market wage of similar descruption of duties, just for living off the teet of the hard work of others.

As for the rest, sllow the dictates of a free market to sort it out. They will.

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I am more than a little amused.

So many of you have overlaid vast webs of assumption; which as you do not know me are entirely your own problems/issues and not mine. You may find it hard to understand other peoples positions when you keep adding your own extras without hearing what is being said.

My question was why do people call a shareholder who is encouraging other share holders to review executive remuneration a Socialist?

For the record I am not at any level a company executive, I am an investor concerned about the governance of companies I am invested in.

I did not suggest nor do I think Government intervention is warranted or needed. The intent of my argument is to convince enough other share holders we need to take action. Last time I looked this is 100% in line with the way companies and shareholders should act. If I am unable to convince enough shareholders then my idea won't take off, which is fine that is what shareholders do.

Finally I am Australian. In Australia our CEOs and senior executives are often paid vastly more than equivalent office holders in similar size companies in other jurisdictions . We have also had some significant failures in corporate Governance in recent times which has seriously called into question both the levels of competence and the payments of senior executive staff.

There is a whole mess of inbreeding amongst the "board of director" class in Forture 100 or Fortune 500 corps - go look - lots of folks sit on a lot of boards - why is that? And that group think spreads on how the financial class (stockholders/traders) who get involved demand the company do certain things to keep the stock levels up - or they do what they think the investors want without actually asking them.

I get your point regarding bringing the baggage in - I got no real illusions how this runs - I've just looked it over since the 80's when I saw the stocks crash in 87 and a lot of people got filthy stinking rich over it while the little folks got set back years and years - and I kept digging at it.

The reality is that there are several ways we could redo the system and make it much more fair - but they will just figure out how to game it yet again - because, remember, according to Obama they were "too big to fail" - when the money should have been directed down to the people so they could pay the bills to those big corps, instead they gave the money to the corps and the corps put the screws to the regular folks anyway.

Understand, I'm a big time capitalist - but what we had go on with the various bailouts and the current regulatory climate - this isn't Capitalism. At all.

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Jordan Peterson laid it out nicely during the attached video. Simply put, these executives a hard chargers. They have a drive and ambition, not to mention overabundant work ethic, that is lacking in the other 99.9% of people. They sacrifice quite a lot to get there, and quite a bit more to maintain it.

Even if we somehow assume that the group of people we're talking about here are indeed "hard charges with drive and ambition" you've totally sidestepped the morality of their wealth in the first place. Can you find me a single name off the Wikipedia richest men in the world list who didn't get there without massive government assistance, one way or another. Jeff Bezos has an absolutely incestuous relationship with governments, local and federal, and he absolutely uses that government sponsored priviledge to line his pockets.

@HonkHonkExpress, there’s plenty of people in high business positions that got there through simple hard work. Sure, there’s those that game the system, but that doesn’t mean all of them do. Your argument then, and I’ll agree with this outlook, is why government has a big hand in business to begin with? What good has come of it? What you describe is crony capitalism. Sadly, that’s how the field has been laid out over the last hundred years. That’s where the morality issue is. The siren song of equal outcomes, through wealth redistribution and affirmative action, is even more morally bereft.

@Harpoon, it seems like @HonkHonkExpress argument comes down to one statement: wealth is immoral (based on his comment "you've totally sidestepped the morality of their wealth in the first place" )

So, @HonkHonkExpress , make a case to support your belief: why is wealth immoral?

While you're at it, please explain why your wealth is okay, when you possess more wealth and a better standard of living than approximately 99.9% of humans that have ever lived on this Earth. You are the .1%, so please explain how your wealth is moral, but everybody else's wealth is immoral. Educate us: where is the line morality? How much 'stuff' is one person morally allowed to earn in their lifetime?

Or perhaps your real concern is with unfair government regulations, and not with wealth that was honestly earned?

