How much does the average CEO make? - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 6 December 2013
How much does the average CEO make? A  A  A

Baltimore, Maryland

Oh no...and now Barack Obama is on the case!

First the Pope. Now the president.

But first, the Dow fell again yesterday...down another 68 points. Gold fell too - down $15.

Meanwhile, the president thinks income inequality will divert the public's attention from ObamaCare. USA Today has the story:

    WASHINGTON - President Obama sought to revive the issue of growing income equality on Wednesday, saying it restricts economic mobility and threatens to shrink the middle class.

    "I believe this is the defining challenge of our time," Obama said in a speech at an event hosted by the Center for American Progress, a pro- Obama think tank. "It drives everything I do in this office."

    The growing gap between rich and poor can be closed by actions ranging from an increase in the minimum wage to better education to following through on his health care plan, Obama said.

    Obama also again proposed creation of government-assisted "Promise Zones" in urban and rural areas that are struggling.

    Obama said the average CEO now makes 273 times the income of the average worker.

Where did he get that number? Out of the hat, we suppose, along with the rest of his ideas.

------------------------------- Measures to take in the event of a Sensex crash... -------------------------------

As you know, the Sensex has been fluctuating rapidly in the past few weeks due to different factors.

And every time the Sensex crashes, the regular investors often turn out to be the worst hit!

So what can you do to minimize the negative impact of a stock market crash on YOUR portfolio?

Well, the first thing to do would be to check if your allocations are as per the approach suggested in this video.

The advantage of following this approach is that apart from reducing the overall risk, it also helps you earn consistent returns in the long run.

For full details, watch this short video here...

In our company, the CEO makes maybe about 10 times as much as the average employee. We'd be surprised if it were much different in other small businesses.

Let's see, the average worker makes about $40,000. So 273 times that is $10,970,000. We've met some good CEOs...but never one who was worth $10 million a year. Not even close. Who would pay a CEO that kind of money? Only a public company with cronies on the compensation committee and shareholders who aren't paying attention!

Is Obama right? Is there something wrong with one person making a lot more than another? Is redistributing wealth from the person who earned it to the person who didn't the "defining challenge of our time?'

If so, can you control the outcome of a free market...and still have a free market?

But who cares? The trouble with free markets is that they don't necessarily deliver the results you want. As far as material success is concerned, nothing can beat the free enterprise system - the freer the better. No economist has ever put forward a serious proposal for making it more productive. No improvement has ever been forced upon it. No rival system has ever raced ahead of it.

But the improvers talk about 'fairness,' or 'the social consequences' of it...or the 'political environment' in which an economy operates. They say there's a 'trade-off' between the ideal of free markets...and a fair, democratic society. That's what seems to stick in Barack Obama's craw...that the trade-off has gotten out of balance. Markets are too free, he believes; they deliver outcomes that voters don't like.

"It's either money or control," says a friend of ours.

"You get money by giving up control...and letting markets work.

"But you, personally, don't necessarily get what you want. And if you try to control an outcome, it's gonna cost you."

Rich people want to control things because they want to protect what they have. Poor people want to control things because they want more of what other people have.

Nobody - save a few philosophers and wing-nut economists - are willing to let the chips fall where they may.

"It's all a matter of envy," continues our friend. "And greed. Everybody wants what he can't get honestly. He turns to the government to get it."

And then he changes his tune. Instead of talking about what he wants, he refers to what he says would be "best for the society," or what would "help the economy."

What we all want is an economy that delivers our own version of 'fairness,' which almost always involves more for us and less for everybody else. It's an economy that is so finely controlled that what we do no longer determines what we get. We can step on all the rakes we want; never will the handle come up and hit us in the face. Instead, everything is under control. We get outcomes that are the result neither of choice nor chance, but crony connections and the master plan. In short, we all want to live in North Korea - until we actually see the place.

Since we are in a philosophical mood, we would like to recommend colleague Alex Green's new book. "An Embarrassment of Riches" he calls it. Alex says the "human race has never had it so good." In 226 pages he proves that the glass is half full...and that the other half of it doesn't really matter anyway; because there's nothing in it.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Get The Daily Reckoning directly
in your mail box.
Just enter your e-mail address » 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "How much does the average CEO make?". Click here!

1 Responses to "How much does the average CEO make?"

John DSouza

Dec 8, 2013

Perhaps Bill Bonner should have a look at this...

Please google: 9-out-of-10-americans-are-completely-wrong-about-this-mind-blowing-fact - since I cannot paste any links here.

Equitymaster requests your view! Post a comment on "How much does the average CEO make?". Click here!

Recent Articles:
A Darkness Is Spreading Across the US
August 22, 2017
Today, we are attacked by one preposterous thing after another, each of them even more absurd than the last.
Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working
August 21, 2017
Most Indians who cannot find jobs, look at becoming self-employed.
Trump Takes a Beating
August 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Which Gods Will Bring Down the US Empire?
August 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?