"He doesn't leave anything on the table, does he?"

January 4, 2012 6:22 AM

"He doesn’t leave anything on the table, does he?" John Hammergren is the CEO of McKesson, a major healthcare system and pharmaceutical provider. He earned $145 million last year, not including an employer-contributed $13 million to his executive pension plan (the employee pension plan was shuttered in 1997, before Hammergren's tenure began), unlimited personal use of a corporate private jet, car and chauffeur, and other perks like a lifetime personal assistant and office and financial counselor. In his ten years with McKesson, Hammergren has earned over $500 million. The Daily Beast dives into the extraordinary compensation of the 0.01%. If you're so inclined, the EDGAR filing has the excruciating detail, including bits like this:

Our executive compensation program is based on a philosophy of “pay for performance.” For an executive to receive compensation above his or her target amount, the Company must surpass the target financial goals. In addition, the executive must be able to identify the ways he or she contributed to those results. To foster a performance-driven culture, we apply this philosophy to both annual and long-term compensation. This means that performance surpassing our pre-established goals will result in increased compensation. Equally, insufficient executive and corporate performance will result in little or no incentive-based compensation.

Our executive compensation program has three key goals: aligning management interests with those of stockholders, attracting and retaining highly qualified individuals, and creating long-term value without promoting excessive risk-taking. To this end, direct compensation is comprised of the following components: base salary, annual performance-based bonus, long-term performance-based bonus and long-term equity awards, currently comprised of stock options and performance-based restricted stock units. Other benefits and perquisites are added to attract and retain talented executives to the degree such benefits are competitively necessary, or to the degree that such benefits are determined by the Compensation Committee to be in the best interest of the Company and its stockholders.

An executive’s target compensation is based on his or her level of experience, his or her individual performance, and the performance of the Company. As an executive’s ability to impact financial performance increases, so does the proportion of his or her “at-risk” compensation. In addition, target long-term compensation grows proportionately as job responsibility increases.

posted by disillusioned (93 comments total)

I've yet to RTFA but just wanted to note that while I've seen eponysterical comments, this FPP exemplifies the word.
posted by infini at 6:27 AM on January 4 [4 favorites]

It's funny how of course a company's (or university's) CEO has to have a gigantic salary and compensation package, because they need to attract the best and the brightest and retain them and blah blah blah....but how this theory never seems to apply to those who do the work - the teaching, the making of widgets, whatever - that makes the company's stock price (or US News and World Report's ranking) rise.
posted by rtha at 6:34 AM on January 4 [35 favorites]

At some point the question becomes, why should I care. I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets.

If the shareholders want to get upset with the Board that awarded the compensation, that's their right it's their money that's being given away. However, I suspect that shareholders do about as good a job electing Board members as we do in electing legislators... too few of us care...too few are concerned... too few are educated...too many are just lazy....

My advice, vote that socialist ticket the next time you go to the polls.
posted by tomswift at 6:36 AM on January 4 [2 favorites]

tomswift: "At some point the question becomes, why should I care. I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets."

Guess you missed all of those corporate tax repatriation holidays and US businesses paying the lowest corporate tax rates ever?

They may not be taking money directly out of your pockets, but US infrastructure is fucked because companies like this one use it and pretty much don't pay their share.
posted by Happy Dave at 6:40 AM on January 4 [34 favorites]

tomswift: At some point the question becomes, why should I care. I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets.

Are you looking for outrage tips? It's not usually direct impact that outrages us, it's empathy for those who are impacted. I was only sad, personally, until the detail that he had $13m contributed to his pension plan... while his employees' plan was cut in 1997. That did spark a little empathetic outrage.
posted by gilrain at 6:40 AM on January 4 [3 favorites]

All the CEO has to do to get the big payout, is to manage expectations so the 'target financial goals' are lower than the most expected result for most years. It's just BS packed into pretty words. Why would the board members set the expectations (too) high? It's the same guys the CEO meets in a lot of other situations, so you'll scratch my back, I'll scratch your back.
posted by flif at 6:40 AM on January 4 [2 favorites]

Happy Dave...gee, I'm sorry, I wasn't aware that those holidays and low corporate taxes were a direct result of this. I guess the point I'm trying to make is that this situation isn't the cause of the inequity, it's the symptom.
posted by tomswift at 6:43 AM on January 4 [1 favorite]

At some point the question becomes, why should I care. I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets.

Are you sure you don't? Say for example I've got my the Vanguard target date 2050 fund as an IRA. That fund is ~62% comprised of the Vanguard Total Stock Market Index fund. That index fund is ~12% comprised of health care stocks, and there's a pretty good chance that McKesson makes up some part of that.
posted by ghharr at 6:44 AM on January 4 [2 favorites]

I guess I don't have the CEO mentality, cuz as soon as I had my first hundred million dollars, I'd never work another fucking day in my life.
posted by weinbot at 6:45 AM on January 4 [66 favorites]

I do IT in a hospital. I recently upgraded one of our McKesson products and after the upgrade the product would no longer work. I called their support line and the conversation went like this:

Me: "Hi, I just upgraded to version 10 and nothing is working."

Tech: "ok, go here. Go here. Go here. Find the file whatever.exe. Rename it to .old. Go to the install folder and copy the .exe to the working folder. Ok should be all set."

Me: "Wow. You knew exactly what the issue was. I'm impressed."

Tech: "Yeah, there's a problem where the .exe doesn't get upgraded in this release."

*sound of sad trombone*

So, Mr. Hammergren, perhaps you could spend a little of that $145,000,000 for some QC in your company so that when they release an upgrade it actually upgrades the god damn .exe so I don't have to keep 200 people waiting for their product to work. I mean, the .exe is sort of the thing that is supposed to be upgraded, right?
posted by bondcliff at 6:47 AM on January 4 [32 favorites]

tomswift: "this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets."

Take a look at who McKesson's customers are.

If you live in the US, I'd bet money that you've consumed something that's passed through McKesson's supply chain in the past few months. They're the 800-lb juggernaut of healthcare supply and distribution vendors.

They can get away with this, because the healthcare industry is famously competitive, even when it comes to fairly generic products such as the ones that McKesson sell. This is how they can earn insane profits, and pay their CEO $145 million a year.
posted by schmod at 6:50 AM on January 4 [5 favorites]

tomswift: "Happy Dave...gee, I'm sorry, I wasn't aware that those holidays and low corporate taxes were a direct result of this. I guess the point I'm trying to make is that this situation isn't the cause of the inequity, it's the symptom."