@jneedler, exactly. A couple years ago, a friend posted an article on Facebook about how those families that were wealthy 1,500 years ago, even those that suffered under government purges (China for example), are still on top today. The contention was that the game is rigged.
Now, in some instances, the game is rigged. But it's the fact that people can use government to rig it that should be the concern. Regardless, these families seem to have a genetic trend towards high achievement. Also, birds of a feather flock together. It's almost a cliché in some respects, how these families associate and intermarry, further pushing the tendency towards high achievement, and how the "black-sheep" are deselected from any position of responsibility and legacy.
These people will rise to the top regardless of barriers.

@jneedler lol wut? What a bizarre strawman. I specifically was referring to the wealth of Jeff Bezos, which you totally ignored to go on some inane pseudo-libertarian rant circa 2003.

Nobody is making vague arguments against the abstract concept of wealth itself. I don’t need to justify my amount of wealth before I attack on parasitical shitbags like Mark Zuckerberg.

@HonkHonkExpress, I think we're all talking passed each other. Let's clarify something. I agree completely about Jeff Bezos, Mark Zuckerberg, and a host of others, who've made their riches through manipulative use of crony-capitalism. But please recognize, they're the symptom, or outcome, of the progressive ideology that has ever increasingly involved federal and state government into the marketplace.
We do not live in a free market system. This is clearly apparent when a child's lemonade stand gets shut down for lack of a permit. Much of our consumer goods are artificially priced high because of the quid pro quo regulation between industry and government. America's producers, unwilling to compete in a free marketplace of less expensive imports, lobby for protectionist tariffs. Other industries, automobile manufacturers for example, utilize EPA, and other regulatory standards, to thwart competitive start-ups.
Unfortunately, many in this country are comfortable with this situation, and fail to recognize that we're heading down the path of greater centralized economic control. Look no further than Venezuela to see how that works out.

@Harpoon We're not "talking past each other", I was strawmanned by jneedler full stop.

"please recognize, they're the symptom, or outcome, of the progressive ideology that has..."

Yeah, no. They're not the symptom of some abstract ideology. Nobodies ideology says "well we're gonna give the richest people on the planet lots and lots of privileges from the government." This is such a classic case of Cuckservatives pretending that the enemy is some ideas instead of flesh and blood people. Jeff Bezos is a guy, George Soros is a guy, Mark Zuckerberg is a guy. These are actual people. The bureaucrats who give them favours are specific people, with names, faces, and home addresses.

I do not need someone to explain to me that a government that spends 45+% of GDP is meddling in markets. I do not need someone to explain to me that regulations exist to thwart competition. I am well aware. I am totally disinterested in hypothetical discussions about some imaginary Free Market Utopia where there's no government intervention and everyone deserves everything they get. We do not live in that world.

@HonkHonkExpress We're still waiting for you to support or explain your assertion of "you've totally sidestepped the morality of their wealth in the first place."

Additionally, you asked: "Can you find me a single name off the Wikipedia richest men in the world list who didn't get there without massive government assistance, one way or another" .... which sounds like you're against government interference in the markets. However, this is completely at odds with your stance that free markets are evil (admittedly, this is an assumption on my part, the assumption being required based on your lack of coherently stating any actual belief - all you really communicated is your hatred and anger of Bezos, government influence, and your very enlightened opinions about "cuckservatives" ). Do you care to try and justify your simultaneous espousal of two opposing beliefs?

@HonkHonkExpress, ideologies are driven by people, and it takes two to tango. The people you list are half of the equation, there’s also the politicians and bureaucrats in government, using their positions to do exactly what you’re complaining about at root here. If government doesn’t have the authority to regulate every detail of commerce, then there’s less chance of corrupt business using it to stifle free market competition. Companies receiving tax breaks and subsidies have to smooze their cronies in government, usually through campaign contributions, or opening a division in a specific congressional district, to affect this. Asking for more government intervention is like trying to put out the fire with gasoline.

