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CEO Hikes Minimum Wage To $70K, Capitalist Tragicomedy Ensues
Meet 31-year-old Dan Price.
Dan is the CEO of Seattle-based credit card payments processing firm Gravity Payments, and three months ago, he did a funny thing.
After talking with a friend who confessed to having difficulties making student loan payments and rent each month on an annual salary of $40,000, Dan decided to set a $70,000 per year pay floor at Gravity.
Dan was not, The New York Times says, looking to insert himself into "the current political clamor over low wages or the growing gap between rich and poor." All he wanted to do was improve the lives of the 120 or so people who worked for him and after reviewing some literature on the subject, he decided that $70,000 was the level at which workers start to experience "an enormous difference in [their] emotional well-being."
Predictably, the initial response to the new policy was quite positive. Here’s The Times:
Talk show hosts lined up to interview Mr. Price. Job seekers by the thousands sent in résumés. He was called a "thought leader." Harvard business professors flew out to conduct a case study. Third graders wrote him thank-you notes. Single women wanted to date him.
But even as Dan adjusted to life as a rebel hero and basked in his newfound popularity among third graders and single women, he quickly learned that whether he liked it or not, he had waded waist deep into the minimum wage debate and he would soon discover a few very hard lessons about the unintended consequences of hiking the pay floor.
First, some employees felt it wasn’t fair to indiscriminately give everyone a raise. That is, some felt Gravity should at least pay lip service to the notion that there's a connection between higher pay and performance and because the new pay plan didn't seem to acknowledge that link, the company lost some workers.
Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees.
Maisey McMaster was also one of the believers. Now 26, she joined the company five years ago and worked her way up to financial manager, putting in long hours that left little time for her husband and extended family. "There’s a special culture," where people "work hard and play hard," she said. "I love everyone there."
She helped calculate whether the firm could afford to gradually raise everyone’s salary to $70,000 over a three-year period, and was initially swept up in the excitement. But the more she thought about it, the more the details gnawed at her.
"He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump," she said. To her, a fairer proposal would have been to give smaller increases with the opportunity to earn a future raise with more experience.
A couple of days after the announcement, she decided to talk to Mr. Price.
"He treated me as if I was being selfish and only thinking about myself," she said. "That really hurt me. I was talking about not only me, but about everyone in my position."
Already approaching burnout from the relentless pace, she decided to quit.
Next, Gravity began to lose some of its long-standing customers and while the across-the-board pay raise won the company more than enough new business to make up the difference, the new accounts won’t be immediately accretive and in the meantime, Gravity has had to hire more people to service the new accounts and thanks to the new salary floor, all of those new employees will eventually have to be paid $70,000.
A few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase — despite repeated assurances to the contrary — also left. While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees — now at a significantly higher cost — and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.
Dan’s benevolence is also costing him friends in the business community where some say Gravity’s new pay floor will embolden minimum wage workers in their quest for higher pay.
Brian Canlis, a co-owner of his family-named restaurant, is also a client. He said he was fond of Mr. Price, but was more discomfited by his actions.
Mr. Canlis is already worried about how to deal with Seattle’s new minimum wage, which rose to $11 an hour in April and is scheduled to reach $15 an hour for small businesses within five years.
The pay raise at Gravity, Mr. Canlis told Mr. Price, "makes it harder for the rest of us."
Finally, Dan is now being sued by his older brother and as it turns out, Maisey McMaster had not included a "provision for legal fees in case my brother sues us" line item in the new budget, which means that ultimately, Gravity may have a hard time staying in business.
Less than two weeks after the announcement, Mr. Price’s older brother and Gravity co-founder, Lucas Price, citing longstanding differences, filed a lawsuit that potentially threatened the company’s very existence. With legal bills quickly mounting and most of his own paycheck and last year’s $2.2 million in profits plowed into the salary increases, Dan Price said, "We don’t have a margin of error to pay those legal fees."
Lucas Price owns about 30 percent of their company, although he has not actively been involved in day-to-day operations for several years. There had been tensions between the two long before the new pay plan, and Lucas is demanding that Dan buy him out for an unspecified amount, plus damages.
* * *
To be sure, there are number of lessons here and indeed, the Gravity story touches on several topics we've discussed at length over the last several months.
There's no question that surviving in America is becoming more difficult by the year for an alarmingly large subset of the population and part of the problem is anemic wage growth for 83% of the workforce. In fact, just last week the Department of Labor said the employment cost index notched a meager 0.2% increase in Q2 - that's the smallest quarterly gain since record keeping began in 1982.
Despite claims that this miserable data point was anomalous, this ECI print clearly suggests that for all the publicity around the minimum wage debate, and despite (or maybe even because of) the growing pressure on employers to raise the pay floor, wage growth is virtually non existent. Thus, across-the-board pay raises seem to be suffering from the QE paradox that's now playing out in Sweden - that is, the more you do it, the less effective it is and at a certain point, it even begins to undermine itself.
Meanwhile, easy access to credit has led to an explosion of student loan debt and yet that debt has created a preponderence of degreed job seekers. In other words, college degrees are now so common as to reduce their value for prospective employers which has had the unfortunate effect of transforming many college educated, would-be professionals into waiters and bartenders.
Needless to say, paying off $35,000 in student debt is tough when you're relying on tips to make ends meet and it's made all the more difficult by the fact that rents are soaring. With lenders still stinging from the collapse of the housing bubble, underwriting standards are still relatively tight (for homes anyway) which means, to quote WSJ, households are being squeezed "between rents they can't afford and homes they can't qualify for."
Meanwhile, the gap between the rich and the poor is widening materially on the back of Fed policy that, while ostensibly designed to rescue Main Street via the elusive "wealth effect", serves only to further enrich the wealthy by inflating the value of the assets most likely to be concentrated in the hands of those who were already rich in the first place.