Your question was why you should care. My answer was because companies like this one pay staggeringly large amounts of money to men like Hammergren while simultaneously gutting their workforces, paying fractions of the taxes they should be paying and wrecking the security of the poor jerks who still have jobs.

I don't know if Hammergren's worth that money. But I do know that corporates don't exist in a vacuum, dreams of transnational tax havens aside. Eventually something's gotta give, and it's likely to be collapsing consumer demand mixed with half-educated workforces and increasingly scarce raw materials. You can't chase quarterly numbers forever and create sustainable businesses.
posted by Happy Dave at 6:52 AM on January 4 [14 favorites]

Hammergren's salary so far in 2012 : $145,000,000 / 525,600 min. per year (thanks, Rent!) * 60 min. per hour * 24 hours per day * 3 days so far in 2012 = $1,191,780.

Wow. He must work really hard.
posted by davidjmcgee at 6:55 AM on January 4 [12 favorites]

If the shareholders want to get upset with the Board that awarded the compensation, that's their right it's their money that's being given away.

Amusingly enough, they'd still be angry at the same person: the end of the article notes that "[i]t helps Hammergren’s cause that since 2002 he’s also served as chairman of the board, meaning he runs the body that decides what the company pays him and his top people."
posted by cjelli at 6:56 AM on January 4 [20 favorites]

If you live in the US, I'd bet money that you've consumed something that's passed through McKesson's supply chain in the past few months.

We have one of these in every nursing unit and satellite pharmacy throught our 2 hospitals, literally dozens. I have no idea what they cost but I wouldn't be surprised if it weren't in the six figure range for each unit, with other costs for maintenance and upgrades. So that is millions (or tens of millions) of dollars in just one department in one institution. They pass the cost of his compensation on to us, and we pass it on to insurance companies and they pass it on to those who buy their health insurance.
posted by TedW at 6:58 AM on January 4 [11 favorites]

I wouldn't be surprised if it weren't...

Ugh; I would be surprised if it weren't, or I wouldn't be surprised if it were; take your pick.
posted by TedW at 7:00 AM on January 4

I hear what y'all are saying, I really do, and I can't argue with it, but I have to feel that the problem here is deeper than this guy's salary. I think I'm just trying to say, probably poorly, that the problem is systemic, this issue is a resulting suface blemish.
posted by tomswift at 7:01 AM on January 4 [1 favorite]

[i]t helps Hammergren’s cause that since 2002 he’s also served as chairman of the board, meaning he runs the body that decides what the company pays him and his top people."

Um, holy shit. That is all kinds of shady.
posted by LN at 7:03 AM on January 4 [2 favorites]

Why do you think this company has the cash to pay its CEO like this? McKesson is effectively protected from new entrants in the healthcare IT market in part by regulations cheered on by progressives. If their margins are so high that they can drop $150m/year on a CEO, health IT is a market that other people could make money in, too - but potential competitors face giant barriers to entry.

Also, medical care is a relatively concentrated industry - again in part because of, you guessed it, regulations cheered on by progressives. Sell to a few hospital chains and you more or less have the market tied up.

I'm just so sick of these unhelpful one-dimensional portrayals of "the 1%". It's a systemic, not a moral problem: get rid of these 1%-ers and there will be more to take their place.
posted by downing street memo at 7:09 AM on January 4

McKesson's health coders make $12.41/hr. That's $25,812/year if they work full time. He made that much money between 12:00am and 1:30am January 1st.

I'd say that's also a moral problem.
posted by davidjmcgee at 7:17 AM on January 4 [74 favorites]

Why do you think this company has the cash to pay its CEO like this? McKesson is effectively protected from new entrants in the healthcare IT market in part by regulations cheered on by progressives.

Yeah! If I want to sell my smelly old sweat socks as bandages I SHOULD BE ABLE TO.

Let the markets decide! Damn no good reg'lators!
posted by Max Power at 7:19 AM on January 4 [2 favorites]

schmod: "because the healthcare industry is famously competitive"

Er. I meant to say noncompetitive there.
posted by schmod at 7:21 AM on January 4

since 2002 he’s also served as chairman of the board, meaning he runs the body that decides what the company pays him and his top people."

Um, holy shit. That is all kinds of shady.

It is also very common in the US; the practice of having the CEO also be chairman of the board is discussed here, with some stats here.
posted by TedW at 7:22 AM on January 4 [2 favorites]

Yeah! If I want to sell my smelly old sweat socks as bandages I SHOULD BE ABLE TO.

Let the markets decide! Damn no good reg'lators!

You know, there is a middle ground between "no regulation" and regulation that distorts the market badly enough to result in monopoly rents to big firms.
posted by downing street memo at 7:22 AM on January 4 [3 favorites]

You know, there is a middle ground between "no regulation" and regulation that distorts the market badly enough to result in monopoly rents to big firms.

Given the mergers, buy outs, and consolidations I've seen in my 17 years of attentive, sentient life... I think we have both option a and option b going on in a weirdly not mutually exclusive way.
posted by Slackermagee at 7:25 AM on January 4 [1 favorite]

why should I care?

Because in order to pay that salary, the company needs to make more profit. More profit means charging more and reducing costs. Labor is the biggest cost in most service industries, so to reduce costs means to reduce the number of staff and/or pay them less. Charging more means that the company's customers pay more, and because health care costs are largely socialized, this is a cost to all taxpayers.

So you should care because that salary means that we are all paying more for health care and there are fewer people with jobs in someone's community.
posted by RandlePatrickMcMurphy at 7:31 AM on January 4 [6 favorites]

But the mergers and buyouts and consolidations aren't separate from the regulation; regulation can spur rounds of consolidation in industry.

My overall point is, life does not fit neatly into narratives, and it especially doesn't fit neatly into a narrative about the repugnant rich bilking the poor and lighting cigars with $100 bills. The phenomenon of diverging incomes in western countries is extraordinarily complex, the product of an economy that's incomprehensible by any one person.

I don't have a problem buying the notion that income inequality is in part due to the malfeasance and ill-gotten political achievements of the rich, but I do have a problem with the creation of a story that purports to explain the entire phenomenon as such. Society and the economy are too complicated for blame and causality.
posted by downing street memo at 7:32 AM on January 4 [4 favorites]

Also, from the article:

Options aren’t free; they dilute the worth of everyone’s shares. And the practice hurts more than the privileged few. Anyone who owns an index fund of the country’s 500 largest companies owns shares in McKesson, a Fortune 500 company. “It’s nothing short of a massive wealth transfer from the retirement accounts of middle-class Americans to a privileged few,” hidden in the guise of stock-option programs like McKesson’s...
posted by RandlePatrickMcMurphy at 7:34 AM on January 4 [11 favorites]

I worked for McKesson and, prior to that, HBOC, the company that was the cause of McKesson's woes back in the 90s. The article is not kidding about Hammergren being the last man standing. Three of HBOC's top dogs did time for their actions, and the then-CEO of McKesson resigned, partly out of embarrassment that McK failed to perform proper due dilgence during the merger.

