patrick.net

And how is this executive producing over $70 million of wealth? How are her contributions to Google, whose products are all software, greater than that of 350 of the best software developers in the world? And yes, those products are what bring in the ad revenue, so it's still the software that adds value to the economy.

Here's an idea, hire 350 more developers and have them write software to automate her job. Then you'll save $70 million every year and keep those 350 developers producing other software essentially for free.

What is this going to do to the women are underpaid meme? Ought to move the average a couple of points? Now what is Elizabeth Warren going to rabble rouse about?

Nice of you to leave out the 1st year costs of 140 mil...economics libby style!

Dan8267 says

Here's an idea, hire 350 more developers and have them write software to automate her job. Then you'll save $70 million every year and keep those 350 developers producing other software essentially for free.

SoftShell says

Nice of you to leave out the 1st year costs of 140 mil...economics libby style!

You are an idiot. Over the course of 100 years, the first year costs are essentially averaged out to zero dollars a year. Hence the phrase "essentially for free". You really need to retake elementary school grammar. Your command of the English language leaves a lot to be desired.

indigenous says

What is this going to do to the women are underpaid meme?

Invalidate it for any woman who's a CEO?

indigenous says

Now what is Elizabeth Warren going to rabble rouse about?

Ah conservatives fear Warren, and rightfully so. You can see them piss in their pants whenever her name comes up. indigenous demonstrates this fear very well.

Call it Crazy says

They piss in their pants laughing so much because the Libbies actually think she is a good choice!

Comments like that demonstrate that Warren really does scare you. If she didn't, you wouldn't feel the need to ridicule her. You think by making baseless condemnation of her (for evidently no reasons) that you are making her look bad to potential supporters. In reality you are doing the opposite by demonstrating how much the parasites in our country fear her and thus implying that she would be very effective of ridding our country of parasites like you.

Again, the fact that you need to repeatedly attack her, yet can provide nothing to back up your assertions, proves that she is capable and that the bad guys, that's you, are terribly afraid of her. Now go change your pants. You pissed and shitted in the ones you're wearing.

With these kinds of salary compensations coupled with our geography and NIMBYism mentally, and we're wondering why real estate along the Peninsula is expensive?

CFO types are typically better for mature companies like Honeywell than a tech firm, who's still heavily into technology and not just mature product lines.

Thus, if she gets all *hatchet man* like too early, then a potential alliance between let's say Google car and let's say Toyota Motors may not occur due to too much crimping on the R&D budget. On the other hand, the car concept shouldn't eat up all of the company's R&D cost center either so there's a bit of a balancing act. Unfortunately, coming from an investment bank, I'd doubt that she'd have that insight, as the bulge bracket types look at the world as client accounts, credits, liabilities, and overhead. In other words, the business of money management isn't the same as that of technology.

Rin says

In other words, the business of money management isn't the same as that of technology.

You rarely see any sort of bean counter in a CEO position. Seems curious to pay a bean counter so much.

indigenous says

You rarely see any sort of bean counter in a CEO position. Seems curious to pay a bean counter so much.

Page is still CEO, however, bringing in an outsider from Wall St, is probably more about cost containment as well as creating greater financial value but the problem is that Google, by nature, spends lavishly.

It's not a typical Fortune 500, where depts and R&D project codes are very cleanly laid out. The Google culture encourages R&D w/o necessarily having it tied to ad revenues. I don't see where the typical CFO personality would fit into Google.

I mean it points to a weakness in the CEO more than in finance, of course they have to correlate R&D to income.

indigenous says

I mean it points to a weakness in the CEO more than in finance, of course they have to correlate R&D to income.

This is a lot easier to do in companies where the deliverable is a F-22 fighter (since the DoD has a budget to pay in bulk to Lockheed and Boeing) or when there are X no of man hours, billed to a customer, as in consulting.

Until the Google car is properly licensed to an automaker, it's not directly tied to R&D, even though it's probably got many elements of Google's analytic tools used in adware.

Dan8267 says

And how is this executive producing over $70 million of wealth? How are her contributions to Google, whose products are all software, greater than that of 350 of the best software developers in the world?

Dan, respectfully, those questions are too easy to answer, and if I understand your point correctly, it would be better served by a different line of reasoning.

