Backlash Against Globalization and CEOs

Note that the color for the "no" category is not consistent from top to bottom:

I'm surprised how many people support pay caps for CEOs, and at the large number of people who do not believe that there is equal opportunity. The article reports that "Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalisation." There is also more uncertainty about the effects of globalization than I would have guessed. Although the majority of those with an opinion view globalization negatively, more than 40% of the people polled weren't sure how to answer. More detail here (free).

Comments

[Meh]

Not sure why you're surprised by the number of people who don't think there is equal opportunity, since their view actually accords with the evidence. You yourself have linked to a paper of two demonstrating that equality of opportunity has declined in some places and remained mostly static in others.

As for CEO pay, that's a function of the question asked. Would you be surprised if there were similar numbers in favour of higher taxes on CEOs?

[Mark Thoma]

I wasn't surprised that people thought that opportunity is limited, I just didn't expect quite that magnitude.

On the question, the article indicates high support for taxation as well. But I am more surprised by high support for a cap (which is essentially a 100% tax rate past the threshold) than by high support for an increase in the tax rate.

[steve]

These numbers don't surprise me at all.

What's funny is that even though more Americans still believe in equality of opportunity here in the USA it may very well be that there is more equality in countries like Germany or Scandinavia, where, for example, college is free (see recent OECD(?) studies). Once again, popular perceptions may differ radically from reality.

Re: CEO pay caps (in UK, France, Spain and Italy over 60% favor caps), note how moneyed interests can easily frustrate the "will of the people" even in a democracy...

[real person from the real world]

Ah, the siren dream of getting filthy rich.... Cap the CEOs, sure! What do those guys really do for all that money? BUT, raise taxes? hmmm.... wellllll if I had it, I guess I too, would want to keep it all..... Frankly the US citizenry has been fighting taxes since a load of English tea got dumped in Boston Harbor.

[save_the_rustbelt]

No real surprises here.

I spent some time in Saginaw Michigan on Friday, and I could see the impacts of globalization close up. When most of the auto parts business goes overseas it will get worse.

The new CEO at Ford got an $18M payday just for showing up, to console him for leaving Boeing behind. The odds of him being successful (not his fault really) are slim and none.

[sam]

dunno, what you are suprised?
ivory tower, may be.

[robertdfeinman]

People in the US all live in Lake Wobegon. Everyone one thinks they are above average. They think their chances of moving into the wealthy class are something like 20-50% (while it is really like 2%). They think the chances that they will have to pay an estate tax are like 40% when less than 5% actually are subject to it.

I used to think that it was only in hopeless third world countries that people would play the lottery. It is an (implicit) admission that one's beliefs are false. Now we see that it has swept the US as well. So people want to believe that their chances of wealth are great while their actions in buying tickets show otherwise. However, they still don't want to be penalized in the one in a million chance that they do come out on top. They would be far better off if the $80 billion wealth of the Waltons was being used for the greater social good. They can console themselves by visiting Helen Walton's vanity museum that is being built in Bentonville with funds from her estate. I hope that visit is worth it.

Old myths die slowly.

[Peter Schaeffer]

Globalisation in its current form is essentially an elite ideology where special interests (Shiller's "cosmopolitans") profit at the expense of the great majority of Americans, Germans, French, etc.

Predictably, globalisation is very popular among the classes (NYT, WaPo, and WSJ readers) who benefit from it.

David Brooks wrote a commendable essay on this subject. See "Karl's New Manifesto" (http://www.nytimes.com/2005/05/29/opinion/29brooks.html?incamp=article_popular). A useful quote

"They congregate in exclusive communities walled in by the invisible fence of real estate prices, then congratulate themselves for sending their children to public schools. They parade their enlightened racial attitudes by supporting immigration policies that guarantee inexpensive lawn care."

Add unprecedented trade deficits to Open Borders and you will have a perfect storm for how the few can profit from the many, all while professing perfectly liberal attitudes and congratulating themselves on how enlightened they are.

[wcw]

In re: surprise, I tend to believe that in aggregate, people are very observant. "Don't make the first or the last out at third base" turns out to be something that computers churning away at monte-carlo simulations can demonstrate, and yet baseball lore had that saying well before Von Neumann so much as paved the way for computing. I am shocked not at all that people notice whose children do well in life, and whose don't.

On taxation, surely you've seen the literature on the likely genetic basis for the human conception of fairness. Paying someone ten quintillion dollars just seems unfair to most, whether those observant masses or those who think things through. Most CEOs are not Alex Rodriguez; as a class they are entirely fungible, so their high prices strike me and other observers as a market failure. A cap, maybe I don't support, but considering the status quo, maybe I do.