If you're not in healthcare, I'm not surprised you've never heard of McKesson. Next time you're in the doctor's office, take a look at the name on the medical supply boxes in the exam rooms. All those rubber gloves, cotton swabs, etc, probably came from McKesson. They also own Zee Medical, the company that distributes and supplies most of the first aid kits you find in break rooms and warehouse around the US. HBOC, the company they merged with, is the IT/software side of the house. While they were the smaller of the two companies when they merged, HBOC's revenues were 10 times McKesson (before the illegal restating, that is).

Havent' been keeping track of the company since I left in 2002, but I really doubt that Hammergren has been doing anything that amazing to justify his heinous salary. He just happens to be riding a company that's more or less recession proof. As long as hospitals and clinics needs medical supplies, McKesson's gonna make dough.
posted by Larry Duke at 7:36 AM on January 4 [10 favorites]

it especially doesn't fit neatly into a narrative about the repugnant rich bilking the poor and lighting cigars with $100 bills

I need 10 ccs of citation, stat!
posted by fullerine at 7:43 AM on January 4

My understanding is that CEO compensation has risen quite specifically because it's a "club" where CEOs appoint other CEOs to their boards and compensation committees so that it's in their own interest to inflate CEO compensation.

There is a serious problem with inequality in the U.S. specifically, which has grown over the past couple of decades. The outcome is a political and business class substantially disconnected from the experiences of over 90% of the population, changing the rules to protect their status, and a shrinking middle class. This CEO's compensation is a symptom, but at a purely practical level, his inflated compensation comes out of reduced compensation to the rest of the company's workforce.
posted by idb at 7:46 AM on January 4 [7 favorites]

We have one of these in every nursing unit and satellite pharmacy throught our 2 hospitals, literally dozens. I have no idea what they cost but I wouldn't be surprised if it weren't in the six figure range for each unit, with other costs for maintenance and upgrades. So that is millions (or tens of millions) of dollars in just one department in one institution. They pass the cost of his compensation on to us, and we pass it on to insurance companies and they pass it on to those who buy their health insurance.

And what would be the cost of those machines if Mr. Hammergren decided, out of the kindness of his heart, to work for free for McKesson? I bet they would cost exactly the same as they do now.
posted by gyc at 7:47 AM on January 4

Why do you think this company has the cash to pay its CEO like this? McKesson is effectively protected from new entrants in the healthcare IT market in part by regulations cheered on by progressives...

Also, medical care is a relatively concentrated industry - again in part because of, you guessed it, regulations cheered on by progressives.

I could determine the "cheered on by progressives" part on my own, but I find this argument sufficiently vague that I feel comfortable ignoring it completely. Some links or references seem necessary to make a point other than "regulations are a convenient boogieman."
posted by Critical_Beatdown at 7:57 AM on January 4 [4 favorites]

Way to swallow, CEO-cheerers.
posted by maxwelton at 8:06 AM on January 4 [2 favorites]

Wow, with compensation like that he sure must create a lot of jobs.
posted by usonian at 8:13 AM on January 4 [5 favorites]

tomswift: At some point the question becomes, why should I care. I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets.

Something is happening here and you don't know what it is, do you, Mr. Jones?

posted by Skygazer at 8:25 AM on January 4 [1 favorite]

Something is happening here and you don't know what it is, do you, Mr. Jones?


Envy?
posted by gyc at 8:40 AM on January 4

Envy?


Disgust.
posted by Skygazer at 8:52 AM on January 4 [5 favorites]

And what would be the cost of those machines if Mr. Hammergren decided, out of the kindness of his heart, to work for free for McKesson? I bet they would cost exactly the same as they do now.

Probably. But you're ignoring that if the executive pay structure weren't so messed up to begin with, there would be a significant difference in how much the machinery cost to the end user. Or are you suggesting that costs incurred in the running of a company have no bearing on the price charged for the company's product?
posted by bardophile at 8:57 AM on January 4 [1 favorite]

Because in order to pay that salary, the company needs to make more profit. More profit means charging more and reducing costs. Labor is the biggest cost in most service industries, so to reduce costs means to reduce the number of staff and/or pay them less. Charging more means that the company's customers pay more, and because health care costs are largely socialized, this is a cost to all taxpayers.

So you should care because that salary means that we are all paying more for health care and there are fewer people with jobs in someone's community.

Whether or not he makes $10 Million or $145 Million, this isn't more or less true. That's how businesses operate; you make a product for as little as you can and sell it for as much as you can. You employ the fewest number of people you can before the cost/benefit goes above 1 and you charge whatever you can get for it.

Plus, people are equating hard work with worth. My grandfather thinks a programmer or economist who makes $50-100k to sit at a desk and push numbers around is not really working hard, and the piece of the puzzle he's missing is what they produce is what's valuable, not the sweat on their brow. Steve Jobs compared to the two CEO's at RIM perfectly portray how valuable a good CEO is; one with vision can be worth tens of billions of dollars and employ thousands of people by providing strong direction, vision and making good deals.

Why is it we only see the cost and not the benefit of a good CEO?
posted by Rodrigo Lamaitre at 8:59 AM on January 4 [1 favorite]

> And what would be the cost of those machines if Mr. Hammergren decided, out of the kindness of his heart, to work for free for McKesson? I bet they would cost exactly the same as they do now.

Fascinating! So you believe that the money to compensate Hammergren simply appears from thin air? Do you have any proof of this?

Me, I'd go with the classical accounting of this, which would amortize all of the costs involved in making the machines, including salarles, into the cost of the machine.

Seems to me that the half billion dollars that went into Hammergren's compensation was money that was spent on health care and diverted into the pockets of someone who neither doing a particularly excellent job, presiding over a company that was outperforming its competitors, nor doing a service to the citizens of America.

To believe that that half billion compensation simply came from nowhere and had no effect on the healthcare system or the people paying into it is literally like believing in the Tooth Fairy.
> > Something is happening here and you don't know what it is, do you, Mr. Jones?
> Envy?

Ouch! You sure put him in his place!

Most people might have some moral qualms at someone who shuts off the pension plan for all his workers, while simultaneously getting $13 million a year put in his own personal pension, but not you! The only reason we could possibly have any negative feelings about Hammergren is clearly our own greed and we're just sitting there in envy, given the choice we'd switch places with this paragon of capitalism in a moment.

