High CEO pay isn’t harmful.
The article discusses generally how impossible it’s been to actually prove that executive pay exacerbates income inequality. And Biden economist Jared Bernstein and other insiders are in the position of having to subtley acknowledge that, there being no good studies with relationships that correlate.
How could there be? I mean, as a matter of statistics maybe yes, high CEO pay increases the gini. But the implicit assertion of the income inequality monger is that CEO’s are taking money that could as a matter of corporate discretion be directed to worker salaries or to lower product prices.
Well that’s not true because that’s not how it works in almost all cases. You look at Ellison, his pay isn’t taken from a corporate pot that could be used somewhere else if it wasn’t going to him. In reality he gets a million or two or five or whatever in W2 cash pay. The rest is a stock grant, and that stock is deemed into existence by the board of directors at bonus time.
There’s 3 big winners in a transaction like this. Ellison, who gets paid. The company, who gets to invent money (stock) into existence to make that payment. And the government, who simultaneously gets to take 20 – 40% of the transaction as an income tax.
The public at large is not an obvious winner here, but nor are they a loser. Change the tax rules to disincentive that sort of pay, and maybe it ceases to happen. But that money doesn’t then get redirected to the worker or get reflected as lower on the shelf prices.