Apologiae in advance for the baseball metaphors, but it's my experience that sports metaphors help undercut theological rather than rational thinking.

[evagrius]

Peter Schaeffer;
A propos Brooks- does he live in a gated community? Does he send his children to public schools? Does he have lawn service?

Just asking because he strikes me as one of "those". Just a tad more "conservative".

[me]

Globalization today is nothing but labor arbitrage and the opportunity to dump (steal) benefits promised for decades, with no opportunity to make up the shortfall for those screwed.

All this entrepreneur crap is sickening. 2 Millions E-Bay entrepreneurs says Cheney. You can bet your ass he was never without benefits and pensions and salary.

It reminds me of the guy that was a courier for a bank in Cleveland. The bank did away with his job and privatized it. He still has the job but now he had to buy a vehicle, insurance and makes less than a salaried employee for the bank.

The cycle of avarice had better change or it will be changed.

[real person from the real world]

E-bay entrepreneurs? eBay listings are actually down. Ever been on eBay? The ones doing the best business are not always the most ethical. Quite a few are from 3rd World countries in SE Asia, making $ by selling doctored/faked goods to American suckers.

Other Entrepreneurs? I work for an immigrant entrepreneur. He's changed his business so many times, it's enough to make your head spin.... and everything built on white lies and games.

These big CEOs, they all think they are a species of Rock Star. Come to think of it, at least the Rock Star actually produces something. Some of these CEOs just drive things into the ground, while they collect their golden parachutes.

[real person from the real world]

Pete Schaefer is onto something.... Brooks' BoBos in Paradise.... Too bad I did not know about this book back when we were discussing Whole Foods. A few of the Bobos showed up in the discussion, and I didn't even know it!

From Wikipedia:
"....they rarely oppose mainstream society, claim highly tolerant views of others, buy lots of expensive and exotic items, and believe American society to be meritocratic ..... spend extravagantly on kitchens, showers, and other common facilities of everyday life. They "feel" for the labor and working class but may refuse to buy American made goods."

On Amazon.com the book description it goes on to explain how they overspend on common items, maybe plucking $5 down for a "wheatberry muffin" while driving big shiny new SUVs to stores like Wild Grains or whatever....

Sounds like the gal who posted a defense of Whole Foods and the more "nutiritious wheat bread" she found there. Good ol' Roman meal has been around for ages, and is available in most normal grocery chains, but now the search is on for alternatives....

Guess I was on to something, and didn't know it.... aparently since you have to pay to read Brooks now-a-days.

[Brenda Rosser]

Globalisation is OVER. Peak oil. Look around.

"The power to become habituated to his surroundings is a marked characteristic of mankind. Very few of us realise with conviction the intensely unusual, unstable, complicated, unreliable, temporary nature of the economic organisation by which Western Europe has lived for the last half century. We assume some of the most peculiar and temporary of our late advantages as natural, permanent, and to be depended on, and we lay our plans accordingly… In England the outward aspect of life does not yet teach us to feel or realise in the least that an age is over. .."
John Maynard Keynes

[Alex Tolley]

"Globalisation is OVER"

That would be one hell of a "black swan" event.

[Brenda Rosser]

US led Neoliberal globalisation is over.

Look for protectionism everywhere.

[Peter Schaeffer]

Evagrius,

I have not been able to find out anything about David Brook's personal life via the Internet. He may or may not be married. He may or may not have children.

[btgraff]

the problem with asking people about a "Cap" is that it could mean anything - does it mean a fixed number 9$20 million) or some formula (20 times average pay of the company's employees) - i think most people probably interpreted it to mean placing some general limit on CEO pay.

what bugs me is stock options - which should be taxed as income, and not as a capital gain, unless CEO's actually pay market prices to obtain an option. just because an option is issued at or below the stock price doesn't mean it has no value.

[Lafayette]

btg: (20 times average pay of the company's employees)

OK, good, your estimate is as good as any. That puts a cap on Executive salary at $808000. A bit peeked, that.

Shall we be a bit more generous and say 100 times the average pay? That makes for a top cap of $4,040,000.

That's enough for anybody with the talent to run a major corporation and one helluva lot better than "The sky's the limit!" And, as for stock options, let them be a "motivational tool" for everyone and not just management.

When will we the Dems propose the above as a law? When pigs sprout wings.