No. This is a greedy, evil man, who not only heisted hundreds of millions of dollars from his workers, stockholders and clients, but committed the worst sin that capitalism has, he did not provide value comparable to his compensation.

And overall, this idea that the poor, poor man accidentally got this money - it's not a "cause" but a "symptom", in other words - well, it seems to me like he acted aggressively to divert this money from his clients, from his stockholders, and into his pocket. It seems to me from reading the articles (you did read the articles, right?) that he caused this tremendous flow of cash into his pocket. Is there some hidden fact missing that shows that this windfall was caused by outside forces?
posted by lupus_yonderboy at 9:03 AM on January 4 [16 favorites]

If you ascribe criticism of high levels of compensation to some core emotion like envy, then I think it would help to have a coherent explanation why the situation is so different in the U.S. compared to other countries, and why inequality (and social mobility for that matter) has dramatically changed in the past few decades.
posted by idb at 9:03 AM on January 4 [2 favorites]

> Why is it we only see the cost and not the benefit of a good CEO?

Why are you talking about "good CEOs" when this company has systematically and dramatically underperformed the market during this man's tenure?
posted by lupus_yonderboy at 9:04 AM on January 4 [2 favorites]

Why you should care: CEO compensation structure is somewhat based on the concept of what other CEO's make.
posted by Blue_Villain at 9:05 AM on January 4 [5 favorites]

I recommend that everyone read the SEC disclosures for their company - they're usually quite revealing. For example, at my old company our staff performance review raises maxed out at a theoretical 8%, although no one I know ever got that much. In contrast, the bonuses paid to management had a floor of 8%, even if that person received an unsatisfactory review.

It's good to be king, I guess.
posted by winna at 9:17 AM on January 4 [10 favorites]

Why is it we only see the cost and not the benefit of a good CEO?

I agree with everything you said, except this. I think the economic literature is pretty clear that CEOs have relatively little effect on their company's trajectories, and most opinions otherwise are post-hoc narrative fallacies.

What's different is that CEO's in market-dominant companies are in a position of holding their companies over barrels - they can demand (and receive) exorbitant compensation because leadership shifts are extraordinarily risky. They can impact stock prices, investor confidence, analyst opinions, just about everything.
posted by downing street memo at 9:25 AM on January 4 [1 favorite]

I recommend that everyone read the SEC disclosures for their company

Yes!

The filing linked here is a def14a, a definitive proxy statement. It is filed before the annual shareholder meeting. Shareholders need to vote. Your broker will vote for you if you don't send your proxy card.

Read the rest of the filings here
posted by Ad hominem at 9:29 AM on January 4

Wow, with compensation like that he sure must create a lot of jobs.

By my math, his company could afford to create nearly 6,000 new full-time health coder jobs with just his annual salary alone.

But surely, he creates that many jobs every year just by taking his yacht out a couple of times a year.
posted by saulgoodman at 9:34 AM on January 4 [5 favorites]

Great link, he does it all in the name of for-profit healthcare, which has not really created innovation (on the delivery side) and does it from a government priveleged space of monopoly provided assistance to pharmaceuticals (legit or not is another debate) and the inability to even sue your HMO.

Bigger point, is the talent of the top 500 CEO's really THAT unique. Millions of people have IQs of their level, and has been said, they profit from the discoveries of people whose IQ's are of that level. But, does business acumen or performance improvement really that exclusive of a thing? (The Steve Jobs/Pepsi CEO case is good -- that CEO who "branded Pepsi to profitability" -- was terrible for for Steve Jobs). Yet, he was compensated amazingly.

This type of compensation -- supposedly for amazing talent -- occurs in the sports arena though. Perhaps 5-6 QB's can and 5-6 people DO play their position as well as Brees, Mannning, Roethlisberger, Brady -- in an open, competitive market for their talent. But, these people have a truly amazing skill and we see it and know it. Teams are LOST without them. It has to be why Buffalo gave Ryan Fitzpatrick $60 million.

Why the CEO mystique is equally as heralded and compensated I have no clue. GE has not lost much of a step once Welch stepped away, nor has Disney, or Coca-Cola, etc. It's not that talent at that level is not required, it is, it's just I doubt to the point that's it's so exclusive to be compensated so highly.
posted by skepticallypleased at 9:48 AM on January 4 [3 favorites]

When you have the power to authorize yourself a raise ...
posted by infini at 9:56 AM on January 4 [1 favorite]

By my math, his company could afford to create nearly 6,000 new full-time health coder jobs with just his annual salary alone.

Someone should make this into a slogan. "Jobs for real Americans" , "Fire a CEO, hire a town", something along those lines.
posted by Go Banana at 10:06 AM on January 4 [3 favorites]

This is just my opinion, but I think we're never going to have economic and distributive justice in the US until we acknowledge that money and wealth are, to some extent, public property, or at least public resources, animated in their utility by common and universal traction. Everyone has an interest in the distribution of money because its value is predicated on the fact that we all have to use it as a medium of exchange; every dollar has power because everyone participates in the dollar, so to speak, but only a very few have the power to negotiate its distribution. The way we treat money now is similar to the way land was treated under feudalism.
posted by clockzero at 10:13 AM on January 4 [4 favorites]

By my math, his company could afford to create nearly 6,000 new full-time health coder jobs with just his annual salary alone.

I'm pretty sure I've had this go-round with you before, but you know this reasoning is absurd, right? If they needed more coders, they'd hire more coders.

Plus, medical coding and billing is one of those evil tasks that is increasingly automatable (hence the low pay).
posted by downing street memo at 10:17 AM on January 4 [1 favorite]

By my math, his company could afford to create nearly 6,000 new full-time health coder jobs with just his annual salary alone.

But surely, he creates that many jobs every year just by taking his yacht out a couple of times a year.


This argument is common here, but is pretty meaningless. Sure, it's possible that money could hire 6,000 new workers. Except they likely don't need 6,000 new workers.

It's also very likely that the money is already creating new jobs, unless he's stuffing it in his mattress.

The guy sounds like a crappy ceo. But let's not match stupidity with stupidity.
posted by 2N2222 at 10:22 AM on January 4 [2 favorites]

By my math, his company could afford to create nearly 6,000 new full-time health coder jobs with just his annual salary alone.

But surely, he creates that many jobs every year just by taking his yacht out a couple of times a year.

Here is the thing. What are they going to do with 6,000 medical coders. You know what those are right? They assign a code to a diagnosis or procedure for medical records and billing.

When he buys a yacht, he employs yachtmakers and helps to pay the hundreds of people at the marina etc.

