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Tue Jul 3, 2012, 03:15 PM

 

France pushing for maximum wage

France is trying to implement a maximum wage for the employees of state-owned companies. From the Financial Times:

France’s new socialist government has launched a crackdown on excessive corporate pay by promising to slash the wages of chief executives at companies in which it owns a controlling stake, including EDF, the nuclear power group...François Hollande wants to cap the salary of company leaders at 20 times that of their lowest-paid worker...

France is unusual in that it still owns large stakes in many of its biggest global companies, ranging from GDF Suez, the gas utility; to Renault, the carmaker; and EADS, parent group of passenger jet maker Airbus.


In July 2011, Doug Smith proposed a maximum wage, using a 25 to one ratio, for any enterprise that used taxpayer funds....

For those, however, receiving bailouts, deposit insurance, government guarantees, tax breaks, tax credits, other forms of public financing, government contracts of any sort – and so on – the top paid person cannot receive more than twenty-five times the bottom paid person. This ratio, by the way, is what business visionary Peter Drucker recommended as most effective for organization performance as well as society. It also echoes Jim Collins who, in his book Good To Great, found that the most effective top leaders are paid more modestly than unsuccessful ones. And, critically, it is a ratio that is in line with various European and other nations that have dramatically lower income inequality than the United States.

In other words, the French proposal isn’t that big a change from existing norms, at least in most other advanced economics (ex the UK, which has also moved strongly in the direction of US top level pay). But despite the overwhelming evidence that corporate performance is if anything negatively correlated with CEO pay, the myth of the superstar CEO and the practical obstacles to shareholder intervention (too fragmented; too many built in protections for incumbent management, like staggered director terms; major free rider problems if any investor tries to discipline extractive CEO and C level pay, which means it’s easier to sell than protest) means ideas like this are unlikely to get even a hearing in the US. Let the looting continue!

http://www.nakedcapitalism.com/2012/07/france-pushing-for-a-maximum-wage-will-others-follow.html






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Reply France pushing for maximum wage (Original post)
HiPointDem Jul 2012 OP
Lionessa Jul 2012 #1
hifiguy Jul 2012 #2
Comrade_McKenzie Jul 2012 #3

Response to HiPointDem (Original post)

Tue Jul 3, 2012, 03:18 PM

1. Excellent! Very sound idea. K n R

 

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Response to HiPointDem (Original post)

Tue Jul 3, 2012, 03:19 PM

2. Could we write in President Hollande in November?

 

I keed, I keed. But not much.

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Response to HiPointDem (Original post)

Tue Jul 3, 2012, 03:21 PM

3. This is what it looks like when a country is not held hostage by ignorance... nt

 

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