At the risk of setting off a backfire effect, I will begin by answering your questions. Consider the example of W "The Decider" who decided that America should invade Iraq. That decision has cost trillions of dollars. A better chief executive might have been worth many billions of dollars, even trillions, vastly more than 350 soldiers or programmers, not because the chief is a better or smarter person than they but simply because of the importance of choosing the right person for that job. If you could find 350 software developers to automate the job of CFO or CEO, and amend the Constitution of the United States to open the job to a non-human bot, then have at it, tovbot will surely volunteer to campaign. Meanwhile, for so long as we rely on human persons to wield decision-making authority over vast institutions (e.g. government or corporate), the decisions those people make can easily produce or destroy vastly more wealth than their salaries. Ditto a surgeon, btw, and the line of reasoning in your first two questions might be called a type of Obamneycare fallacy, i.e. if your life might depend on something then you should be willing to pay infinite money for it, or at least all you can afford.

The question you should be asking is, can the employer hire a similarly qualified person to make the same or better decisions for less money? If you start at minimum wage and work your way up, is there really no one in the entire USA who could do that job just as well or better for less than $70 million? With so many people looking for jobs, are really none of them capable of delivering the same or better work for less? Certainly in the medical sector, a world of people can do equally good or better work than what Americans get from Obamneycare, and at significantly lower cost.

Another question: why do certain fields become exempt from the competitive pressures that others face? Your 350 programmers face global competition, but the American medical sector does not, and Wall Street gets around global competition by pulling the strings of government to enact lemon socialist protectionism. Social network effects and other factors enable certain people to reap enormous rewards, and these are disconnected totally from what most people would consider value; they are often opposite, as "flex nets" enable "flexians" to "fail up". Before someone - who shall remain nameless - quotes me out of context, I do not intend to cast any aspersions on the person mentioned in the OP, I was thinking rather of the financial crisis of 2008, where certain executives made millions while bankrupting the institutions they had been entrusted to run. If, in reality, choosing a particular CEO or CFO has a material effect on the probability of good or bad decisions, then these can easily translate to many billions of dollars in shareholder value or tax dollars; the question is, how do you know whether that's really what's going on? The financial collapse of 2008 showed that many of these market "emperors" had no clothes. Maybe your 350 programmers should write a screening program to score prospective executive candidates based on reliable metrics that provide good inidicia of likely success. That would add huge value.

Yup-life ain't fair. The more you rise up the corporate ladder, the more you realize it is thin air!

curious2 says

If, in reality, choosing a particular CEO or CFO has a material effect on the probability of good or bad decisions, then these can easily translate to many billions of dollars in shareholder value or tax dollars; the question is, how do you know whether that's really what's going on?

Here's the thing, many of these execs come from a clubhouse, whether it's management consulting (MC) or the bulge bracket (a.k.a Wall St's IBs), and sometimes both.

And then, in place of actually thinking and doing real work, they hire a cadre of consultants, many of whom are cronies with the C-levels in the Fortune 2000, Once this happens, the ownership of the actual decision is then outsourced. When many of these junior MCs are 26 year old, with little actual hands-on experience in operations a/o deliveries, they basically parrot whatever paper the junior partner on the team is pushing, so that it appears that a consensus was formed by an experienced committee.

The end result is that if an initiative fails, the managing director can then tells the COO and that he'd followed the Mercer Group's recommendations and thus, still gets that silver parachute because he lived up to his contract.

curious2 says

Consider the example of W "The Decider" who decided that America should invade Iraq. That decision has cost trillions of dollars. A better chief executive might have been worth many billions of dollars, even trillions, vastly more than 350 soldiers or programmers, not because the chief is a better or smarter person than they but simply because of the importance of choosing the right person for that job.

I would argue that your example isn't one of a good executive generating trillions of dollars, but rather of a bad executive costing trillions of dollars. Thus the solution is simply to decrease the power of the executive position so that no one holding it can cost the organization (company or country) so much or to eliminate the position altogether.

I would also suggest that if only Bush and his cabinet wanted war, he would not have gotten it. Congress and a good third of the public were for the wars.

curious2 says

The question you should be asking is, can the employer hire a similarly qualified person to make the same or better decisions for less money?