@jneedler "However, this is completely at odds with your stance that free markets are evil (admittedly, this is an assumption on my part, the assumption being required based on your lack of coherently stating any actual belief"

Do you have any capability to actually address my arguments, or is it just Strawman all the way down? I don't have opposing beliefs, you moron. I never said "free markets are evil". Are you 13 years old? I distinctly remember calling these people "government parasites". There are people who actually live in the real world, who don't give a fuck about your dumbass abstract ideology. Hatred of Jeff Bezos is an actual political belief. If you were serious about your "muh free market" beliefs, you would be making lists of all the businessmen, politicians, bureaucrats, and so on, who have violated your sacred principle. On that list you would include Jeff Bezos, so why this got a little sand trapped in your vagina is beyond me. If you want me to take your "muh free markets (that don't really exist)" ideology secret, then show me the Google Sheets doc where you've been making lists of all governmental parasites that you've been finding. Go on, I'll wait.

I am under no obligation to take seriously your stupid ideology. My political beliefs are chosen because I feel they would actually lead to the best outcomes for myself, my family, and those in my community and nation.

@jneedler, @Harpoon "The people you list are half of the equation, there’s also the politicians and bureaucrats in government"

And I quote myself here:
"The bureaucrats who give them favours are specific people, with names, faces, and home addresses."

It's like I'm talking to a bunch of retards with no capability to even consider the shallowness of their stupid ideologies. Dude, Jeff Bezos is not a Socialist. He doesn't have any ideology beyond "I'm going to steal these filthy peasants money because fuck them for being plebs. They need to know who's boss." The bureaucrats and politicians who steal on his behalf, do not have ideologies either, they're just thieves. There's no secret group of SOCIALISTS out there who are demanding higher living standards for factory workers. The response to Jeff Bezos saying, through his actions, "fuck you peasant", is "fuck you Bezos", not "WE HAVE TO STOP SOCIALISM. BECAUSE THE ABSTRACT IDEOLOGY OF SOCIALISM IS SOMETHING SOMETHING AND THAT'S WHY WE CAN'T REGULATE TECH COMPANIES THAT CENSOR YOU PEASANT."

I live in the real world, you should to.

@HonkHonkExpress said "do you have any capability to actually address my arguments?"

So far your 'arguments' have been:

  • everything I say is a strawman argument
  • you hate rich people and "cuckservatives"
  • everybody that actually makes a point relevant to the original post is a "bunch of retards"

So, no. I'm not going 'address' your arguments.

2

How would you propose the reset take place? Tell me answer and I will tell you if you are socialist.

Through shareholder votes, as I said in my comment.

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I think the reason you are accused of being a socialist is because that is a socialist concern. If you were concerned about the economically dispossed, that would be different. Socialism is basically a cover for covetousness, and I cannot see it any other way than you are being covetous by looking at the salaries of senior executives.* The only way to enforce what you are proposing would be by regulation, thereby growing the government, which is the antithesis to capitalism and free markets.

*I am not suggesting you necessarily want their salary. However, you should do some serious soul searching on why you are so upset by this very specific concern in economic inequality.

My concern comes as share holder, being dissatisfied at remuneration to senior managers in various companies I have invested in. feeling that they were not brining the value their salaries indicated that they should. As for dealing with it I am advocating shareholder NOT Government action. My whole point is to try and raise awareness about what I see as a problem situation for shareholders.

In my country many of our CEOs are paid higher salaries (by orders of magnitude) than heads of similar and larger companies overseas. In essence I want share holders to take assertive action, and hence advocate for that.

@waynus thank you for the clarification. I was about to opine that you were what Mises would call an interventionist, but if you are not advocating government intrusion, then good luck with your market innovation.

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As I read this , I see a giant warehouse , filled with people seated at card tables , playing Monopoly . The Federal Reserve Note is a debt instrument , without intrinsic value . Nothing is real in that warehouse .

It's all as real as the group allows it to be. So far, we as a group have allowed it to be real, so therefore it is real. Go try to buy something with Monopoly money. Then try it with Dollars.

I get your point on this, I really do (and I am no fan of the Monster from Jeckyl Island - the real monster, not the book, dig the book) but the reality is that this is the game we were given, and unless/until we figure out how to break the game, it's the one we're stuck in.

@Paisley_Pirate The only options I have seen are getting away from the cities and growing our own food . Independence is priceless .

