Tuesday, March 11, 2008

Why CEOs are paid so much?

This question comes back every now and then and there does not seem to be an easy answer. The ratio of CEOs pay to workers wages is increasing (this guy is not probably trustworthy, but claims it grown 12 times over the last couple of decades), one might say escalating.
Presumably, this should be bad, but I don't really see why. Anyway, there IS a simple explanation:
Now, more than anytime in the history of the world, there is both plenty of capital and unskilled labor force. There is probably also plenty of skilled labor force. What is scarce is the ability to manage this resources effectively.
Maybe there are some obstacles in entry (education, manners, persistence, pragmatism are obvious candidates), but I'm more and more convinced that most people are simply bad at management.
That's why Scott Adams has such an easy life making jokes of the managers - most of them are indeed bad, but there is nobody better!
So if you think you've got the potential, go for it. The rewards are unlimited.

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