Why do corporations have CEOs?Submitted by Liberty_Forever on Tue, 05/06/2014 - 12:17
So last night, I was on the phone with my best friend, who rarely gets into economics and politics, and we somehow got onto the topic of the role of a CEO. She asked her classmates the other day if any of them could shine some light on what a CEO does, and the best anyone could come up with is "make decisions".
So she gives me this scenario while we're talking into the late hours of the night: If the CEO of Fun Meal Palace were to die and not show up for work the next day, nobody would really question it. They would assume that he/she took a sick day, and go about their business. Now say a week goes by; What happens? Oh my gosh, a whole week? Someone must be getting curious by now! Nah, they're just on vacation. So what if two weeks go by with an absent CEO? Damn, Fun Meal Palace must be up in flames by now! Again, no. People just think they are on an extended vacation.
So, in the meantime, if Fun Meal Palace isn't burning to the ground, what is it doing? Well, it is, quite literally, going about it's business. It's only after the third week that people start to talk.
This brings me to my next point: Replacing the CEO.
So, the CEO hasn't been needed for a few weeks to make any major decisions. Now that everyone knows he's dead, the food chain will need a new CEO. So either someone with prior experience gets hired to the job, or someone from a lower rung gets promoted. Easy peasy lemon squeezy. But wait a second! Isn't that pretty much like the President when it comes to making laws?
The answer is yes. While the President has many more things to deal with than making decisions on laws, his role in this small portion of his job is the same as a CEO. People have an idea, or raise awareness on an issue, it's goes to the lower ranks of those in charge, and works it way up. By the time a bill reaches the President, hundreds of people have already approved it. All we need now is that big red check plus on our paper to make it a law. It's the same thing for a CEO, just on a smaller scale, yet they are making millions of dollars year in and year out, while the President, the most well known figure in the nation, is only making $400,000 a year for up to eight years.
Do you see where I'm getting at here? A CEO rarely makes minor current event decisions that could slightly impact their company and then say that profits need to be raised or steadied each quarter. Doesn't seem like the kind of job to be makings millions off of each year for a decade or two.
So, to wrap things up, I want to hear your thoughts about what could be done to make improvements for both the corporations and the people. If CEOs were to take a pay cut, or perhaps just taken out of the equation entirely, places like Fun Meal Palace would have a much larger profit, which in turn would increase wages, not just for their employees, but employees of multiple nearby companies. It would be a chain reaction. I am already living a steady life, an increase in my wage would allow me to buy things I want, go get more new clothes more often. This increases customers at retail stores, which increases need of production. That increases the need for more workers and creates new jobs. That's right folks, increasing wages would help CREATE more jobs.
So just tell me your thoughts on the matter and hopefully we can have a nice discussion.