I am all for some guys getting 50m a year. As long as they spend all of it! If you are raking in the big bucks spread that shit around. I don't want to see 20m in 20s in the trunk of your lambo (I'm looking at you 50 cent)
posted by Ad hominem at 10:24 AM on January 4 [1 favorite]

Maybe it's just all the History of Rome I've been listening to, but every year I feel like proscription is going to be the only viable solution. And that's just all kinds of depressing.
posted by Dark Messiah at 10:27 AM on January 4

Envy?

You find envy distasteful? How about concern for the health and well-being of Mr. Hammergren himself, then?

Before the tiny violins drown me out: shouldn't society be concerned about the alienation that accompanies any one individual becoming so revoltingly wealthy? Isn't it a problem of general concern, not just a matter for the shareholders (and their customers and their patients, or not?) if such wealth results in the recipient becoming, or being seen as, no longer quite human?
posted by GeorgeBickham at 10:28 AM on January 4 [2 favorites]

I think we need to reconsider the meaning of the word "earned".
posted by IndigoJones at 10:29 AM on January 4 [6 favorites]

When he buys a yacht, he employs yachtmakers and helps to pay the hundreds of people at the marina etc.

He'd better get to work. He'll need to buy at least a couple thousand a year to generate as much economic activity at the lower end as hiring 6,000 new full time people would generate. Especially considering the problem of the diminishing marginal utility of big stockpiles of money. That rich guy's extra million, economically, just isn't worth as much as a poor man's buck, in strict economic terms.
posted by saulgoodman at 10:30 AM on January 4 [10 favorites]

My mom does medical coding on the weekends for the hell of it, she became a certified coder while getting her nursing home adminstrator license.
posted by Ad hominem at 10:32 AM on January 4

Converting doctor notes into billing codes is the best use of healthcare dollars? Have we all just lost sight of the big picture here?
posted by smackfu at 10:36 AM on January 4 [5 favorites]

> Before the tiny violins drown me out: shouldn't society be concerned about the alienation that accompanies any one individual becoming so revoltingly wealthy?

I think sociopaths start off pre-alienated. Society should more be concerned about allowing sociopaths these jobs in the first place.
posted by lupus_yonderboy at 10:38 AM on January 4

Re-reading the article:

> If Hammergren loses his job due to a change in ownership, he receives an immediate $469 million payout, GMI found—giving him perverse incentive to see it happen.

So do tell me - who possibly benefits from this clause - a clause which encourages this man to run the company into the ground to collect the half-billion dollar windfall - except Hammergren?
posted by lupus_yonderboy at 10:40 AM on January 4 [2 favorites]

Converting doctor notes into billing codes is the best use of healthcare dollars? Have we all just lost sight of the big picture here?

It's not and we did 30 or so years ago. Remember that paperwork alone comprises something like 20-40% (depending on whose estimate you are using) of healthcare dollars spent in the US through private insurance. Compare this to Medicare at around 2-4%, or France at 0.5%.
posted by Mister Fabulous at 10:42 AM on January 4 [5 favorites]

So do tell me - who possibly benefits from this clause - a clause which encourages this man to run the company into the ground to collect the half-billion dollar windfall - except Hammergren?


The clause is so if he sells the company, he gets to keep his CEO gig. He can always sell the company, get his 500m buyout and keep the 150m he has in stock. Why wipe out his own 150m
posted by Ad hominem at 10:58 AM on January 4

Why are you talking about "good CEOs" when this company has systematically and dramatically underperformed the market during this man's tenure?

McKesson's stock price has doubled since 2001 and their sales have more than doubled, when he became the sole CEO.

Why you should care: CEO compensation structure is somewhat based on the concept of what other CEO's make.

You realize that's also true about teachers, doctors, lawyers, computer programmers, etc. too, right?

Nobody's compensation is created in a vacuum.
posted by Rodrigo Lamaitre at 12:12 PM on January 4 [1 favorite]

Why should you care???

Jesus, because its exactly this sort of absurd bullshit that prevents the US people from getting a Government Funded Universal Health Care. Healthcare costs in the USA are outrageously expensive, because you are all paying the salaries of these Health Industry CEOs!
posted by mary8nne at 12:15 PM on January 4 [5 favorites]

But it's your right, nay DUTY as an American to screw the poor and sick for all they're worth.

Now all we need to do is bring back debt peonage and McKesson's labor cost problems will be solved!
posted by Talez at 12:22 PM on January 4

Here's where I think the problem lies. The problem basically is that all these suit-types, the MBA's, lawyers, board room execs, politicians of the world, have become collectors of rivetting personal narratives. They throw good money behind _tales_, albeit with some justification plucked out from the real world, that give this uplifting feeling of success somehow, with absolutely no room for dispassionate quantitative analysis.

That's why you need sports metaphors to succeed at business presentations, that's why Republican diehards donated so much to absolute incompetents such as Rick Perry, that's why the rest of the board here continues to grant money year after year to this guy despite clear quantitative evidence that he hasn't giving the results he is mandated to.

The reason he is given a good salary is because he makes the rest of the board feel good about themselves, using his life story as a prop.
posted by the cydonian at 12:25 PM on January 4 [3 favorites]

"Why should you care???

Jesus, because its exactly this sort of absurd bullshit that prevents the US people from getting a Government Funded Universal Health Care. Healthcare costs in the USA are outrageously expensive, because you are all paying the salaries of these Health Industry CEOs!"

Short of dismantling the capitalist system, what do you see as the solution to this? Serious question.
posted by tomswift at 12:30 PM on January 4

You realize that's also true about teachers, doctors, lawyers, computer programmers, etc. too, right?

Nobody's compensation is created in a vacuum.

But most people's compensation is not decided upon by a group of people who all have the same job and are thus biased towards moving compensation ever-upward (and who sit on the boards of each other's companies, forming interwoven webs that further entrench the bias toward pay increases).* For example, computer programmers have their compensation decided by managers in their own company, not by a committee of computer programmers who work at other companies.

The problem is that executive compensation is decided by other executives (perhaps rubber-stamped by shareholders—most of whom are "don't rock the boat" institutional investors—in a so-called "say on pay" scheme). In my opinion it ought to be decided by a committee of non-executive employees.

* Doctors, lawyers, and other professionals that form partnerships are an exception. I can't speak to doctor compensation, but among lawyers you see the same trend as with executives: partner compensation at large law firms continues to go up, up, up even as the overall legal market suffers and clients pay ever-higher hourly rates.
posted by jedicus at 12:32 PM on January 4 [5 favorites]

I think jedicus gets to the root of the problem pretty easily. The biggest issue is that shareholder activism is almost nil, so boards that are appointed by CEOs to determine their compensation have no incentive to act any more responsibly than the very bare minimum required of them—enough to justify in flowery language how they've "worked to reduce CEO compensation by eliminating certain programs" and how their pay is "competitive" and how their CEO has exceeded their performance expectations. Nevermind that the yardstick is printed, manufactured, and delivered BY the CEO, working with the compensation team. (Seriously, he sets his own goals. And thus consistently outperforms them.)

