I remember hearing this from a professor back at UMass...not sure the name of the class but Justin Lewis was the professor:
Back in the '80s, Japanese top executive pay was capped at about 7 times what their lowest paid worker makes. If I remember correctly, this was not a mandated cap, but an expectation that was honored by most major companies.
This cap apparently enabled them to reinvest more of their profits in their companies which enabled Japanese businesses to be very successful and productive during that time. Professor Lewis asked why American companies didn't follow suit.
My own opinion is that the problem is cultural, not economic or legal in nature. American culture demands competition to the extreme. To be considered successful, you need to be as successful or more successful than everyone you grew up with.
You can't address this issue with just a law, the culture needs to be addressed, which is much harder.
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timeasmymeasure
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Date: 2009-04-09 04:43 pm (UTC)Back in the '80s, Japanese top executive pay was capped at about 7 times what their lowest paid worker makes. If I remember correctly, this was not a mandated cap, but an expectation that was honored by most major companies.
This cap apparently enabled them to reinvest more of their profits in their companies which enabled Japanese businesses to be very successful and productive during that time. Professor Lewis asked why American companies didn't follow suit.
My own opinion is that the problem is cultural, not economic or legal in nature. American culture demands competition to the extreme. To be considered successful, you need to be as successful or more successful than everyone you grew up with.
You can't address this issue with just a law, the culture needs to be addressed, which is much harder.