The Myth that CEO pay doesn’t affect you

TheGrandmaster Economism: Bad Economics and the Rise of Inequality Leave a Comment

Why should ordinary people care about whether or not corporate CEOs and fund managers really deserve to make hundreds as opposed to tens of millions of dollars? First, poorly designed pay packages can have harmful effects both on the companies paying them and on the economy as a whole. Excessive compensation reduces profits for shareholders, a group that includes not just the wealthy but also ordinary people whose retirement funds are invested in the stock market.

The Right wingers like to say CEO’s provide jobs, hire, support you, and their pay doesn’t affect you. The economy is zero-sum, and the pie gets larger. But each company does only have so much money, and if it goes to the top, you get less. 

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