An-Dân Nguyễn @ngnndn - Twitter Profile

An-Dân Nguyễn @ngnndn

13 days ago

Very well explained

Daniel Priestley

@DanielPriestley

14 days ago

Socialists imagine a class struggle. In their made-up fantasy the CEO is in competition with low level workers, the wealthy entrepreneur is stealing from the underpaid nurse. In reality, workers do not compete vertically they compete horizontally. Entrepreneurs compete with entrepreneurs. Investors outbid each other. CEOs are benchmarked against other CEOs. Nurses are hired from a pool of nurses. Etc. The CEOs pay has no correlation to the entry level workers. The Football star on £300K a week isn’t linked to the person selling drinks in the stadium. A biotech entrepreneur raising VC capital isn’t paid relative to a cleaner. What is linked is the demand and supply dynamic of each role. If a company places an ad for a qualified truck driver and 150 people apply for the role, then the company knows it does not need to increase wages for that role. If the company has an open role for months, it is forced to look at the compensation package. Same for a CEO. A board representing shareholders would like to hire a CEO for a lot less if they could. Their dream scenario would be to hire a CEO who brings in institutional investors, attracts top executives, drives innovation and growth, keeps margins steady and is a good public face for the business even under pressure. It turns out there aren’t a lot of these people looking for work and if you want one you have to pay more than other companies are offering. The class struggle isn’t vertical it’s horizontal. CEOs are in competition with CEOs. Retail workers are in competition with retail workers. Demand and supply dynamics set the price. Sure you can say that a CEO want’s profitability and would like wages to be lower BUT it’s not up to the CEO - demand and supply tension sets the price of workers. An Airline like RyanAir would like free pilots if they could get them but they can’t… so they pay the market rate. The reason incomes are rising at the top and falling at the bottom is not class warfare. It’s technology and globalisation. Technology makes basic jobs simple, remote or fully automated. At the same time tech makes executive roles more leveraged, more important and more valuable. A CEO used to run a smaller organisation. Today a CEO who’s 2% better on a $5B company is generating $100M more. Seems sensible to try and pay a few million to get $100M. Globalisation has put workers from all over the world in completion with each other - downward pressure on wages. Globalisation has given CEOs more market opportunities to explore - upside opportunity to unlock. The rich are not very interested in buying houses that poor people own. The poor are not buying up the homes the rich want. They are separate groups living separate lives. Try finding the genuinely rich people whose strategy is to hoard normal residential homes - it barely exists as a thing. About 85% of landlords are people who own 1-4 properties. Super-landlords (100+ properties) are 0.2% of landlords and own a tiny fraction of the 30M homes in the UK… and they’re heavily taxed. Class warfare isn’t real. It’s an imagined war in the minds of socialists. Demand and supply dynamics are real. To the degree it is measured in class, it’s a horizontal competition not a vertical one.

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