CEO Payment thought
There's bee a lot of complaints about CEOs and upper management getting ridiculous paychecks. (Economist)
I somewhat agree - it's ridiculous. But, what about externalities?
Other than the whole fact that these CEOs usually don't have a life for a while, which I think is worth paramount of money, there's also the effect of all the effort being put into becoming these top-paid executives.
To study the following we'd need to know:
Number of inheritance in upper management positions
Average length of time spent at lower level before joining the ranks of upper management
Average weekly workhours of these folks who become upper management during their junior times, if they existed.
My contention is, not too many start at the top. They have to make it to the top. Not many come out of MBA and are put in charge of a huge team. Maybe lower management, but not upper management.
So, in attempt to advance, they work hard. if advancing wasn't as lucrative as it is (perks, salary, bonus etc) then these people will work a little less hard - maybe just an unconscious effect, but maybe enough to affect things when you add them up.
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I think you can support the notion that CEO's high paid salaries are appropriate using some economics too - namely, Monopoly.
Although monopoly is inefficient, one good reason for monopoly's existence is encouragement of innovation. Because of legal monopolies like a patent, franchise, there are constantly innovations being thought up of, to enjoy the reward. Without protection, this incentive would be reduced.
Like the post said, CEOs don't start at the top, they work towards the top. And because they can be rewarded with high pay as senior management, they have the incentives to work their asses off and constantly create fierce competition.
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