Whether Dan Price realized it or not, his move to raise the pay floor at Gravity was destined to be seen as an emphatic reaction to each of these economic realities. But as we saw last week with WalMart, addressing the rise of class segregation and the disappearance of the American Middle Class by resorting to across-the-board pay raises comes with a long list of unintended consquences and as Tony Hsieh learned when he attempted to transition Zappos to a "bossless" corporate culture, predicting how employees will respond to what seem like unequivocally worker-friendly policies is quite difficult.
So while we wish Gravity the best of luck with the new pay structure, we fear that if anything, Dan Price's experience will serve as a cautionary tale to employers who may now think twice before embarking on one man crusades to address the nation's social and economic maladies and ultimately, if the company's very existence continues to be threatened by the fallout from the wage hike, Gravity's employees may soon find that the new pay floor is, like everything else in the world, subject to the law of... well, gravity.
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True, Seattle is a wet dream paradise, but a good number of higher level positions, especially in government and large corporations is based on who can lie, cheat, steal, and manipulate better than others without getting caught. In order to have these characteristics one can fall in most any "ism" category.
I believe the word is "remunerate" not renumerate. .
I believe the word is "remunerate" although you could renumerate them too.
Your missing the most important part from Wiki: "In June 2010, Dan Price was honored by President Barack Obama[2] with the Small Business Administration's "National Young Entrepreneur of the Year" Award for his entrepreneurship and the sustained success of Gravity Payments.."
Fuck Yah! Econ 101!
How the hell on ZH has no one made a shitty, sexist comment about "maisey mcmasters"??????
"Now 26", are fucking serious, that little millennial, obamaite educated bullshit, was a serious source in this article?? She thought it was a great idea, until she fucking thought about it? I'll bet you thought Obama and socialism for the masses was a great idea too, until it kicked your little millennial ass, and now you think it's unfair!!!
With a name like that, if being a glorified paper pusher doesn't work out, your set for porn "sweety"
There, now the ZH posts are complete:)
Heheh. Perfect.
isn't it funny how any comment which criticizes someone's viewpoint is "sexist" if that person is a woman?
why don't you say something about white male privilege and fuck off back over to Daily Kos - they're as in favor of political re-education camps and book bans as you likely are and Larssen surely is.
http://www.marketwatch.com/story/donald-trump-leads-republican-president...
There's a reason The Don is way out front of the pack.
How many millions(billions?) will he reap to drop out like Perot?
Obviously missed my subtle sarc mixed with a little dark humor and irony, on this post?
I don't even know WTF the "daily Kos" is, and I'm a regular reader and poster in ZH for the last 3 + years,
But it's cool, you can't win them all
And did you also presume I'm in favor of book burning??
Lol
Girl, that's funny!!!!
I'd do her, although she does seem to have some wide birther hips.
I would have said she's too lean if anything, what are you looking for dude a 10 year old?
Maybe you need to re-read the post you responded to. Not the Daily Kos type post.
She "loved the job"...but then quite partially due to "burnout"? I see these (MISERABLE) people all the time...putting work before everthing else...even their own health...some figure it out fast...others waste thier entire life...pathetic.
If you chose work over family, you had better put away enough money to PAY SOMEONE TO CARE FOR YOU when you get OLD...because if you have no kids, or you ditched your kids in daycare...you'll be dependent upon government in your old age...
I quit a six-figure job to spend the best part of my children's lives with them. No amount of money can replace the most valuable thing in life:
Time
Yeah, I hear you, but you aren't a 26 year old mother that was most likely banging the boss.
The wife and I both quit full time jobs and went part time while are kids were pre-teen...still part time...have no desire to work "full time"...and "Jeb" runs around sure in his statement that "all these part time workers want full time jobs"...no we don't fuckhead.
Fuck that overpaid beatch. Hope her next job is at Starfux pulling coffee for tips.
Amen.
I had a difficult time taking this drama seriously when it got to the "Maisey McMaster" bit. The sound of her name made me laugh and my spidey senses started to tingle. Then, I read little Miss McM orchestrated the very thing that turned her off ---- oh, God help the man who has to employe more than 1 woman!
----
RenewableLife,
You want sexist? I bet 10ozAg that all of this theater is hiding the real story: Maisey McMaster is taking a hissy fit because Suzie Q caught the boss's eye. Nothing else makes sense.
In my industry, the concept of "owner" and "employee" does not exist because 99% of the labor force is female. Women are the most bizarre pack animals on this planet.
I bet 10ozAg that all of this theater is hiding the real story: Maisey McMaster is taking a hissy fit because Suzie Q caught the boss's eye.
-
Funnily enough I thought the brother might be suing out of jealousy once he heard about the single women.
Based on my "work experience" she was most likely banging the boss a few years ago, and her "rise" in the company was based on her former sexual relationship with the owner. My last company had many management postions filled with "cast off" former female lovers of the two owners.
"You want sexist? I bet 10ozAg that all of this theater is hiding the real story: Maisey McMaster is taking a hissy fit because Suzie Q caught the boss's eye. Nothing else makes sense. "
Sexist? LOL.
Suzie or Steve?
No, but you can raise his pay.
Gravity will soon catch up to him, all his new employees will double their wages again, in Rupees.
a bad sophomoric book treasured by idiots who never read any other philosophy or decent literature?
Why?
Guy owned a business and ran it as he saw fit. He fucked up, but he tried to do what he wanted with his own business
Do you?
"a bad sophomoric book treasured by idiots who never read any other philosophy or decent literature?"
Yes, that's what every statist says.
