[mike777]

and if it doesn't work he's not out of pocket.


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[Cyberyeti]

Cthulhu D, on 2013-April-22, 00:36, said:

It's because of the way stock options work - if you get options today, that's the right to by Stock A at price $X on date Y. If the cost of the stock on date Y is less than X, your stock option is worthless - and it doesn't matter how much under X it is.

So say coming up to stock option day your current share price is $X-2, so your stock options are worthless. You can make a 25% bet that will increase the stock price by $10, 50% do nothing and 25% send the company bankrupt. The rational CEO will make that bet every time, because then he has a 25% of cashing it at $8 an option, and if it doesn't work he's not out of pocket.

Government can fix this.

Change the tax rules so that stock options are not as worthwhile if you sell the shares within 3 years.

Now sending the company bankrupt within 3 years is a very bad idea.

[Winstonm]

mike777, on 2013-April-21, 23:35, said:

Side note:

In my local paper was a very very interesting discussion with Cruthfield on the issue of too big to fail.
He was a big banker.


He suggested taking 5% of profits and set them aside.

His argument was better to take 5% than 33% of profits in making banks smaller.
If make USA banks smaller than nonUsa, read giant China, take profits.

He also noted that no one had any idea how to solve the issue of too big to fail.


He misses the main point not 5% or 33% but 100%....you lose 100% of your ownership....he missed this point.

a perfect example of non risk takers...missing the point.

Mike,

The guiding hand of capitalism is local competition - Adam Smith defined this notion in Wealth of Nations. The only way to reduce competition to the local level is to regulate mergers. Too big to fail banks are the direct result of Reagan's policies. Totally free markets do not work when a few mega-institutions control supply.

[Cthulhu D]

Cyberyeti, on 2013-April-22, 01:58, said:

Government can fix this.

Change the tax rules so that stock options are not as worthwhile if you sell the shares within 3 years.

Now sending the company bankrupt within 3 years is a very bad idea.

Sure - I think you should have to hold them for a 10 year minimum period and have some exposure to downside risk. Similarly, I think politicians wages and pensions should be linked to average incomes. But that's not where we are with 'Captains of Industry' at the present time.

[Winstonm]

As an aside, it is not government debt that is the problem - the problem is unemployment.

[mike777]

guys can we agree that taxes on others will not solve ineq?

if so how do you solve?


You may hate my suggestions but how do you solve? at the very least I see few agree.

[hrothgar]

mike777, on 2013-April-24, 00:55, said:

guys can we agree that taxes on others will not solve ineq?

No

[Cyberyeti]

Taxes and government intervention in general will not solve inequality, they can mitigate it a bit, but not necessarily how government would like them to.

Two examples from my life.

I was a well paid consultant in the IT industry, but doing that meant travelling away for a week at a time which I didn't really enjoy (I very much enjoyed the work but not the travel), but I put up with it because of the money I was making. The tax regs were changed, I decided it was no longer worth the hit to the quality of life for the reduced remuneration, so I downsized and got a much lower paid job near my home, costing the government a substantial amount of tax, and the general economy a lot of money.

So I'm in my low paid job (earning less in a day than I was in an hour) and the government puts up the minimum wage (which I wasn't on but most of the department was). Within 6 months the project I was on was being done in India.

[hrothgar]

Cyberyeti, on 2013-April-24, 04:53, said:

I was a well paid consultant in the IT industry, but doing that meant travelling away for a week at a time which I didn't really enjoy (I very much enjoyed the work but not the travel), but I put up with it because of the money I was making. The tax regs were changed, I decided it was no longer worth the hit to the quality of life for the reduced remuneration, so I downsized and got a much lower paid job near my home, costing the government a substantial amount of tax, and the general economy a lot of money.

Somehow I suspect that the company was able to fill the position in your absence which, of course, means that the government didn't loose any tax and the general economy didn't lose much in the way of money.

As for the outsourcing claim: I'd be surprised if a small increase in minimum wage had much impact at the margin...

[Cyberyeti]

hrothgar, on 2013-April-24, 06:22, said:

Somehow I suspect that the company was able to fill the position in your absence which, of course, means that the government didn't loose any tax and the general economy didn't lose much in the way of money.

As for the outsourcing claim: I'd be surprised if a small increase in minimum wage had much impact at the margin...

