Apr 262014
 

A horrible article surfaced on Reddit…Coming from the wonderful state of California, obviously, the state is considering a law that would punish corporations whose CEOs make 100x their employees salaries. It was posted in /r/politics so naturally the hivemind will come out in support of this socialist policy.

Shakedownlab is open about its philosophy of libertarianism. We are people who are committed to taking ownership of our own lives. We do not believe in punishing others or holding others back. We believe this because it is something we embody every day of our lives as we try to improve ourselves. If you don’t believe this, I have no idea what you are doing reading this blog. And I also doubt your commitment to self-improvement and self-enlightenment.

Many comments remarked on the fact that this would give Californian companies another reason to relocate to more forgiving states. Yes, yes, all valid. But that’s not what I want to address right now. I want to comment on a user’s post regarding the disparity of a CEO and a low-level employee. Their comment,

To that are saying this would not accomplish anything I would say some laws are a statement of our ethics and morals in society. It’s a slap in the face to the workers that a CEO can make 400x what the they make. I believe that hard work should yield more reward but it is insane proposition on its face to believe someone works 400x harder than someone else that works. A CEO doesn’t have 100x the education, isn’t 100x smarter or more talented, and most certainly doesn’t work 100x longer or harder than the lowest paid full time employees. There just isn’t thatch variation in the human species without significant disabilities and not enough hours in the day. 

On the surface, this seems kind of reasonable. CEOs get paid so much more — this is NOT fair! Let’s dive deeper. What is fairness? Well, to the socialist, such as the reddit commenter above, fairness is “equal effort = equal pay”. And since it is impossible to 100x smarter, 100x more educated, and put in 100x more effort simply because there aren’t enough hours in a day then it is not justifiable to pay them 100x the salary.

This person lacks a fundamental understanding of business. And since they have no understanding, they resort to emotional means and “fairness” argument.

 

The socialist above is correct on a few items.

1) If this law somehow does pass, it is a reflection on California’s determination to put another dent into capitalism and strip away free market forces.

2) A CEO likely does not have 100x the education, is not 100x smarter, and does not work 100x harder….

Correct on all counts.

…..However, the socialist left out one very important detail. A CEO produces 100x more in value. And this is actually likely. Think of the CEO and all the decisions he has to make on a daily basis that can produce or cost the company millions of dollars. Now think of the cashier that quit and was replaced the next day by another cashier.

Socialists focus on effort put in by each employee. But effort does not equate to the impact you have on the company. Shit, if an employee works 4 hours a week and produced 1000x value than an employee who works 60 hours a week, that 4-hour a week employee may be paid 1000x better. And guess what? That’s completely okay. Here in Shakedownlab, we constantly advocate being a producer of value. You get what you are worth and you should always endeavor to produce better value. You are not entitled to anything. Socialists believe those two individuals should be paid the same. This is not realistic, and better yet, it’s immoral.

Every time I read the news and see something like this, I have to ask myself, “Who is John Galt?”

 

 

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