Thanks for visiting.

I agree. Shareholders, boards of directors, corporate officers can and often do make mistakes. It’s part of the human condition. I just think they are more likely to get it right than a few transient D.C. bureacrats.

Another way of putting one of your key points is that leftist objections to executive pay derive from personal envies rather than from perceived injustices. This would be quite easy to document in an empirical study, incidentally.

However, I dispute your conclusion that shareholders must correctly appraise how much a CEO is worth. Though they are certainly better placed to do so than external parties, they are hardly infallible. Also, the level of CEO pay may be influenced by norms set partly by proximity to money, rather than actual value gained. Also, one irrational reason for high CEO pay may be that both CEOs and shareholders have a vested interest in being able to conclude that a CEO can make them a profit–a sort of folie a deux. But perhaps such overoptimistic assurance, or the ability to provide it, is what is being paid for.

Thanks.

Your illustration makes that perfectly clear.