The incentive system is entirely backwards here. It's nothing but cronyism and self-serving, near-corruption at this level. You may not be outraged because you don't see how this sort of compensation affects you until, as some have noted, you go to the hospital and notice they charged you $8 for a single Ibuprofen (this happened to me).

The rest of the executive compensation within McKesson, and many other companies like this, is insanely well-to-do. The board is paid shares and a salary just for being on the board. The board sees no reason to do anything but keep the CEO who employs them happy. They may have the power to oust the CEO, but why rock the boat? I'll scratch your back...

It's incredibly obvious that executive compensation has exploded in bubble-like ways, but with no sign of letting up, or popping. Does anyone here legitimately believe that John Hammergren would not have performed exactly the same at his job, however well that is, for $15 million versus $145 million? The diminishing marginal utility cuts both ways: here, it's incredibly obvious that McKesson's board could hire another qualified CEO to maintain the status quo for a mere $7-12 million (apparently the average compensation for top 100 firms) and save themselves $135 million a year. (Strictly speaking, his salary was "only" $50M, but I digress.)

The problem is that they don't care. The company makes piles of money, and absurd compensation paid to a single individual scales in a way that is completely traceable and predictable: offering a raise program or giving employees more money can easily spiral out of control. Paying their "boss" to "reduce costs" is an understood problem that they can wrap their heads around, and it's easily explained away in an EDGAR statement they hope no one reads too closely.

There's literally no incentive for the board to truly act in the fiduciary best interest of their shareholders, even though THEY THEMSELVES are shareholders: they have too much money to care and their personal relationships are too important.

Why on earth McKesson sees fit to pay into this man's pension is beyond me. You want $13M in cost-savings? Kill your fucking pension program. No one who earns over $10M a year requires a pension. It's just lunacy.
posted by disillusioned at 12:46 PM on January 4 [9 favorites]

tomswift:
Short of dismantling the capitalist system, what do you see as the solution to this?

Steep progressive taxation would be a good start.
posted by 0rison at 12:53 PM on January 4 [3 favorites]

At some point the question becomes, why should I care. I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets.

Apparently you missed this part of the FPP: "John Hammergren is the CEO of McKesson, a major healthcare system and pharmaceutical provider." It's coming out of your pocket as much as out of the stockholders', given the percentage of healthcare paid for by taxes.
posted by Mental Wimp at 12:58 PM on January 4 [1 favorite]

I'm trying to get outraged about this, but I don't own stock in the company, this compensation isn't coming out of my pocket, it's not coming out of the taxpayer's pockets.

are you trying to tell me that "a major healthcare system and pharmaceutical provider" doesn't ever get a cent directly or indirectly from the medicaid and medicare program? - from government employees' health care insurance? - from our armed forces' and veterans administration's medical services?

no, the government, the taxpayer, YOU are one of their major customers, perhaps the biggest

maybe you should try a little harder to be outraged
posted by pyramid termite at 1:20 PM on January 4 [3 favorites]

There's literally no incentive for the board to truly act in the fiduciary best interest of their shareholders, even though THEY THEMSELVES are shareholders: they have too much money to care and their personal relationships are too important.

McKesson's shares are paying a dividend 233% higher than they five years ago. Their shares prices have doubled in the last ten years. Do you really think the shareholders are suffering at the hands of Hammergren?

Of course, this is ignoring the fact that the volume of Hammergren's compensation is in stock options, for which he actually benefits from a higher stock value and dividend as well. His actual salary is $1.6M in 2011, with $14M in pension and the rest coming in performance-based areas where he actually double benefits from performing well.
posted by Rodrigo Lamaitre at 2:03 PM on January 4

Why do you think this company has the cash to pay its CEO like this? McKesson is effectively protected from new entrants in the healthcare IT market in part by regulations cheered on by progressives.

I'm intrigued to know exactly what regulations you are referring to. Healthcare IT companies are not exactly few and far between. I may be mistaken, but my impression is that the barrier to entry is usually just the difficulty of convincing a healthcare CIO to take on the challenge and risk of changing from their legacy systems, regardless of how bad they are.
posted by sevenyearlurk at 2:41 PM on January 4

The biggest issue is that shareholder activism is almost nil, so boards that are appointed by CEOs to determine their compensation have no incentive to act any more responsibly than the very bare minimum required of them—enough to justify in flowery language how they've "worked to reduce CEO compensation by eliminating certain programs" and how their pay is "competitive" and how their CEO has exceeded their performance expectations. Nevermind that the yardstick is printed, manufactured, and delivered BY the CEO, working with the compensation team.

This. If only one corporate charter could get revoked. Just one. That's all we need.
posted by Mister Fabulous at 3:27 PM on January 4 [3 favorites]

> Short of dismantling the capitalist system, what do you see as the solution to this?

By the time this man has died, he will almost certainly have extracted one billion dollars from the United States healthcare system and put it in his pocket (he's well past half of that now and he has that golden parachute too).

And you believe that this is inevitable, short of dismantling capitalism?

Well, no. Mind you, I'm absolutely not sure that dismantling capitalism isn't a good idea, but in fact this problem is a failure of capitalism.

The issue is simple - the actual owners of these companies are the stockholders, but they are in practice zombis, pushed around by the owners.

So consider this fix, which completely preserves the idea of "stockholders rule their company".

Two bills are passed. One deems certain decisions in companies "critical" and requires active, informed consent from any stockholders before they vote on these decisions.

In other words, to get a "critical" decision passed, you actually have to get 51% of your stockholders to positively get up and affirm it - no automatic proxies or that sort of thing.

Once you've done that, you pass a new bill that forces all publicly-held corporations to adopt a cap on the total compensation package for any employee of the company at five hundred thousand a year.

This is a one-time thing - just a reset. And the shareholders could easily go back and vote their executives right back into their old compensation packages - except that this is a "critical" decision so you can't just rifle the proxies, you actually have to get them to actively consent to these new salaries.

Now, if the efficient market/will of the stockholder people were right, then this would make no great difference. Some stockholders would vote to pay the old salaries and get the superstar CEOs and no doubt be world-beater, and the other pathetic companies who decided to keep them on the penurious half-million a year salary would crumble - probably in weeks.