Who is John Galt?
except I'm not a "statist" - I've just read a lot more than you.
1) I didn't call you a statist. I said that's what every statist says.
2) Very presumptious of you to think you know what I've read; then again, you also have the chutzpah to proclaim yourself a genius
3) And if you're not a statist, you've got a funny way of showing it; you certainly have trouble with free markets, based upon some select comments you made in your 8 short weeks here.
Bullshit quibbling and you know it.
I didn't say I know what you've read, I said I've read more than you.
Anyone who doesn't think absolute free markets would work is a statist? I'd tell you to stop excluding the middle, but as a Rand-worshipper, you simply would know understand what that means.
It's not quibbling. How do you know you've read more than me, Genius? Or a Rand "worshipper"?
"You wouldn't understand what that means."
You certainly speak like a statist.
I'm a statist because I think Rand is worshipped by the stupid or because I don't agree with the idea you haven't repeatedly called me a statist for thinking only idiots worship Rand?
Which is it?
You're the "genius" around here. You tell me.
I didn't say I was a psychic.
""a bad sophomoric book treasured by idiots who never read any other philosophy or decent literature?"
Yes, that's what every statist says.
Who is John Galt?"
Really - "every statist" says Atlas Shrugged was a shit book? And only statists?
I believe you haven't read much other philosophy [broadly speaking] because virtually no one who has thinks highly of Rand's thinking.
If you think anyone who doesn't like Rand is a "statist" you're sort of proving the point that only the stupid - people who exclude the middle - who read one book and can't stand criticism of it, etc. - extol the virtues of Rand.
You're free to disagree.
You're also free to let your lazy ad hominems do most of your arguing.
xxoo
I didn't say I was a psychic.
You sure act like one.
As for the ad hominems, look back at the thread. The only one who was passing those out like candy on Halloween was you.
Peace.
not my best work, admittedly.
Rand sucks, and most people who have read a lot of *philosophy* - even paleocons and classical liberals - think so.
I'll leave it at that.
Get over yourself.
lol, that actually got downvotes. ZH has gone full retard.
Oh, c'mon be fair. The posters are only about 90% stupid.
Z
And how many per units stupid would you say have you?
They can't fuking READ, Doc!
It IS NOT his business: Dan has partners, one being his own brother, Luke: whom has effectivly expropriated.
The name is the same as the 346 lb. girl on FB who goes by Sweet & Sexy.
I'd love to see a debate between this little pile of intellectual dung and an actual free human.
Savage as it would no doubt be, violence is very much an essential aspect of genuine reality.
Dr. Suess doesn't count.
Couldn't agree more about Atlas Shrugged. I read the whole thing about 15 years ago and actually was dumb enough at the time to believe in a lot of it. But at least I didn't turn my brain off at that point and go into ideology mode and eventually realized what an idiotic piece of trash it was ...
The book is poorly written too with characters going off on pages of speeches disguised as dialogue.
"Guy owned a business and ran it as he saw fit. He fucked up, but he tried to do what he wanted with his own business"
I agree that he deserves to run his business, which he built, as he sees fit. Does everybody have to have values that have a dollar and cents benefit for themselves attached?
I'm not so sure he fucked up anyway; time will well. If you read the whole article instead of just extracting selective excerpts meant to support this post's writer's beliefs, you'll find out that he also has had some very positive reactions to his wage increases and his business is doing pretty well, though the lawsuit definitely is a not a positive development.
Z
I had a minor in philosophy - waste of time, sure - but in my experience arguing with Objectivists on message boards back in the late 90s/early 00s - such as people used to do - I found that most people who loved and adored Rand simply never read much else.
Econ and finance majors declaring that Rand has all the answers is fucking absurd, but to a certain type of right winger posing as a libertarian, to criticize Rand is to be a "commie" who wants to give all the things to welfare moms.
It's a bad fucking book - it's simplistic, arrogant, and bad writing.
As philosophy goes, it is derivative, and almost childish in its representation of the world.
I'm willing to bet that almost none of the people who wash Rand's balls ever read Stirner's "The Ego and Its Own" - which is what Rand would have written were she a better philosophical thinker.
Of course, some people need a Saviour.
Overly simplistic is the primary problem with libertarianism. It is way too one-dimensional and hence attracts selfish, simplistic people who never think beyond the effects of something which supports their pre-existing point of view. Objectivism? What a fucking joke. That's exactly what libertarianism lacks.
Z
Wow. I'm sure you've done all of the studying necessary to confirm this conclusion in your armchair with the computer off.
For example: http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0042366
As an adjunct, http://traffic.libsyn.com/tomwoodsshow/woods_06_22_2015_2.mp3
Note, Haidt is NOT a libertarian. In a nutshell, psychologically libertarians are MORE likely to consider other points of view than other ideologies - rationally (NOT sociologically, psychologically, or emotively).
So I'm assuming the Z(ero) stands for the amount of thought you put into your position.
EDIT: once again I find myself reminding people that libertarians are not necessarily Objectivists.
EDIT2: Haidt is the NON-libertarian author of "The Righteous Mind: Why Good People Are Divided by Politics and Religion" which is a good book and challenges some libertarian notions about behavior.
http://www.amazon.com/The-Righteous-Mind-Politics-Religion/dp/0307455777
You're the one with the reading comprehension issues. I never wrote that all libertarians are Objectivists. I wrote that objectivism is one thing that the libertarian movemenrt lacks.
But yeah, thanks for unneccesarily "find(ing) (your)self reminding people that libertarians are not necessarily Objectivists". That was very enlightening.
Z
My apologies for misreading you. I went back and read it again and only saw it the way you describe after your clarification.
