But that is precisely my point: The outrageous CEO power grabs began a full decade before the electronic automation you mention. Almost all the faults in corporate culture that we bemoan today were already present during the Savings and Loan crisis. So they are clearly antecedent to the technical revolution at the heart of your experience.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Interests in preserving structural relationships between (actual) people prevents deep IT penetration of FIN and COMMOD sectors. Asymetrical market knowledge (and adverse selection) is a feature not a bug. Diversity is the key to economic and political evolution.
enron was the smoke coming out of the financial engine, now bits are falling off by the mile and the day... ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
I'll also note that this has coincided with the European institutions turning from French-speaking and French-inspired to English-speaking and English-inspired, because of the arrival of the Scandinavian countries, the replacement of fundamentally pro-European Mitterrand by euro-skeptic Chirac, in addition to overall trends. In the long run, we're all dead. John Maynard Keynes
the real, massive increases in CEO pay mainly happened in two phases: in the dotcom bullrun of the late 90s, and in the more recent Bush years.
and this to show that most of the increase in incomes have come in the form of higher wages rather than in the form of capital gains:
Wage increases are associated with the managerial class, ofcourse. In the long run, we're all dead. John Maynard Keynes
So it's not just about the dot-com starting in the 1990's as you claim. A man of words and not of deeds is like a garden full of weeds; a man of deeds and not of words is like a garden full of turds — Anonymous
After that, the smash-and-grab was on, and the CEO class never looked back.
http://www.highbeam.com/doc/1P2-8010445.html
and here is a link to some document related to the FDIC investigation a decade later which mentions his base pay and bonuses in 1987 adding up to over $2million. I can't remember what eventually happened to Baldini, but he got into some trouble after the bank/mortgage company failed. It was an 80s thing.
http://www.qui-tam.net/USga1121.htm
In 1987, Jim Baldini, the president of Comfed mortgage made over 2 million dollars. Less than $400,000 was salary; the rest was "bonus." As I recall at the time, it was shocking to think that anyone could possibly "earn" that much money in one year.
Was poor performance punished before the 80ies? Was there too powerful countervailing forces (and how did they decline)? Was there a fear of a workers revolution? A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
IT has also had the effect of making drive-by trading possible. It also meant that share prices could be monitored minute by minute, which has an obvious short-term influence.
Previously share dealing was a more leisurely affair, and there wasn't such an obsessive interest in talking up prices with bullshit - or reorienting towards a growth maximising corporate performance landscape, if you prefer.
It's an equilibrium, of sorts: If the norm is that executives have long tenures, it becomes hard to get a slot, so a short-termist rape-and-run executive will hit a brick wall because he'll have a hard time getting new positions when he runs from the company he looted. Not because he'll have a problem being accepted into a new slot (he'll still be hired by his golfing buddies, after all) but because there are much fewer vacancies. This pressure to do a proper job while you are in the business will naturally tend to promote a long-term outlook that will in turn make it valuable to retain the executives over the long term.
On the other hand, you can get a new equilibrium in which the CEO can expect only a short tenure - in which case asset stripping becomes much more attractive as a strategy relative to real work, because the guy who benefits from his work will be the next CEO. At the same time, rape-and-run becomes more viable because there is a greater CEO turnover (so there will, at any given time, be more open slots when he has to run from the crashing company into a new top job). Obviously, this further reinforces the culture of short CEO tenures, which makes long term vision increasingly precarious.
It's entirely possible (but I won't claim to have evidence for it) that corporate culture can jump between these two states given the right (wrong?) external shocks. The Raygun Revolt may have been one such shock.
And once it started it amassed power in the hands of a few who could finance people who promoted its spread. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
What I'd like to do is read through the diary and comment thread in one sitting and synthesise the suggestions into a single reasonably coherent explanation (or, if that is impossible, at least make it clear which models are being proposed).