@Georgesblogforum I live in a town of about 40,000 approximately 45 miles from a city of about 500,000. Lots of farm land all around. My biggest worry is we may not be quite far enough away from that major metro - smallish though it is - the closest million plus is 3+ hours by car and again lots of empty space in between.
I can garden, but i am better at working on things and keeping things running. One of the classes I occasionally teach is Electrical Maintenance... so yeah, knowing how to make stuff work is a thing. I don't see being 100% independent, but I do see the possible collapse back to small towns like this as a thing. We can feed the rest of the world from here, because we already do, but we'll be short on some stuff. Is what it is.

@Paisley_Pirate You have a pretty good handle on things . The important issue is avoiding adhesion contracts and incorporated environments . It isn't just big cities . It's the corporate relationships that are poison . I live outside of an incorporated "city" of about 9,000 . It is two different worlds.

@Georgesblogforum Problem here is, now the state has been pushed by the cities into making boundary areas of up to 5 miles outside a city limits that the city can still micromanage your property for you. Hard to find 5 miles away from any city in most of the state until you get way out west... and then it's a different set of government bureaucrats sticking their noses in.
I do get your point though.

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Well, they earn that much because they can. They are expected to grow the company and take on legal liability. If there is a scandal that it is not the average employee who sits before congress. If things go sour then the execs are cut and may haze zero opportunity afterwards. It is worth remembering that for a large portion of c-level execs their huge numbers come from options and performance grants. If the stock tanks the options expire worthless and the performance grants do not vest. Is it right they make so much more? Entirely up to the company to decide.

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Even in socialism there is no economic equality, no matter how LOUDLY they shout it. There never was, is NOT now, nor will there ever be equality in economics. Man kind is inherently an evil, greedy bunch. They will fight for control over a population, and the resources that they have.

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You only have the right to try to set that value in proportion to your ownership in a specific company and only for that company.

If you hold no ownership, you have no right to try and force that company to decide on how much they do or don't value their CEO's contribution to the company.

Of course. I was not suggesting anything other than share holders taking action against an abuse.

Agree but when a public company gets funded by tax payers money on an annual basis then we should have the right to question these wages! CBC AND OTHERS!

@WhiteRose LOL I guess that would be a good incentive to not be a public company! Since, nobody owns it, then everybody does? I would not argue against it in that case. Maybe a wedge issue on the way to getting rid of government "companies" altogether. Make it very rough to attract a good CEO, by diminishing the public companies ability to offer them much.

However, I see that as another issue than the economic inequality mentioned in the original post. Or are you shifting the goal posts here? OP seemed to be talking about all executive salary packages, not just public companies. Then, there was the thing about share value and profitability. Last I checked, public companies weren't all that concerned with either.

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Do you believe government can fix inequality? If you answer yes, then you are definitely a socialist. History shows it can’t.

The solution is cultural & on a individual level. And that has many layers of complexity and many moving parts all needed to be balanced into a mental structure. Destroying our current founding culture is a definite step in the wrong direction if you ask me because people were way more generous under our conservative mental structure created by itself then they are likely to be now under our more tribalistic culture. Even worse, corporate branding are tapping into our degenerate society as Personal Identity weakens Business are capitalized on it. It’s much easier selling a corporate brand identity to someone who has no real Identity of their own to begin with.

I think it is very easy to stuff up a system and very hard to replace it without stuffing up also.

I do not think that Government is the answer. I think though that often our institutions have mechanisms in place to address problems but we are not showing up and making use of those mechanisms.

It is highly likely I could be wrong about any particular proposal so I very much like the balance provided by needing to convince a majority to effect a change. In this case mustering the votes to change the nature of CEO remuneration; no Government required just share holders voting their concerns.

@waynus sounds to me like you are a socialist. Even though you seem to believe you are not. You have to let free markets be free.

@Local93bc How so? Must be an American thing. Ever met a socialist? Hint: Democrats are not Socialists.