EDIT: Are you purposely conflating "Objectivism" (Ayn Rand's philosophy) with "objectivity" (what you apparently think libertarians lack)? As a libertarian non(anti)-objectivist(as in, Ayn Rand's philosophy), obviously I'd take issue with this.
That's what I hear from every fan of coercion at government gunpoint.
The truly selfish ones are the idiots who think they are being generous by forcing others to give money to their pet projects.
Genius,
I have also read many books beyond Rand, understand the limitations of her philosophy, and don't enjoy her books myself, but I think they are still relatively good books that have a lot of value for some types of people.
As with everything in life, some people will "settle" on it and others will continue searching beyond and elsewhere. You can insult those who have settled on Rand if you like. Just keep in mind that there are many more who have settled on something like Harry Potter. And someone who has settled on the former is much closer to being able to digest the next level of philosophical text than the latter.
Careful not to be too full of yourself, lest you settle on something narrow-minded yourself.
I laugh when people who are well-read pat themselves on the back for being smart. The truly smart people don't need to memorize and regurgitate the thoughts of other people. They figure it out on their own.
Sitting next to many a copious note taker/ regurgitator in college gave me the impetus to get out into the world and experience reality outside of a textbook. I found most of my professors could refer to many others works and critique them but rarely provided their own alternative explanations. They resided in various camps of thought and associated with those of like mind. Perhaps they feared their jobs or positions would be at risk.
I think it is good to study the masters but if no personal growth, understanding or application to the world today can be made, what is the point besides being a bombastic asshole at a San Fran cocktail party? Practical experience rarely is respected by others but they do seem to drool over Ivy League degrees.
Miffed;-)
There's no top tenor for sure.
Smart people write the books that educated people read.
They resided in various camps of thought and associated with those of like mind.
Like...like...like here on Zerohedge, Miffed?
LOL
Really?
And I always thought that the mark of a good attorney was to be able to take both positions in an argument, experiencing the weakness in both propostions, so that they could prosecute the opposing argument through exploiting the flaws.
I always thought of the flaws as areas of investigation, of discovery, of getting closer to that which is the truth.
Silly me, MeatHammer. Just what do I know anyway? Not much of anything at all.
Shades of Ben and Jerry's
http://abcnews.go.com/Business/companies-follow-ben-jerrys-lead-wages/st...
Do you consider all books that contain intellectual or philosophical speeches in their dialog to be poorly written?
What books do you consider well written and worth reading?
G.K. Chesterton: Orthodoxy
Salmon Rushdie: Satanic Verses
Philip Beitchman: I Am A Process With No Subject
Hermann Helmholtz: On The Sensations Of Tone
Carl Jung: Man And His Symbols
Slavoj Zizek: The Sublime Object Of Ideology
Sun Tzu: Art Of War/Strategy/etc.
Edgar Allen Poe: The Rationale Of Verse
Oliver Sacks: The Man Who Mistook His Wife For A Hat
Richard Bach: Illusions
Oliver E. Williamson: The Economics Of Governance
Franz Kafka: The Trial
Boris Pasternk: Dr. Zhivago
George Orwell: 1984
Kurt Vonnegut: Catch 22
Thomas Jefferson: Notes On The State Of Virginia
Paul M. A. Linebarger: Psychological War
James Gleick: Chaos
extra credit:
http://www.propertarianism.com
I never met Ayn Rand, so I don't know for certain, but if I had to bet, I'd bet she was a speed queen.
Z
It will be interesting to see how this pans out. He picked a good area to start a business. He can improve processes just 10% over the Bankster Welfare Industry and build a nice business. Indeed he had.
I hope that fact does not get lost in this youthful business experiment.
Indeed. I've read Atlas Shrugged. One could easily rip out half the pages and still get the story across. Long winded and simple.
Well said. It is long-winded.
On the other hand, those long silloquies by Francisco d'Anconia eloquently explain the importance of free markets in society and the folly of statism. (It's too bad you have to get 400 pages into the story before you encounter them.)
You could say the same about many books, such as 'Of Human Bondage'... does it make them better books if they're shorter? I believe the opposite.
Obviously he doesn't own the whole business, sounds like he is screwing his brother and maybe other investors as well.
bearwinkle should be banned. his avatar is too hypnotizing. :-)
Hey, this IS fight club!
I don't think you actually read it yourself, and as such are speaking purely from your own bias and ignorance.
Very nearly this exact situation was laid out in a company in the book, and, surprise surprise, the exact same thing happened. Highest performers left and the company collapsed. Even had the infighting siblings.
What planet really does he live on?
Did he even read about Henry Ford and how he determined what a "minimum wage" at the River Rouge plant could be?
Key point was productivity BTW
70k is fine if you have 120 high quality producers who work the hours and don't make many mistakes. Maisey McMaster simply saw the canary in the coal mine fall over, told everyone else about it and ran for the exits. "Selfish" I know.
I'm guessing some of the slackers will be losing their jobs even as more office drones are needed to tend to the new accounts.
Where today can a guy who dropped out of fourth grade legally earn an ounce of gold, tax-free, for four days' work? The five-dollar day gave Henry Ford the freedom to fire slackers, as there was a long line of men at the door eager to have their jobs.
Dan Price gave everyone a raise just for existing. If he'd fired all the slowpokes and replaced them with people who could *earn* $70,000 a year, his company would have done fine.
Totally agree here. I figured out some time ago that companies do not reward hard work and contribution, so generally during full time work I actively figure out what is the work needed to justify the salary I want, do that, and no more. The one exception being when I want to boost my skillset for the next job, and need the experience and recommendation. If there's a company where I can earn $70k and do a $40k job, then unless I am earning much more than that why wouldn't I take that kind of job?
The motivation factor has basically been flipped here.
