CEOs benefit from exploited labor?

[Manoverde84]

Hi guys, new to the forum and relatively new to progressive politics too. I was having a hard core debate with a libertarian friend of mine and he replied to my assertion that CEOs benefit from exploited labor in the third world with this:

Dude, you are doing it again. You are mixing and matching different ideas. First of all, let's take a bus 101 class here. CEO's are for the most part compensated in stock. CEO's can't make their stock go higher, you can. Stock is sold to the public. The public buys that stock or sells that stock based on an assortment of factors. I know many companies whose profits have soared and their stocks tanked or went no where. The greedy awful Walmart is a case in point. The stock finally broke out this year but for a decade was dead money. When you are a publicly traded company, the CEO doesn't get any of those profits from exploiting the workers like you suggest. Privately held companies do and they are usually the smaller firms who obviously are not exploiting people. I just get the sense you have no idea what you are talking about. You have a general philosophy where you try to make everything in the world fit into it so everything makes sense. You just need to read more and learn more and you will find the world is very variable. And for the love of Christ, please stop bringing FOX news into every post. It makes you look childish.

Any help with this? How can I reply back? I would think that CEOs get a little more than a stock option in their compensation packages and that their decision to move overseas probably helps their stock. I just think that the guy pressuposes too much business logic to really see the social consequences here.

Help?

[Manoverde84]

1. anyone?

I know it's posted in politics but I could use the help. Thanks!

[bluesbassman]

2. Try this.

Most stock is purchased as an investment with an eye toward the price rising, or in the long view receiving dividends. If the CEO makes decisions (outsourcing is a big factor) that increases the profit margin of the company, the stock becomes more valuable, so yes they can be a factor in the stock going higher. As a matter of fact, that's pretty much their prime goal. What in the world does your friend think they get compensated for? Sweeping floors and answering phones? And while it is true that a large percentage of CEO compensation is in the form of stock, wouldn't it be in the CEO's best interest to do everything they could to make sure the stock gained value?

Sounds to me like your friend is a 1%er apologist and labors under the delusion that massively overcompensated CEOs somehow deserve the over 200% ratio they enjoy compared to their average employee. That's just my opinion of course, but I despise most all large corporations and their CEOs.

[Manoverde84]

3. excellent post!

Thanks for the reply. I will use it

Anyone else want to chime in? I want to get some more good responses.

[reteachinwi]

4. Wausau Paper Corporation

is an example. A hedge fund or capital management company bought Wausau Paper for $6 a share. After closing a plant and laying off 450 workers ( among other things) the stock went to $9 a share. The buyers got a 50% windfall, the workers got a few weeks of unemployment insurance payment. This is how many (Bain Capital) capitalist make their money. They don't make anything. They manipulate markets. It was not a legal business model before Ronald Reagan brought us morning in America.

[Manoverde84]

5. his reply....

No, CEO's don't get higher stock prices by outsourcing labor. As a professional trader I can help you out here. Stocks go higher based on top line growth, not bottom line. Cutting costs is bottom line growth and it does not drive stock prices higher. I can cite 1000's of stocks that have increased earnings over the last decade through cost cutting and their stocks have tanked. I can also show you 1000's of stocks whose bottom line is awful yet their stocks have gone vertical because they are growing their top line i.e revenues and sales. So no, your argument yet again makes absolutely no sense.

Basically because this strategy of outsourcing doesn't always work, it discounts the fact that CEOs make a lot from doing it?

I am guessing because he can cite 1000 companies that have terrible stock that outsource, then that means the argument that CEOs get rich off cheap labor is false?

[uppityperson]

6. has he shown you anything, any of those stocks? Quote him reply #4.