Drumenomics 1 comment

Kevin Drum looks for the cause of the large increase in compensation received by CEOs of large companies (undefined):

Is this the free market at work? That’s what I’m told. So I have a contest in mind: a prize for the least laughable explanation for why CEO pay has gone up 7x since 1980 based on supply and demand. At a minimum, winning entries should explain the following:
*Why the supply of CEOs has decreased.
*Why the demand for CEOs has increased.
*Why the elasticity of the CEO demand curve is apparently steeper than for any other commodity on the planet.
The comment thread to Kevin’s post will provide lively discussion about his questions and the apple and orange comparisons that led to them.
I do suggst that Kevin find some different economic advisors if he is being told that this is the free market at work. There has never been one of those in the US and currently the US economy is extensively, but not completely, directed by local, state and federal government law.
Certainly it appears that many CEOs are overcompensated compared to the average worker and some of these CEOs should probably be spending some time in jail like thieves of all income levels. However, Kevin would do better arguing from specific examples within specific industries than using incomplete and misleading generalizations.

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