The formula for success. Loose a little on every employee, make it up in volume. Nobody needs to talk to this kid , the market will do that :P
OK someone enlighten me:
Credit card payment processing company? Isn't that what Visa and Mastercard do?
Going Galt with style. /s
Ayn Rand would be so proud of him!
Whaaaaaaaaaaaaat??? Socialism doesn't work???!?!?!?!?! Here's my O face.
I have talked to this guy and tried to do business with Gravity and found them to be nothing like the "benevolent" group described here.
I guess the memo did not reach everyone in the organization.
Not sure what he was thinking, but hope it works out the best for them!
sschu
it was great PR...but reality is catching up to the hype.
Agreed. A dose of reality.
But these guys who live in Seattle REALLY believe this stuff. When the $15 minimum wage debate was raging, there were a LOT of true blue believers.
But here we are.
sschu
Yet the NAICS codes in Seattle inclduing the restaurant codes show that jobs have INCREASED since the $15 minimum wage was implemented and continue to do so. Ditto the lack of restaurant closures which are actually below normal pace.
Is implementing a $15 minimum wage nationally good policy? Of course not because $15/hr in Seattle isn't at all comparable to some rural town in Kentucky but all of the hatchet articles that the $15/minimum wage in Seattle will have immediate and dire consequences has been complete BS. The OPPOSITE has occurred and in general the conservative hit pieces have moved on largely from the topic.
The min wage in Seattle is only $11 right now. It will move to $15 over time, in a couple years. If you do not think higher wage hence price negatively affects demand, then not sure what to say.
The economy is booming right now here, some say this is the best job market in the country. When things get tougher, lets see how the $15 min wage works for all those hamburger flippers.
sschu
Pffff!
Here's an idea... let's make usury illegal... no more interest on on any loans starting today... all student loans become principle only... all home loans become principle only... yes banks would fail... but let's do it, and I don't even have to get the press for it... let price get the credit... there everything solved, can probably keep minimum wage the same...
Think about it...
this whole story reeks of fear......fear the unknown....take no action.......gripped with fear. the better employees left......they would have anyway.....good grief
Exactly. Half the morons here have enough brains to realize that too much of the country's wealth is going to people that don't deserve their largess ... and who aren't truly productive anyway (see management in banks, Wall Street) ... and yet any move by labor to try to gain more power and wealth is belittled.
The almighty market would supposedly take care of it if it was only allowed to be "freer". Oh, how the oligarchs fear the "free" market. Markets in which they currently have unprecedented leverage over, which is exactly why the oligarchs do not fear libertarianism in the slightest. In fact, they welcome letting these useful idiots push for less regulation, lower taxes, etc. Better for them, worse for us, even for these supposedly self-made, super self-sufficient, independent libertarians.
Z
Come on. You put yourself up there as someone that's informed but you have completely failed the ideological Turing test; the portrait you paint of "free marketers" is as bad as the anti-abortion portrait of pro-lifers as a cabal of white males that meet in board rooms to try to determine how to enslave women.
There's so much written about: 1) How regulation serves larger established institutions at the expense of new competition. 2) Forced monopoly participation destroys intensives (hint: unions create a forced monopoly on labor, how great did that work for Detroit?). 3) Mercantilism is not free markets and many many many people have written that we're much more of a mercantilist system than a free market - e.g. this is a constant theme of libertarian anarchist, historian and economist, Thomas DiLorenzo.
Please ACTUALLY read something that portrays the view your failing miserably to accurately paint a picture of.
absolutely right. the regulation you are speaking of is not very different from cartels. have been reading about economy in europe during 1920-1940 where cartels were not only legal but enforced by the authorities, as well where the unions colluded with the corporations to milk the middle class. i'm trying to find how it's any different from that period besides being more covert.
"the portrait you paint of "free marketers" is as bad as the anti-abortion portrait of pro-lifers as a cabal of white males that meet in board rooms to try to determine how to enslave women."
That's quite an imagination you got there.
"There's so much written about (h)ow regulation serves larger established institutions at the expense of new competition."
Yes, there's plenty written about a lot of things ... especially things that benefit our rulers ... but it doesn't mean that it is necessarily true. I'd imagine that the leaders of these corporations and groups like the Business Roundtable, etc. know what is best for their interests and I don't see them spending money and punding the table for MORE regulation. No, in fact I see the exact opposite.
"unions create a forced monopoly on labor, how great did that work for Detroit?"
There was more involved there than simply the unions ... such as so-called free trade agreements. Unions are not always good and they are not always bad.
"Mercantilism is not free markets and many many many people have written that we're much more of a mercantilist system than a free market - e.g. this is a constant theme of libertarian anarchist, historian and economist, Thomas DiLorenzo."
I didn't write that ALL people that call themselves libertarians all hold the same, exact views. I don't think you have read what I wrote thoroughly. You are creating retort to points that I never made.
I have read plenty and I will continue to read. And I'll also continue to observe.
Z
Thanks. Again, I apologize if I reacted too quickly.
No problem. It is easy to not thoroughly understand what someone wrote in these circumstances, just as it is easy to not thoroughly articulate what your point of view is.
I don't disagree with all aspects of libertarianism by the way. I'd vote for a true libertarian over any of the corporate candidates of the two major parties, such as Bush and Clinton.
Z
> That's quite an imagination you got there.
Thanks :-) ... I'm working on my rhetorical flourish. No where near as good as those practiced at it.
> I don't see them spending money and
> punding the table for MORE regulation.
> No, in fact I see the exact opposite.
Several well known cases off the top of my head which you can dig into yourself:
Washington medallions: Established taxi companies are pushing for a city run medallion system. of course this will limit competition.
Moving companies in Kentucky: http://www.bloomberg.com/bw/articles/2013-03-07/think-twice-about-openin...