My claim of course is that if the stockholders were actually forced to actively consent to these high salaries then they'd never in a million years do it. A few companies would pay their psychopathic CEOs a zillion dollars - they'd do worse than the competition (because there has historically been a negative correlation between company performance and CEO compensation), and no one would try that idea again.

The only reason that CEOs get those huge salaries is because they "steal" them - I don't mean that they commit a literal felony, but that they arrange with the board of directors to take compensation that is hugely, hugely disproportionate to their actual contributions to the companies that they run.

If the shareholders had to actively approve these salaries, it'd be over in a flash. And the best part is that your ultra-capitalist like some people above doesn't have a leg to stand on - this is the Free Market in operations!
posted by lupus_yonderboy at 5:04 PM on January 4 [5 favorites]

because there has historically been a negative correlation between company performance and CEO compensation

Cite?
posted by Rodrigo Lamaitre at 6:32 PM on January 4 [2 favorites]

I guess all these reasons to care are good. And of course fixating on this or that example is what gives a thinking person pause--why should I care, indeed.

In fact I find it hard to express why I care in a way that doesn't seem either false, or maudlin, or naive, or sarcastic. So let me enumerate a few things:

1. There is some aspect of meritocracy in the United States
2. But it is far from ideal
3. Even those with exceptional merit owe a great deal to their surroundings, their social circles, their environments, their friends and family
4. I, like many non-business-majors, harbor gnawing suspicions that management requires more daring and dazzle than it does thought or ability;
5. and note I did not use the word charm
6. I, like many arts and humanities majors, endure commonplaces about the uselessness of our educations--
7. though I fail to see honest-to-God productivity in anything a CEO does
8. I do see quite a lot of productivity in what CEOs' employees do (anyway, most of them)
9. I see workers vilified constantly, even by other workers
10. I like to root for the underdog
11. I think, if all these resources are scrimped and saved to reward sociopathic charm-artists, where are the resources for clinical researchers, rocket scientists, artists, poets, firefighters, teachers, scholars, students?
12. I think, how can I trust in an invisible hand that seems to be visibly dumping ingots of gold into the pockets of unworthy men?
13. I think, there's not enough trust built by business leaders and economists to convince me they aren't using their sophisticated arguments to bamboozle me for their own gain
14. I think, in the words of someone smarter than I am: "I like private property so much, I think everyone ought to have some of it."
15. more in the lines of #11: after years of swallowing the message that better society comes from rewarding executives, I don't feel that I live in a better society. I don't even feel like there are better executives.

posted by adoarns at 6:49 PM on January 4 [4 favorites]

And Americans wonder why they can't afford healthcare?
posted by mek at 7:22 PM on January 4

Sheesh ... It seems to me that it's all our money, our being society as a whole. This is because every cent spent or saved, no matter how it is spent or saved, affects the entire economy, and therefore has an effect on us all, for better or worse. Furthermore, corporations cannot exist without us to run them or to serve as their customers. Corporations and their leadership have legitimacy only to the extent that they serve our needs - the US Supreme Court be damned.

These jerks like the one mentioned here, their corporations -- and many, many others -- arrogate unto themselves the means that most of the population needs to live a modestly decent life. The arrangement is only conscionable if society gets value in return commensurate with its cost. For this reason, it is very much our business whether this glucking futton is allowed to continue his predaceous ways. It is not just up to the frickin' shareholders: they have shown themselves to be too ignorant, powerless or irresponsible to do that job. It is a democratically-elected government's job, as the most legitimate representative of us, to do that.

I realize this does not solve the problem, but if it is going to be solved, you need to know where to look for a solution.

... and now I see that this was clockzero's principal point, but expressed much less politely by a cranky old man.
posted by dmayhood at 7:24 PM on January 4

Japan strikes me as a not-so-uncapitalist sort of place.
Strangely, they don't seem to have this kind of disparity. So, apparently it's possible.

Other stuff aside tho - it makes me think: who would deserve this kind of money?

First names that came to mind was Mozart, Einstein, and Gene Kranz (average NASA flight director makes, what - $120k?)

I might slide Stanislav Petrov, y'know, a bonus. But he wouldn't have that kind of take home bank before he made the right decision not to destroy the world.

I don't know anyone who's works are worth just that stupid amount of money short of landmark type geniuses who's work is going to be here 1,000 years from now (the Jupiter Symphony, etc, isn't going anywhere. We shot part of Beethoven's 5th into space)
Most of them seem to not starve, but some die in gutters.
Van Gogh seems to have gotten a rough deal. He puts a bullet in his head, fails to kill himself, gets left to die by two doctors. His self-portrait goes for $71 million.

But I'm sure managing a company is up there with Jonas Salk who we all know made big money when he...oh, wait. Well, must not have been worth anything.
posted by Smedleyman at 7:58 PM on January 4 [6 favorites]

> > because there has historically been a negative correlation between company performance and CEO compensation

> Cite?

Might I ask you honestly if you made the slightest attempt to Google the matter before throwing in your pointless zinger? Because I was unable to find any Google search that didn't bring up several studies on this as their first result.

Here's one from a bastion of capitalism, the Wall Street Journal. "We find evidence that industry and size adjusted CEO pay is negatively related to future shareholder wealth changes for periods up to five years after sorting on pay. For example, firms that pay their CEOs in the top ten percent of pay earn negative abnormal returns over the next five years of approximately -13%. The effect is stronger for CEOs who receive higher incentive pay relative to their peers."

I wouldn't mind so much if you hadn't ignored all my reasoning to zoom in on questioning that one point, one you could have found out for yourself in a few seconds.
posted by lupus_yonderboy at 8:45 PM on January 4 [6 favorites]

Converting doctor notes into billing codes is the best use of healthcare dollars? Have we all just lost sight of the big picture here?

I have reason to write about local job openings in week and there's actually quite a bit of hiring going on for medical coders. The most recent posting I saw mentioned changes resulting from the federal health care law as of 2013 as the reason for more training and hiring. So something's going on.
posted by etaoin at 9:03 PM on January 4

Might I ask you honestly if you made the slightest attempt to Google the matter before throwing in your pointless zinger? Because I was unable to find any Google search that didn't bring up several studies on this as their first result.

Oh, I can read, I just wanted to know what study in particular you were citing. I'm aware of the Wall Street Journal one (it's a couple of years old) but was interested in whether or not there was another one you were in particular referring to.

The reason I ask is that Hammergren has been the sole CEO at McKesson's for 10 years, well past the purview of that study, and in fact the exact opposite effect has been achieved over that time (doubling the stock price, increasing the rate of return), so if anything it's proven how valuable Hammergren has been in his restructuring and focus of the company during that time.