That is also a good question to ask. However, the typical worker at any company isn't going to get paid more than what he produces even if he's the cheapest labor available. So it's still valid to ask if this executive position is even worth fulfilling at that ludicrous rate. What is being done at that level that well-paid and highly qualified accountants (a mere six figures a year) can't do?

curious2 says

Another question: why do certain fields become exempt from the competitive pressures that others face? Your 350 programmers face global competition, but the American medical sector does not, and Wall Street gets around global competition by pulling the strings of government to enact lemon socialist protectionism

To escape global competition requires some kind of requirement that cannot be fulfilled, typically by design, from foreign countries. In the case of doctors, foreigner doctors can't practice medicine in the U.S. Medical tourism does place a little downward pressure on prices, but not much because of how our health insurance system works. In the case of lawyers, the law also prevents practicing of law unless a law license is given by the state. Nuclear engineers must be onsite, and that keeps their wages up.

What I don't understand is how executives can keep from global pressure since Google could easily outsource it's financial position to someone far more qualified in China. Google could also hire three CFOs for a fraction of this person's asking compensation and if any of the CFOs disagree on an action Google could then outsource analysis of the decision to more CFOs on a contract basis and still pay less while having less risk of a drastically bad decision being made.

Dan8267 says

Congress and a good third of the public were for the wars.

and another third plus were more than willing to join the bandwagon if the invasion panned out.

Dan8267 says

how executives can keep from global pressure

GOOG is not money-bound. They've got 700 million shares outstanding so if you own 1000 shares this $70M is costing you $100/yr.

GOOG C-suite's time is money. There's no reason to fuck around with committees and random outsourcing to Timbuktu or whatever. Find the guy you want to work with and pay them what they want to work with you. That's GOOG's approach, and it's working for them.

Dan8267 says

Medical tourism does place a little downward pressure on prices, but not much because of how our health insurance system works.

Not to mention it's utterly farcical to fly to Asia or down to Mexico to get treatment.

Her job is to make more Double Dutch-Irish Tax Sandwiches with a little Cayman Islands on top to avoid paying evil taxes.

thunderlips11 says

Her job is to make more Double Dutch-Irish Tax Sandwiches with a little Cayman Islands on top to avoid paying evil taxes.

And even that you could pay an account and a lawyer to do for a dime a dozen.

Dan8267 says

What I don't understand is how executives can keep from global pressure since Google could easily outsource it's financial position to someone far more qualified in China.

She is part of a club where they throw each other that kind of bones.
There is no incentive for them to stop doing it.

Bellingham Bill says

fly to Asia or down to Mexico to get treatment.

If she outsources GOOG's medical coverage via videoconferencing to India and elective procedures in Mexico and the Caymans, GOOG will save more than her entire entire salary and bonuses. GOOG employees will fly to quality, while you wait for an appointment with your local pill pushers and butchers, who send your X-rays and other records off to Pakistan.

As a bonus, if a company or the executives want to have the Caymans as a corporate tax haven, it might help to have the executive medical facilities already there, so the executives have a non-tax reason to spend time there.

Dan8267 says

I would argue that your example isn't one of a good executive generating trillions of dollars, but rather of a bad executive costing trillions of dollars.

No need to argue, that was in fact the point that I was trying to get across, and arithmetically it works out the same (a penny saved is a penny earned).

Dan8267 says

Congress and a good third of the public were for the wars.

W's Iraq invasion had majority support at the time, thanks to the same people who sold Obamneycare (e.g. the NY Times, Ezra Klein, etc.)

I always enjoy conversations about FIAT currency. Great artwork on nice paper.
......
curious2,
Would you have a list of all the right wing nut individuals & media that said "Iraq has WMD."?

HEY YOU says

Would you have a list of all the right wing nut individuals & media that said "Iraq has WMD."?

I don't have a complete list, but DCI George Tenet (appointed by Bill Clinton) called it "a slam dunk" and then Senators Hillary Clinton and John Kerry both voted to authorize W's use of force.

Oops.

curious2 says

If she outsources GOOG's medical coverage via videoconferencing to India

Do you know of any true success stories of outsourcing something to India? I am not talking about the hospitals that they run there that are efficient and make the news. I am talking about general outsourcing.

tr6 says

Do you know of any true success stories of outsourcing something to India?

Yes, with the financial advantage being greatest in the insurance-driven medical sector, where subsidized American prices are absurdly high.

Ppl, why is it, that the press focuses on India, all of the time, but then, forgets the bigger picture?