[Firozali A.Mulla MBA PhD]

If you read page 390 of the book by Thomas Friedman,” The World Is Flat” it goes on to say …But the Indians and Chinese are increasingly adding one more thing to low-cost labour and hi-powered technology: unfettered imagination-that is high, innovative and creative capacities. They focus on solving their problems with cheap labour, high technology, and high creativity - re-imagining their own futures. Then they will focus on ours. We must have people, lots of people, who can do the same. So, for the last time, you have been warned. This is not a test.
Sir. When I read the failures of globalization articles in the Financial Times of UK and the rich countries that will have to participate in the more payment of tax to keep the poor sustainable or simply living, I was not just shocked but I though this is not the test, it is past the test. We are already fighting the poverty with nothing except the promises.
Let me go a little further. The bank of Tanzania is a holes case of theft and giving loans without any back up or the co-lateral values or simply being friend with the Director.
The budget by The Finance Minster Mrs. Zakia Meghji is simply trying to figure out what has happened. Do we increase the price of bus fare that the public do not want do re look ay the financial institutions that The World Bank’s request to give a depth report of the Bank of Tanzanian’s working?
Sir, not just a failure of the economy but a brutal force of poverty still in Tanzania and as FP names the failing states ion Africa. Well no need to further.
I have one here in front of you. DOG EAT DOG WORLD. THE POOR ARE DYING LET THEM DIE.
I mean they are from the Tarzan land, are they not, so why worry. Aborigine in Australia are gone, Red Indians are gone now the cockroaches pest like poor countries have to go. Am I saying this? No. Your graph says this.

I thank you.

Firozali A.Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
East Africa

Firozali A.Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
East Africa

[Lafayette]

FM: unfettered imagination-that is high, innovative and creative capacities. They focus on solving their problems with cheap labour, high technology, and high creativity - re-imagining their own futures.

I don't buy this, even if you read it in a book.

The Chinese, at the moment, are implementing almost exactly the Japanese development plan. The copy just about everything, and all that is innovated is the price. Even down to a multi-millionaire's French chateau on the outskirts of Shanghai or Peking that is a copycat of Versailles. Or the townhouse are that are almost identical to those built in the 19the century. They are very fond of French architecture.)

They have yet to develop an internal market that will take up the slack once the export binge tends to dampen in the next decade.

The Chinese culture, over 5000 years old is rich and diverse. But, for foreign markets they are innovating nothing. Just working hard and selling, selling, selling. A lot of the stuff is low-quality junk. Especially the kitchen gadgetry.

Let's not embellish the "Chinese miracle" with that which it does not deserve. It is amazing enough as it is, having brought millions out of abject poverty to semi-middle class existence.

As for India, I don't see much innovation out of their software houses, but given the labs being set up there, where they can do some real research, innovative technologies may be not far off.

When you are a subcontractor, that doesn't leave much room for imagination. You do what you are contracted to do. The Indians do have one or two important Data Management Software companies ... but their solutions are hardly any more state-of-the-art than SAP or Oracle. Good stuff, but not ground breaking.

[ErwanB]

Anne:
"What then are salaries and conditions like for teachers in French schools?"

Salaries are not great, but the perks are excellent (Long Holidays, job protection...).
Conditions then depend on where you teach, the paris suburb can be quite dreadful. If you're jewish and trying to teach history, it can be worse. Some even get beaten up in the class room by their own students.

Idealising France is a common mistake, half a million young french live in the UK. (officially, the real number is probably much higher in my opinion...)

[Lafayette]

eb: Idealising France is a common mistake, half a million young french live in the UK.

Spot on. Let's not make more of France than what it is.

I'd be a fool to live here if I thought elsewhere were better. But, in the balance it is not a bad place to live.

Just bring money. If you are thinking of starting a business here that will sustain you and your family ... then see a psychiatrist first. You need help.

There are fewer countries in Christendom that have a bureaucracy that can stifle initiative like the French. Even Italy is better. They keep two sets of books, one official the other officious ... and the fiscal authorities know that such is happening.

The French fiscal authorities will come after you with a sledgehammer.

Example: I started a company. I realized quickly that the software was not adapted to the French market. I closed the company ... all within a year.

I reclaimed the VAT on all that I had spent on Marketing, principally two exhibitions that made me understand my error. The fiscal authorities refused the refund. (Too many companies are opened and closed just to purchase equipment, then deduct the VAT, close the company and resell the equipment at full price.)

I had to go to court to obtain a decision that finally got my money back ... five years later. No interest punishment was asked of the fiscal authorities. Luckily, the legal process require no lawyer ... a written submission of arguments is all that need be done.