I wouldn't mind so much if you hadn't ignored all my reasoning to zoom in on questioning that one point, one you could have found out for yourself in a few seconds.

Might I suggest getting over yourself?

Asking someone to cite a source for a fairly reasonable stuff, and nothing in your argument is groundbreaking or enlightening. It's a bunch of "what-if" scenarios that involve shareholders springing into action to save us from executive compensation. It ignores the fact that the majority shares in major companies are often funds of some kind, employees or board members, or other wealthy elite who vote by buying and selling the stock as it is. The market already efficiently manages executive compensation, insomuch as the executives who are paid too much and hemorrhage the company die a slow, market-driven cash death.
posted by Rodrigo Lamaitre at 3:56 AM on January 5

I'm intrigued to know exactly what regulations you are referring to. Healthcare IT companies are not exactly few and far between. I may be mistaken, but my impression is that the barrier to entry is usually just the difficulty of convincing a healthcare CIO to take on the challenge and risk of changing from their legacy systems, regardless of how bad they are.

I think what they might be referring to are things like the current government EHR Incentive Program to give doctors incentives to finally ditch their paper charts and go on computerized clinical systems that can exchange data. There's also the PQRS healthcare quality program and a number of others. These programs require the use of government-certified software (fairly simple process, you just have to demonstrate that your software meets a laundry list of functionality requirements, like standardized data exchange) in order to get your incentive money.

tl;dr: If you want your clinical software to sell, you've got to be certified.

But yeah, Health IT is booming. There are literally over a thousand certified applications, and that's just for the ambulatory setting. So there's not exactly a danger of monopoly here. If you've got the resources to develop something as complex as clinical software, the bar of certification is going to a low one.
posted by middleclasstool at 7:21 AM on January 5 [1 favorite]

downing street memo: "My overall point is, life does not fit neatly into narratives, and it especially doesn't fit neatly into a narrative about the repugnant rich bilking the poor and lighting cigars with $100 bills. The phenomenon of diverging incomes in western countries is extraordinarily complex, the product of an economy that's incomprehensible by any one person."

How's this for a simple narrative: since the 80s or so, the value of labor has gone down while the value of capital has gone up. Most of the "wealth" in the world now represents not goods or services, but just capital, exclusively capital.

The 99% possess wealth that is almost exclusively tied to goods and services. Almost all of them work for a living, and a large proportion of their annual income derives from actual labor. Most of the rest of any wealth they possess comes from tangible goods they own such as houses. All of this gets taxed at a "reasonable" rate depending on your idea of reasonable.

The 1%, on the other hand, hold almost all of their wealth in the form of capital. This is money that flows back and forth in thousands of barely regulated transactions which can have huge effects on the local, regional, and global scale. Because nearly all of the profit gained from this is capital gains, this wealth is taxed at 15% or thereabouts.

Also, how about this: if you make more than $1 million a year, that's your pension plan. Your pension plan is that you make a boatload of money, and therefore if you can somehow figure out how to survive on just $900,000 a year and put that remaining $100,000 in a fund earning you 3-4% a year, then when you retire you still have a whole lot of money. I find it equally morally repugnant that companies routinely screw their workers over in terms of pension plans that get slashed or removed altogether while CEOs still get pensions, huge benefits, and large sums of money if they get fired or are let go.
posted by Deathalicious at 8:17 AM on January 5 [4 favorites]

Deathalicious, that's not a narrative, it's just a collection of facts. You find it morally repugnant, which is fine, but it's happening everywhere - almost every industry and in almost every Western country to varying degrees. (seriously, look at changes in income inequality in Canada and Europe - they're a bit behind us, but are catching up)

At some point, it stops being an issue of "companies screwing workers" and more an issue of "something's changing in society".
posted by downing street memo at 8:42 AM on January 5

At some point, it stops being an issue of "companies screwing workers" and more an issue of "something's changing in society".

Sorry, I don't buy that society is changing. I don't think that most people are more comfortable with income inequality. I don't think that most people don't want income security when they're retired.

I do agree that this is larger than the actions of one company, that it's structural. But saying that "society is changing" suggests that these changes reflect the will of the people or some kind of zeitgeist and I totally disagree. I think this is just a manifestation of wealth engendering ever and more increasing power.

What narrative do you think is going on? Because frankly, I think the narrative that I laid out -- that tangible wealth is declining while ephemeral wealth is increasing -- is a pretty accurate and compelling narrative. It certainly explains why the extremely wealthy have gotten back on their feet while everyone else is still struggling.
posted by Deathalicious at 5:56 AM on January 6

Anyone who opposes healthcare reform should have this guys story shoved up their ass, pronto, and that means your average knuckle-dragger of a bagger, and any GOTP-er dickweed politician who talks about how "Obama-care" is the end of the nation and civilization as we know it.

The Act is not perfect, but it is a beginning towards addressing these sorts of mindblowing scum bags, such as John Hammergren, who pass for decent human beings.

It's got to have a public option attached though so these fuckers don't make a fortune off the very fucking thing that's supposed to stop these abuses.
posted by Skygazer at 8:27 AM on January 6

I think the narrative that I laid out -- that tangible wealth is declining while ephemeral wealth is increasing -- is a pretty accurate and compelling narrative.

By narrative, I suppose I mean "story" - something that more or less resembles a story you might see in a movie. Most peoples' thinking on economic matters resembles a story to some degree.

The popular interpretation here and in other lefty corners of the web is - rich people have used their political power and influence to soak up productivity gains from society at large. There's no identifiable villain, but there's a class of people who have done things - sometimes malevolent things - to another class of people.

Maybe that's partially true, I don't know, and I'm not sure how one could ever really know. But if you look at the Gini coefficients for every western industrialized nation - France, Great Britain, Canada, Australia/NZ, Germany, everywhere - you'll see that inequality is growing wherever you look. All of those nations have very different ideas about the social contract and about labor, they have varying levels of homogeneity, they have very different economies. And in every one, we see inequality growing.

My preferred narrative - stressing again, that it is a narrative - is structural. Innovation is slowing down and companies have to squeeze profits out of a stagnating/shrinking value base: that leads to the nefarious behavior people decry here - layoffs, union-busting, buying off politicians, etc. At the same time, the innovation we do have disproportionately benefits the educated and the intelligent; and the "superstar effect" from increased connectedness tends to benefit the best of the best only.

All of that is perfectly consistent with inequality, and its not to say that inequality isn't a problem - but it's absolutely one without easy, quick solutions like lining rich folks up against the wall.
posted by downing street memo at 10:59 AM on January 6