Obamacare: Written primarily by the insurance industry and big-pharma
FDA and the relationship to the food industry specifically Monsanto
Regulations favor entrenched businesses by creating barriers to entry for competition and provide a larger machine whose reigns are easily usurped by money. You're view of regulations is going to reward the people you want to take power from.
> There was more involved there than simply the unions
Of course there was. I hesitated to mention Detroit and probably shouldn't have - not because I think unions weren't a major reason, but because it would detract from the point. I have family from the steel industry in PA through the 60's and 70's
> You are creating retort to points that I never made.
Again, my apologies. It's just that "free marketers" don't typically think what we have today is a free market. And you seem to paint a picture of them saying "more of what we have today" which isn't true. I would call what we are today Fascist/Mercantilist; that is, there's a "public-private" partnership in managing the economy. You and I disagree with solution. I'm pretty sure that "more regulation" simply strengthens that "partnership" and I think it's been repeatedly shown to be the case.
Yes, there are some cases of big businesses pushing for more regulation, but for the most part that's not the case. They push for less regulation much more often than for more regulation.
Z
"Yes, there are some cases of big businesses pushing for more regulation, but for the most part that's not the case. They push for less regulation much more often than for more regulation. "
Tax loop-holes and carve outs and give-aways and bail-outs ARE nothing but 'more regulation' in my book.
"WE will being jobs IF you exonerate US from paying what every other business in the municipality/state pays, grant US land or provide other infrastructure or grant other rights of way such as direct access to highways, gift US taxpayer money outright, guarantee our debts, etc..."
FUCK THAT NOISE.
"...I don't see them spending money and punding the table for MORE regulation. No, in fact I see the exact opposite."
for fuck sakes. TPP, crominubus etc etc? where have you lived? the corporations are demanding moar regulations which makes them exempt of all the laws, responsibility etc while destroying their competition.
the regulations are not there to level the playing field. it is doing exactly the opposite. i cannot put it more bluntly. current legislation is nothing short of cartel agreements enforced by the government. and you want moar?
you shouldn't read moar, you should choose more carefully what you read.
Ugh. So much for the "top of my head." I can't believe I didn't mention the TPP.
cant wait until we'll see what's in it.
@zeabow
if you are so fond of reading i recommend you to start with tragedy and hope by carroll quigley.
written by an insider, bill clionton's mentor, who had the privilege to have exclusive access to the council on foreign relations archives. this book was never to be published to the wider public but to be a state department et al textbook.
https://archive.org/details/TragedyAndHope_501
God bless the guy! If I was his competitor I'd be ecstatic because, the free market will also eventually put this guy and his artificially-high labor rate out of business.
Sorry, the article fails too inspire me. The writer equates what this man did to some "equal pay" legislation forced on businesses by government. The difference is that this man owns and controls his own business and government does not. Just like the government not having the right to tell this man what he should pay his employees, neither should anyone else. Literally, "It's his business".
Apparently this man does not fully own the business. His brother who owns 30% of it did not have any say in this decision. Like in government - in democracy - the majorty rules over the minority.
first of all, the US isnt a democracy, and second of all, in the area of US foreign policy - it is absolutely clear that a minority control foreign policy, energy policy, etc. because we have the best government money can buy.
Regardless of it's label, we do live in a democracy- a monetary democracy where the wish of many dollars outweigh the wish of the few.
Silly. Rule of money is not democracy. It's Mammoncracy.
This is the mistake, he did this without consulting the other owner. The rest of the article, meh. These other issues may have worked out eventually. I agree with the idea that it is his business and everyone else can go to hell. But it is not ONLY his business.
The idea that other businesses felt pressure to raise their pay...cry me a river. Let experiment boy experiment, what is it to you? If you are not raising your employee's pay, it is easy, they can try to get a job with experiment boy, or they can keep the job they have. If they move on, you will have other applicants.
This article is not about systemic problems with what he tried to do (as if it would fail everywhere), this is a weird idea that he tried to do half cocked.
If there are no other stakeholders, he can decide to earn less. Fuck trying to frame this as being relevant to the minimum wage debate. It is unrelated.
The point that everyone is seeming to miss here, whether you agree with Mr. Price' experiment or not, or even minimum wage laws, is that the real problem is debt money and usury. The gap between rich and poor will only get wider while certain institutions can lend money into existence.
The government is choosing winners and losers while placating the plebes with "healthcare" and minimum wages, and a false sense of security.
Want a better life for all? Ain't gonna happen while we have debt money. Ain't gonna happen while we have too big to fail/jail. Ain't gonna happen while we have unaccountable, highly political, 'regulatory agencies' micromanaging our lives and businesses.
while placating the plebes with "healthcare"
I agree with your comment, but I would note the plebes are not terribly placated with the ACA. I have never witnessed such a universally hated program. 100% of people I have talked to, from every walk of life, hate this law. The only beneficiaries have been the insurance industry, the pharmaceutical companies, and the industrial hospital owners. That's a pretty small group to benefit at the expense of everyone else.
Remarkably effective law, when its real purpose is understood.
Um, no. As majority owner he can do as he pleases.
At 30%, that's a pretty weak hand, his brother was at most a silent partner just there to collect the dividends. He'll probably lose more money than he gains going through a lawyer and the courts.
Will the brother be able to sue to be bought out? Need to see the contract he has with Gravity. As far as future earnings that's always a toss up. I would just ask to be bought out. But, with the way libtards work he could start getting government contracts and then the manna will really start flowing.
1. I have not seen any report that Dan is the majority shareholder.
2. IMHO, it is an improper thing to do to one's co-investors/partners -silent or otherwise.
...& a damned shitty thing to do to one's kin.
