Homestead mailing list

[Clansgian AT wmconnect.com]

> The reason that capitalism allows such things is that the person is
> valuable; if they weren't valuable enough to pay oodles of money for they'd
> be let go.
> 

This may have been true at one time in our economic history, but it isn't 
true now of days.    Let me make a comparison:  people often say of the 
ridiculously high price of something, say, real estate, that it is worth what 
people 
are willing to pay for it.  But real estate has (at least) two components to 
it: 
  1) a use value and 2) a speculative value.  The use value of a house is 
what it would cost you to live in like surroundings if you didn't own the 
house.  
But real estate buyers also keep an eye on what they thing the house WILL be 
worth in the future (for whatever reason) and so are willing to pay more than 
the cost of similar quarters when they buy a house.  This is the speculative 
value of real property.  It's always been a part of it, but it is  completely 
beyond reason now of days.

Like that (somewhat like that) companies used to pay executives salaries and 
bonuses based on how they (the executives) and the company have performed in 
the past.  That is not true now, they pay high executive packages not on how 
the executive has performed for the company but rather on how they hope the 
company under their leadership will perform in the future.   Often that 
speculation is entirely baseless.

If you get a chance find the flick "Startup.com".  It traces a group of 
dot.bomb types through creating a virtual company (it's more of a documentary 
than 
anything else) all the way until it belllied up.  Along the process the 
creators made a pitch to a venture capital group which backed the company 
with 
something like $15 million dollars.  At one time the founder was on one of 
the news 
TV shows saying how he had gone from an idea to the company being worth $50 
million dollars based on the price of its stock.  During that time they 
bought 
out partners for a quarter million dollars or more, had expensive offices, 
staff, gave lavish parties, etc.   Before they could go "online", another 
startup 
company offered their same product (centralized electronic site for large 
municipalities) at a much reduced rate.  During the whole time from startup, 
finding backing, buying each other out, and finally going bust .... th 
company 
never actually sold any product or service.  The creators executive salaries 
and 
benefits were NOT based on how the company had done, but on how the investors 
believed and hoped it would perform.   The investors lost all their money.

Capitalism is in a very backwards state now.  High salaries and benefits as 
are cited in the article are not often the results of how the company or its 
execs have preformed, but rather on how the investors HOPE he will perform 
... 
even if there is no basis for thinking so or thinking that the high salary 
makes any difference in the situation.

James