Perhaps part of the problem is a failure to recognise a range of views. Certainly the term free markets has a myriad of definitions. Does free mean unrestricted, does free mean unregulated, does free mean democratic, does free mean under social or national obligations?

I certainly believe in a free market. I certainly believe in the power of a shareholder also. Is that socialism? Because however you describe it there are always going to be some limit on free markets even if it is the form of the management of public companies, the power of shareholders the power of the board etc.

@waynus inequality is certainly a big problem. Unfortunately you are wasting time fighting it instead of working on yourself to become so valuable that you can command a higher salary. The solution is not top down like you seem to believe. The solution is on the individual level.

@Local93bc If you read the original post it was about an action a block of shareholders took at the AGM of a company I was invested in. It was not about inequality or my salary it was what was in the best interests of a company that I had invested in.

As it turned out the CEO who was brought in at huge cost was a terrible liability and not worth the money.

@waynus that is a complete different issue altogether.
If he wasn’t working out then, case closed, end of discussion. Fire him and move on.

@Local93bc As I said earlier I sold my shares and invested elsewhere. What happened was the companies share price and profitability plummeted over the following 12 months. The shareholders replaced the board and leadership and restructured things along the lines many of us had been advocating, but the company never regained the momentum it once had. Then that is the nature of business.

@waynus then everything is working as it should. Bad decisions resulting in negative consequences properly incentivizing to hire someone competent.

Consider the difference between a dividend-based stock and a speculative stock (where the value is based on an estimate of future value). A dividend stock has to produce money at regular intervals for the shareholders in order to have value, and this forces a company into fiscal reality. Also, the target beneficiaries are the shareholders instead of the executives.

There are few dividend-based stocks. These used to be more common a century ago.

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Well you might be a socialist but I suspect it is just because you challenge the status quo. And we live in an age where indignation is matched only by how fast we resort to name calling.

Would be nice if ‘only’ the markets set compensation figures but there are many other influencers. And there are many who wield influence better than others. Even our lack of a sense of propriety, i.e., what is fair or what is right or wrong has slipped considerably. And focus on short term at the expense of long term has made rock stars out of some CEOs who often leave companies in worse long-term posture than they found them. Stock holders are not immune to the pressures for short term gains of share holders. In the aftermath, were they worth 90 million in stock options. Somewhere around the 1970s the average compensation of shop floor workers was 30x less than senior manager compensation packages. After 2000 that had grown to 300x if I remember the study correctly. (Sorry, can’t recall the specifics of that study).

Regarding our sense of propriety, morality plays as large a part in keeping a free market upright as it does democracy. Criticism, questioning, reflections from within are essential for their continued health. We should despise corruption on the right just as we do on the left. Both threaten crumbling institutions.

Personally I started college around 35 yrs of age. Joined the Marine Corps at 18 in fact with my eye on the GI Bill. Family and life delayed it but in the 15 years before I trudged thru, working days and heading out nights ‘some’ of my motivation was simply to prove how a craftsman stacked up in the academic world given the perception that we unwashed were somehow worth less. I buckled down hard and graduated Summa Cum Laude (still have to look up the spelling). My education confirmed my conviction that this perception was false, even if the market will always determine value otherwise. Every day on the job was at least an equal education to what I got evenings but was earned in the hot sun or in freezing weather. Bones and flesh paid a cost. Cleaning muddy boots and rinsing sawdust from a sweat soaked body or simply thawing out before looking after tools was my homework.

All work is honorable. Too bad the value we place on it can be so skewed. I can accept 30x less but 300x? Gotta wonder what changed since 1970!

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I look at things a little differently, capitalism or socialism are these labels we place to try and organize or define in a quick way. It saves us time in not needing to really think about people and what is motivating them. I like to dig into the root or motivation behind choices and statements.

Envy is a heck of a drug.

This is a bit over simplified, why do we even have a board of directors in the first place? Is this something required by law and if so when was that put in place, and what was the motivation behind it at the time? I am not going to do this research for you, if you care enough about this subject then enlighten the rest of us or do the leg work and become someone I respect...or don't and look like a socialist, it doesn't matter to me as you are not my kid.

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