I agree that capping prices inevitably leads to unintended consequences, many of which outweigh any potential short-term desired outcomes - and dictating CEO pay would be capping the price of CEOs. The government already tries to get at that top pay and some creative ways that compensation is structured to shelter it. Some of those ways purport to tie pay to performance, such as stock options, but there are some incentives for possible CEO behavior in paying with stock shares that can actually hurt the company long term built into those as well. It's a constant balancing act to drive and reward performance today without causing undue harm to the future.
Speaking of perverse incentives, when they look at government waste, they need to take a close look at some of the bizarre incentives that emerge from regulations. Utilities can have some strange economic outcomes from the way they are regulated that hurt consumers. Something tells me a good many of those sorts of unintended outcomes might actually have been known, but since the money goes back into the pockets of a few "in the know", it wasn't a worry when the regulations passed.
Yes, your "constant balancing act" sums the situation up nicely.
It's hard to tell what is intentional and what is, as you say, unintended consequences. From a circumstantial evidence standpoint there do see to be a lot of rich politicians and a lot of money seems to disappear.
I share your (cautious) enthusiasm and hope the recent changes in the US reflect upcoming changes in Canada. Otherwise, Atlas may eventually have to shrug
If you are interested in politics and you believe you can influence others,it's definitely the time to put on those the right is crazy hats. Caplan also had a short article where he argued that fre markets beat politics, you might wanna check it out,similar to yours
Yes, anti-monopoly rules are necessary. Two problems: 1) the rules tend to be enforced differently depending on who is in power and 2) Is there a metric for when the government should interfere or is it just vibes?
Your last point is commonly referred to as the agency problem or the principal–agent problem. This situation arises when managers, who are entrusted with operating the company, may pursue their own interests rather than prioritizing the goals of the owners or shareholders. Such conflicts can lead to decisions that do not align with shareholder interests, potentially resulting in inefficiencies or financial losses. One example would be private jets. Very nice if you're a manager, very expensive if you "just" own stock.
I agree that capping prices inevitably leads to unintended consequences, many of which outweigh any potential short-term desired outcomes - and dictating CEO pay would be capping the price of CEOs. The government already tries to get at that top pay and some creative ways that compensation is structured to shelter it. Some of those ways purport to tie pay to performance, such as stock options, but there are some incentives for possible CEO behavior in paying with stock shares that can actually hurt the company long term built into those as well. It's a constant balancing act to drive and reward performance today without causing undue harm to the future.
Speaking of perverse incentives, when they look at government waste, they need to take a close look at some of the bizarre incentives that emerge from regulations. Utilities can have some strange economic outcomes from the way they are regulated that hurt consumers. Something tells me a good many of those sorts of unintended outcomes might actually have been known, but since the money goes back into the pockets of a few "in the know", it wasn't a worry when the regulations passed.
Yes, your "constant balancing act" sums the situation up nicely.
It's hard to tell what is intentional and what is, as you say, unintended consequences. From a circumstantial evidence standpoint there do see to be a lot of rich politicians and a lot of money seems to disappear.
I share your (cautious) enthusiasm and hope the recent changes in the US reflect upcoming changes in Canada. Otherwise, Atlas may eventually have to shrug
We probably have to wait another 9 months or so. On the plus side that should provide time to learn what works in the US.
If you are interested in politics and you believe you can influence others,it's definitely the time to put on those the right is crazy hats. Caplan also had a short article where he argued that fre markets beat politics, you might wanna check it out,similar to yours
Thanks I'll do that.
The better idea is strong enforcement of rules against oligopoly and anticompetitive behavior (including price discrimination).
Concentration of industry drives concentration of personal incomes and wealth.
Why?
A.) Company profit margins increase dramatically from lower competition (and resulting pricing power)
B.) CxO salaries increase dramatically because scale drives exec compensation
If you want decreased spread of low risk pay between CEO and frontline, then you want more, smaller companies.
Note: Big company CEOs aren’t risking their own capital as founders do. Shareholders carry the risk, and their contracts shield them from most risk.
Yes, anti-monopoly rules are necessary. Two problems: 1) the rules tend to be enforced differently depending on who is in power and 2) Is there a metric for when the government should interfere or is it just vibes?
Your last point is commonly referred to as the agency problem or the principal–agent problem. This situation arises when managers, who are entrusted with operating the company, may pursue their own interests rather than prioritizing the goals of the owners or shareholders. Such conflicts can lead to decisions that do not align with shareholder interests, potentially resulting in inefficiencies or financial losses. One example would be private jets. Very nice if you're a manager, very expensive if you "just" own stock.
Thanks for the comment Douglass!