The reasonable thing to do is to buy out your co-investors/brother first, or divide the company's client base in some reasonably amicable manner and spin off or sell off to buy out your partner(s)/kin before embarking on a radical ideologically motivated re-orientation of compensation practices...
3. Hey, where is that Dan Loeb fella?
Maybe he wants to invest his/client's money in this 'enlightened' venture and buy out Luke?
Dividends? Returns? Hey, who the fuck cares about any of that when ideology can be empowered with YOUR money.
Well, when it comes time for the nut cutting in the court room its all gonna revolve around the contract everyone signed with the Corporation.
Not what anyone thinks is fair or how they'd like the outcome to be.
If the brother was a 30% invester but was not around for any length of time that sounds like a silent partner with no say in how the company was run.
But, it would behoove us to learn whether the so called owner is actually the majority shareholder, or whether he's just hired, in the contract with the Corporation to act as CEO.
If he is 70% owner of the company then he can do as he pleases and his brother can sue for lost compensation.
Unless we can see the Corporate structure and the contracts binding all the players, it's a fools game indeed on our part to assume we know how things will turn out.
One thing for sure though. The lawyers will be getting their pound of flesh from this dog fight.
Because he has shareholders, he has a fiduciary responsibility to maximize returns to shareholders. He will lose the lawsuit with his brother.
I fully support employee ownership. Not only is it a good way to build the middle class up again, but it gives people an incentive to be more productive.
By "fully support" do you mean that you are backing such businesses actively, or that you own/started one, or that you simply like the idea?
I say this b/c I have trouble finding talent for my own business, mainly b/c I don't have much money in the startup phase, so I work with younger guys who have the energy, desire to learn, and willingness to take a chance on me. Sometimes I am amazed because some guys will not do the basic work necessary to better themselves, other times there are guys who could do amazing things if given the opportunity.
With employee ownership, I like the idea but having hired a few people I would be extremely wary of giving anyone a permanent stake in my business.
So sick of the constant deification of the shareholders...As if they are entitled to exalted status merely because they chose to fasten their sucking mouth-parts on YOUR business...
They are gamblers, period. They "invest" in nothing, anymore than a person "invests" in the quarters he shoves into a slot machine...Does the casino have a "fiduciary duty" to return value to gamblers?
Fuck the shareholders. They made a bad bet on this business. Now take your losses and exit the casino, better luck next time...And no, there's nothing wrong with the machines...they aren't supposed to pay out all the time. That's how the casino stays in business.
"Fuck the shareholders. They made a bad bet on this business. "
They didn't make a bad bet: the company was profitable and likely would have been going forward based on the previous compensation practices..
The CEO EXPROPRIATED his co-owners -including his own older brother who founded the company with him!
The claim that this was done for ideological reasons doesn't wash with me: Dan could have distributed as much of his own share of the profits or even shares in the business outright; but, he didn't: he took everything previously amassed and promised to do so on a forward basis.
He should have bought his co-owners and brother out first of only distributed his share of the profits of the business.
The first lesson of gambling is there is NO guaranteed outcome. That's why it's called gambling...
You say it wasn't a bad bet...well, they placed their money on the outcome of a situation. An outcome they themselves determined was the most likely...that outcome did not materialize (for whatever reason...) and they did not get the anticipated payout...
That is the working definition of a bad bet.
As much as the stock market FEELS like gambling, it isn't.
I'm not sure if you're every tried running your own business, but if you have, I know you've run into a point where you knew you weren't growing as fast as you need to because there isn't enough money. The classic case is trying to go from part time in your garage to full time. Also common are cases like some of my friends from grad school, where a guy invented some great new tech but doesn't have $20 million to drop on equipment.
Generally, when you go and ask someone to give you that money, you are expected to explain what you are going to do with it. Most people who have money to invest aren't going to give it to someone who plans to overpay himself, his workers, or both. If the he admits as such and the investor gives it to him anyway, then sure it's the investor's fault for being an idiot. If the borrower promises to honor his side of the deal to the extent the business succeeds (fiduciary responsibility), and then double crosses the investor, I would argue that a lawsuit is justified. The facts of the case point to this guy wasting money that wasn't his, and how he's getting the horns. Justified outcome.
However, if we get a meme going of "all investments are just gambling and you're a moron for giving money to anyone," investment will go to 0. Which means few/no new business and few/no new jobs. That's such a basic concept you should already know it before Economics 101.
Go ahead, downvote me...you KNOW it's true. Trouble is, all you complainers know what the problem IS, you just can't bring yourselves to DO it. Because it might mean giving some of YOURS back.
But bringing the whole Ponzi down means EVERYBODY has to give some back, because it was all fraudulent, fake. That means YOURS as well. Especially anyone who "invests capital" expecting guaranteed returns. Combine that with a debt-based economy and you have a truly toxic mix...It's all gotta go, ALL of it. And I'm not just picking on shareholders...
Greedy homeowners will have to give back inflated home values, workers will have to give back some pension bennies, perhaps even wages. Businesses will have to give up some profits, and government will have to downsize its operations. People who have become accustomed to living off revenue-streams generated by others will have to get real jobs, as will those accustomed to being supported by the taxes of others. If the 'natural direction' of wages is down, then PRICES must go along. The producers and landlords will have to forego, or reverse, their own increases until they match the wages, and governments will have to downsize to where their OWN tax bases can afford them instead of selling bonds that go off more like BOMBS 10, 20, 30 years later...
Do the bankers owe us all? They sure as fuck do. But WE owe us all too, and will have to release our own ill-gotten gains even as we pry them from the cold, dead fingers of our bankers. Bankers crimes are well-known, but they were not committed in a vacuum. WE helped create the unique environment that allowed things to get to this point.
