How High Pay Interferes With Ethical of Even Logical Decision Making

Executive Summary

• Is High Pay Required for Motivation?

Introduction

Is our compensation system pushing us to do things that are right for society generally? There is a great misconception that is almost a requirement for one to believe if one lives in the US.

Is High Pay Required for Motivation?

This is that high pay is necessary for motivation and that more pay causes more motivation, and that this motivation is always in the right direction. Undiscussed is whether compensation can cause people to be over-motivated and to actually do things that are bad for society in general.

• The question to ask is what would a person do for $1 million or even $20 million?
• How can people who make such large amounts of money be expected to put anything in front of that money?
• What would you do for that much money? Would you use sweatshop labor, would you perform unnecessary operations?

The higher pay becomes, the more likely unethical behavior will result. In fact, pay does not need to be what any of us would consider outrageous; in fact, it only needs to be high relatively to what else the individual is used to.

• Illegal Aliens: The vast majority of illegal aliens in the US are Mexican. Mexico, along with the much of Latin America has drastically mismanaged its economy, infrastructure, and is a basket case. Because of this pay in Mexico is extremely low, and the vast majority of the population in Mexico is completely illiterate and treated no better than slaves by the white / Spanish over-class. The pay in the US is so much higher, that it causes Mexicans to violate immigration law and to migrate to the US at great danger to themselves. Once in the US, they will do any job, no matter how dangerous in order to survive. The primary reason for this is because they can make 10x the money they would make in the Mexico.
• H1-B Visa: These are work visas for temporary workers that allow large companies like IBM and Accenture to bill very high rates to clients, while paying their workers less, and enriching the elite at these companies. The H1-B workers will do anything to stay in the US and can be pressured to IBM and Accenture to say anything and get behind any program in order to stay. This
• Doctors: Because of overcompensation doctors perform a large number of unnecessary operations, and continually look for pharmaceutical solutions to health maintenance problems. Overcompensation of physicians is one reason why the US only scores 37 in the world in health while spending 16 times what countries do who are similarly ranked.
• CEOs: These individuals make so much more money than the rest of society that they really see themselves as separate from it. They will make decisions that benefit their stock price to the detriment of very other priority in society including the health and wellbeing of their employees, the cleanliness of the environment and the sustainability of the overall society.
• Wall Street Workers: As we have chronicled repeatedly in this blog, Wall Street is an unnecessary grouping of financial firms that pulls money from the rest of the economy without providing anything of value back. The US economy would be larger if not for the stock market and mortgage-backed securities and other derivatives. Wall Street loads up companies and other financial services companies load up individuals with debt without consideration to what it does to their lives.

Conclusion

Compensation is directed towards the wrong things and away from those areas of the economy that actually add value. The compensation in the US, and in other countries, needs to be altered so that people have the incentives that are aligned with what is good for society generally. The current compensation model is based upon what you can “extract” from the system, not what an individual contributes to the system.