All of Asia, including India & China, is coming online. And thus, we'll be seeing work done in the Philippines, Malaysia, Vietnam, etc.

In many countries, outside of Korea and Japan, the cost of living is lower than in the USA and then, when you add in the fact that the population in Asia is greater than in the US, does it not surprise anyone that work is going there?

During the 80s, the press was harping on Japan Inc. When its stock and RE bubbles had bursted in the 90s, the electronics industry didn't magical re-appear in the US. Instead, it found a new home in Taiwan and Korea. Likewise, when India becomes too inefficient, outsourcing will simply move elsewhere. One of our IT providers, has a huge support team in Bulgaria, as the quality of work done there, was better than in India. If things continue to work out in Sofia, why would they be motivated to create jobs in the northeast corridor?

Yes, I know, Bulgaria isn't in Asia but the points remains and that's that the cost of living in eastern Europe is less that of America.

Rin is Nigeria on the radar yet?

indigenous says

Rin is Nigeria on the radar yet?

If they can diversify out of oil and have safety zones for ex-pat businessmen, as you see in Capetown or Johannesburg in South Africa, then it could happen, since they were already speaking English, due to the Empire.

The problem is that cities like Lagos are crime ridden war zones and ex-pats who work for the energy sectors, have security details posted on them. The team I knew, who did a telecom project there, had to travel with security guards at all time. That's not a conducive environment for international business, however, despite that, Nigerians had been able to partner with other nations and launch a few satellites during the 2000s.

So could they be an outsourcing area? I wouldn't rule 'em out for the 2020s or 2030s, if they can purge the Islamists and improve security for business travelers.

And it doesn't have to necessarily be tech either. There's plenty of paralegal and call center work which can be sent first.

The demographics are projected to make it the next China. I agree on the corruption, India would grow much faster if they could handle the corruption.

indigenous says

The demographics are projected to make it the next China. I agree on the corruption, India would grow much faster if they could handle the corruption.

The problem with India, unlike its competitors like Bulgaria or the Philippines, is that it's widely known among businesses that they provide a poor product. And since they haven't really fixed that issue during the past decade, they won't be the primary outsourcing destination as time goes by. Our IT vendor had dropped Bangalore support, a few years ago for Sofia, for this exact reason. So far, they haven't had a quality issue with Bulgaria so those jobs will most likely stay there.

Interesting, I would contend that a true market was never established in India nor the requirement for education that the market would force in. How does private property work in India?

indigenous says

Interesting, I would contend that a true market was never established in India nor the requirement for education that the market would force in. How does private property work in India?

All that I know, from friends of South Indian origin, is that bribes are huge part of getting leases, licenses, etc, all over the place. Thus, it's a Byzantine maze of corrupt govt and business interests, for someone to navigate through.

The only real reason why it became such a huge outsourcing venue was that corporate America's execs, being such original thinkers, followed the herd mentality of coping other executives. Since they could always point to Jack Welsh and say that "if G.E. could do it, then so can we."

This from Google:

The Indian Constitution does not recognize property right as a fundamental right. In the year 1977, the 44th amendment eliminated the right to acquire, hold and dispose of property as a fundamental right.

I would argue that this is the core problem. In the graph below there appears to be a correlation.

Whoops, ok in the index at this link India is 46th out of 97

http://en.wikipedia.org/wiki/International_Property_Rights_Index

indigenous says

The Indian Constitution does not recognize property right as a fundamental right. In the year 1977, the 44th amendment eliminated the right to acquire, hold and dispose of property as a fundamental right.

I would argue that this is the core problem. In the graph below there appears to be a correlation.

I believe a number of nations, including China, use a leasing strategy instead of pure ownership. And thus, when Asians or Russians acquire a lot of money, they tend to park it in London or NYC real estate, as well as our own stock markets. Any why not? As long as they pay their prop taxes, that's an asset which can't be confiscated by the the PRC or Putin.

But still, outsourcing to China is not a low end quality shop as in India, so I don't know where India went so wrong.

Property rights are fundamental to growth in an economy. After all, is it stealing if no one owns anything?

indigenous says

Property rights are fundamental to growth in an economy. After all, is it stealing if no one owns anything?

Read through that list, all of our outsourcing partners are ranked below 20.

But as far as money goes, one can make money, and send it to the City of London for laundering.