It ISN'T just 'the other guy' who needs to pay up, it's not the "FSA", or the retirees, or student loan taker-outers. It's not just this group or that group, it's ALL of us. We are NOT going to preserve the status-quo for ourselves by throwing some other poor bastard into the volcano.
I dunno. Let's try the dude and the Volcano thingy first and if that doesn't work start throwing virgins in.
"...he has a fiduciary responsibility to maximize returns to shareholders. He will lose the lawsuit with his brother."
methinks here you see in this case the cancer of this kind or style of capitalist thinking: short-term or long-term?
in a way, you can see this as a battle between short-term maximizers and long-term optimizers
best seen in the quarterly report madness of megacorps. cargo-cultism of fundamentalist "infallible market" religion at it's best
and the funniest thing is that many will read and think it's socialist talk to criticize those attitudes
Sounds like a communist
or a union
Did he have an MBA?
PhD from the Zappos school of business managment.
True story. I had a boss who gave everyone the same bonus regardless of effort and results. Once everyone figure it out, the good people left, employee absenteeism and tardiness skyrocketed and the office was empty well before 5:00 most nights. The business declined by 2/3rds over the next 10 years.
Socialism doesn't work in practice. It's a race to the bottom.
Ditto. Equal pay pay is like dumbing down the teaching for the entire class to the level of the stupidest student. If your hard work and achievement is not recognized, time to move on imo.
INterestingly, when you read hisotries of Communist/Socialist dictators (like Mao, Stalin, etc) the first thing they did was to execute all the hard working educated people and discourage ambition and/or achievement. In China during Mao, I read people starved to death in those communes because o one wanted to work since everyone was treated (and fed) equally no matter how hard or little they worked.
Anyone who would let themselves starve to death simply because someone else was being fed was a moron LONG before 'socialism' came to town, and everyone should applaud the Darwinian wisdom of taking them out of the gene-pool.
That may true and all but a few of the earliest white settlements in North America experimented with that type of communism and practically the whole settlement starved. It wasn't until they allowed people to produce what they wanted and profit off of it that the settlements thrived.
I think the weather, and the fact that they were newly-arrived and hadn't gotten themselves properly organized yet and had some disputes with the locals had more to do with it than some early form of 'socialism'...
Those early settlements were NOT the hotbeds of individualism that you imagine. An individual on his own had little chance of survival in that world. People HAD to work together, and forego many of their own personal preferences for the common good.
You would not have liked it there.
"I think the weather, and the fact that they were newly-arrived and hadn't gotten themselves properly organized yet and had some disputes with the locals had more to do with it than some early form of 'socialism'... "
LULZ !
The present Administration is still using all of these excuses as to why their economic agenda is not resulting in prosperity!
Lousy GDP: it was all because of the bad weather!
Lousy implementation of the ACA: we are newly-arrived and haven't gotten ourselves properly organized yet!
Lousy reaction to the immigration agenda: we're having some disputes with the locals!
You are a fucking laugh riot my friend!
It's pretty ironic that this coming from someone in the cut- throat payment processing business.
This fellow hasn't heard of those HB-1 visa people floodin gin from Bangladesh who will work for less then half whatever the Merikan is being paid.
The road to hell is paved with good intentions.
So is the road to heaven. Though minimum wage laws are in the direction of hell for the unemployable at that price level.
Read Rothbard!
Not really. The road to Heaven is paved with evil intentions enslaved to the good of humanity via free market capitalism.
Strange to think about, but it is true.
No good deed goes unpunished.
Ignorance is no excuse.
Why $70,000? Why not $100,000? That sounds more fair. Just like the minimum wage, why $15.00? Why not $50.00?
We need to spread the love and lift everyone up to the same level!
Dan the dumbass will go broke!
There is an order of importance which goes with that rise up, and it's one at a time over a generation, slowly.
Sounds like y'all got it all figgered out. Why not roll back that minimum wage to 2.00/hour. That will teach those lazy good for nothings.
LOL, back in the day my friends at the local Makerspace built a cluster computer, and they thought about paying some middle/high school kids to babysit the simulation program they were running. However, $7.25/hour and the paperwork for hiring someone to sit around during working hours on weekdays/weekends in the summer was too much (it would've made sense at $3 per hour), so they didn't do it and just ran it as they had time.
Result: the research on river pollution we were doing took way longer, and N kids did not get any practical work experience. Or a chance to play XBox with the sound system and giant projector. At least they can get student loans.
As long as single moms and 3 grade retards love you, you are truly rich.
BTW, if Miss Maisey isn't doing anything tonite, I can help her boost her pay a few hundred bucks.
I knew there was something good about this article-Your comment. +
I come here for the seriousness and stay for the laughs.
Until all the baby mommas start writing you in as the baby daddy.
This case is really interesting, in the sense that we have a private business, doing something independently for their employees, that has zero to do with .gov, AND it's still a fucking disaster, from a societal and business perspective!!
CEO's rarely live outside the ether long enough to understand how the "worker bees" live and feel, and when they try to "dabble" in this touchy subject, they do it half ass and delusionally!
Nice job Dan, here's your sign!
How do you know it is a disaster? Did you read the article that this post writer refers to? Or do you just read what supports your pre-existing beliefs?
Z
Them thar a whole lotta words in that that thar article. Somes even big'uns.
This was a hefty price to pay just for some na-na.
When you're an old successful business owner you can never get the kind of na-na that you did when you were a young successful business owner.
Therefore your statement is false.
The 1% will soon be sucking the hind tit in life whilst I squander their accumulated wealth transfer they appropriated from the 99%.
Resistance is futile, Wall Street.
Up yours, Blankfein.