1. No, they shut the project down. Although if they had wanted somebody else for my position, it would be most likely somebody already earning similar money, effectively what would have happened is a shuffle that meant me coming out at the top end, and somebody else entering elsewhere on half the money.

2. It was not a small increase, that was the problem.

[hrothgar]

Cyberyeti, on 2013-April-24, 06:31, said:

1. No, they shut the project down. Although if they had wanted somebody else for my position, it would be most likely somebody already earning similar money, effectively what would have happened is a shuffle that meant me coming out at the top end, and somebody else entering elsewhere on half the money.

I don't mean to sound snarky, but:

If your company decided to shut the project down, this just means that one of your competitors enjoyed a windfall.
If you could have been replaced by someone making half your pay, this doesn't say much for your long term job security.

A single person voluntarily changing jobs to something that they enjoy more but pays less really isn't going to matter than much...

[Cyberyeti]

hrothgar, on 2013-April-24, 06:57, said:

I don't mean to sound snarky, but:

If your company decided to shut the project down, this just means that one of your competitors enjoyed a windfall.
If you could have been replaced by someone making half your pay, this doesn't say much for your long term job security.

A single person voluntarily changing jobs to something that they enjoy more but pays less really isn't going to matter than much...

You don't understand what I was saying.

My company would have replaced me with another consultant making a similar salary. He would have been replaced in his job by somebody making a similar salary. Someone 200 jobs down the line in another company would have left a vacancy filled by somebody on half my salary.

[barmar]

Cyberyeti, on 2013-April-24, 04:53, said:

So I'm in my low paid job (earning less in a day than I was in an hour) and the government puts up the minimum wage (which I wasn't on but most of the department was). Within 6 months the project I was on was being done in India.

What kind of work in the IT industry is done by minimum-wage workers?

[Cyberyeti]

barmar, on 2013-April-24, 09:58, said:

What kind of work in the IT industry is done by minimum-wage workers?

It wasn't in the IT industry, except as a user of IT.

[Winstonm]

mike777, on 2013-April-24, 00:55, said:

guys can we agree that taxes on others will not solve ineq?

if so how do you solve?


You may hate my suggestions but how do you solve? at the very least I see few agree.

Mike,

I don't think the goal has ever been to eliminate inequality but to reduce the size of the gap. No one is saying that an uneducated minimum skill worker should get the same annual payment as an owner of a business but that person should be able to receive health benefits and basic needs by way of taxing the upper ends progressively.

[hrothgar]

Winstonm, on 2013-April-24, 12:20, said:

Mike,

I don't think the goal has ever been to eliminate inequality but to reduce the size of the gap. No one is saying that an uneducated minimum skill worker should get the same annual payment as an owner of a business but that person should be able to receive health benefits and basic needs by way of taxing the upper ends progressively.

More importantly, his kids should have access to the same quality education...

[kenberg]

hrothgar, on 2013-April-24, 13:15, said:

More importantly, his kids should have access to the same quality education...

you won't be surprised to hear that this certainly matches my view. The exact same quality education may be an unreachable ideal but the gap now is, imo, absolutely beyond acceptability. that does not mean I have the total solution but surely a great deal more can be done if we make the decision to do so.

[Winstonm]

I certainly agree that equality or near equality of educational opportunities is high on the list of "needs fixed". The Reagan ideology that social programs should be paid for and managed by private charities and churches is at least equal in its fanciful, unrealistic idealism as belief in a perfect socialistic society. There needs to be adult discussion by adults about how to correct these problem - unfortunately, an emphasis on adult discourse would rule out about 98% of current Senate and Congressional seat holders.

[blackshoe]

Want everybody to be a millionaire? Easy. There's about 300 million people in the US, so print up 300 trillion dollars, and dole it out. Shazam! Everybody's a millionaire! Of course, their million bucks will buy maybe a loaf of bread, but what the heck.

[Winstonm]

blackshoe, on 2013-April-25, 00:11, said:

Want everybody to be a millionaire? Easy. There's about 300 million people in the US, so print up 300 trillion dollars, and dole it out. Shazam! Everybody's a millionaire! Of course, their million bucks will buy maybe a loaf of bread, but what the heck.

Let me once again point out...

(emphasis added)

Quote

I don't think the goal has ever been to eliminate inequality but to reduce the size of the gap. No one is saying that an uneducated minimum skill worker should get the same annual payment as an owner of a business but that person should be able to receive health benefits and basic needs by way of taxing the upper ends progressively