I just finished reading a book called The Dictators Handbook, which is a tounge-and-cheek title for a book about a political science topic called selectorate theory.
It said that corporations have a similar political makeup to communist dictatorships because the number of key supporters (shareholders) a CEO needs to stay in power represents a relatively small proportion of people in the company.
As a result, the CEOs only need to keep the largest shareholders happy. Smaller shareholders and workers merely accept the direction of the company. Their opinions don’t matter.
This is why we see CEOs have massive pay and generous severance packages, while workers struggle to pay rents and qualify for government benefits.
There was a saying in factories in the Soviet Union “they pretend to pay us, and we pretend to work”. We see this same sentiment with workers today with “quiet quitting”. Putting in more work provides no added benefits. Incentives are misaligned, and this leads to inefficiencies that will lead to our downfall.
It said that corporations have a similar political makeup to communist dictatorships because the number of key supporters (shareholders) a CEO needs to stay in power represents a relatively small proportion of people in the company.
As a result, the CEOs only need to keep the largest shareholders happy. Smaller shareholders and workers merely accept the direction of the company. Their opinions don’t matter.
This is why we see CEOs have massive pay and generous severance packages, while workers struggle to pay rents and qualify for government benefits.
There was a saying in factories in the Soviet Union “they pretend to pay us, and we pretend to work”. We see this same sentiment with workers today with “quiet quitting”. Putting in more work provides no added benefits. Incentives are misaligned, and this leads to inefficiencies that will lead to our downfall.