Setting a maximum wage for CEOs would be good for everyone

Under capitalism, the argument goes, it’s every man for himself. Through the relentless pursuit of self-interest, everyone benefits, as if an invisible hand were guiding each of us toward the common good. Everyone should accordingly try to get as much as they can, not only for their goods but also for their labour. Whatever the market price is is, in turn, what the buyer should pay. Just like the idea that there should be a minimum wage, the idea that there should be a maximum wage seems to undermine the very freedom that the free market is supposed to guarantee.

This view, however, has some dramatic consequences. One is the explosion in economic inequality that almost all liberal capitalist democracies have experienced over the past 30-40 years. The difference between the top and the bottom of the income distribution now lies about where it did in the Gilded Age and the roaring 1920s, up until the Great Depression. Unlike these earlier periods, however, this rise in economic inequality has not been driven by returns on capital assets. This time, one of the most important contributors to the rise has been the payment of extraordinarily high levels of compensation to corporate executives. In 2017, for example, the 200 highest-paid CEOs in US business each received compensation of between $13.8 million and $103.2 million, well above the cut-off for the top 0.01 per cent of the income distribution, which currently lies at $8.3 million. More troubling still, while the compensation for corporate executives has been almost continually rising during this period, real (inflation-adjusted) wages for almost everybody else have been stagnating.

Many people find this upsetting but, even so, they tend to treat it as something capitalism requires us to tolerate. Others think it is something that capitalism requires us to applaud. But nothing in capitalism actually says that such sky-high levels of compensation are permissible. What capitalism says instead is that people need incentives to be maximally productive. But will someone who makes $100 million a year really work harder than someone who makes $10 million? Compensation, like everything else, has what economists call ‘diminishing marginal utility’. More of it has less and less of an incentivising effect, until eventually it has no incentivising effect at all – people are already working as hard as they can. At which point capitalism suggests that we should not pay someone even more money, for we are going to get nothing in return.

But wait – aren’t CEOs just getting paid the market rate for their labour? Their compensation is calculated according to a formula set when they were hired and, as long as this formula represents the going wage, then this is what they should receive. The market rate for CEO labour, however, is not set in a competitive manner. The formula is set by a special group of the company’s directors, called ‘the compensation committee’. It does this by commissioning a survey to see what similar companies pay their CEOs. The answer is usually expressed as a range, and while that range depends on what kind of companies are deemed similar, let’s assume for purposes of illustration that it is something like $1 million to $60 million for that particular industry and company size, with an average of $18 million. Given the fact that the CEO will ultimately be in a position to reward the members of the committee in various ways, there are obviously opportunities for corruption here. 

Even setting this aside, there are problems when it comes to using the survey results to frame an offer. The committee can’t recommend an offer at the bottom of the range, for that would be saying that they think the candidate is only as good as the lowest-paid CEO. They might want to offer more than the top, just to show how highly they think of their candidate. But at the very least, they are going to offer a little more than average, for no one wants to suggest that their candidate is worth less than this. By doing this, however, the average keeps ratcheting up. Next time someone hires a CEO and another compensation committee conducts a survey, the average will be higher. The market is not bidding up the price; the price is going up simply because everyone always wants to beat the current average. We have what economists call a market failure. Setting a maximum wage would therefore not interfere with market freedom because, in this instance, the market is not working.

But if we don’t pay the going rate, how are we going to be able to hire the best people? The best people will surely want to go where they will be paid more? This is a loss, however, only if those who receive the greatest amount of compensation really are the best, which is contrary to the evidence. It is very difficult to tell who has both the skill and the talent to make an effective CEO. Past performance is no guarantee of future success. Very highly paid CEOs have run their companies into the ground, and some of the most successful companies today were started and managed by people who had absolutely no background in business. These people began working for almost nothing, yet built their companies into mammoth enterprises. Steve Jobs is an excellent example here, for Apple faltered when he left, and began to thrive again only when he came back, for a salary of $1 a year. So companies need not worry about losing the best candidate to someone who pays more. Very good people will work for say, $10 million a year, especially when given a chance to run a company. And these people are just as likely to do well as those who might demand $100 million.

Nevertheless, doesn’t this deprive CEOs of compensation they deserve? If their company does well, they should do well too. But a corporation’s success depends on the contributions of many people. If we are going to try to determine how much compensation the CEOs deserve given their contribution to their companies, this should be the test all the way down. When the company does well, everyone should get a similar percentage of the profits. But they don’t. More troubling still, when a company performs poorly, CEO compensation should not go up, yet it often does. At least it often remains disproportionately high in light of the company’s poor performance, something that itself seems contrary to the logic of capitalism. To justify this, companies often argue that the CEO shouldn’t be blamed when ‘the market’ takes a downturn. But if there are too many factors to determine why a company does poorly, then there are too many to determine why a company does well. Determining what individual employees ‘deserve’ in a large corporation is simply impossible to do with reasonable certainty.

Where should we set the maximum? We can fine-tune this as we accumulate experience, but I propose we start with a limit of $10 million in total compensation for a CEO of any company doing business in the US, with no one in the company or its subsidiaries permitted to earn more. This would put the CEO solidly among the top 0.01 per cent of the US income distribution, and this should be incentive enough to attract very good people, from anywhere in the world. For companies doing business in the US but which are not based there, are not listed on any US exchange, do not have substantial operations or employees there, and do have such contacts somewhere else, then a similar limit would be calculated according to the relevant country’s income distribution.

To avoid people trying to game the system, when companies have substantial contacts with multiple jurisdictions, the applicable limit would be adjusted to reflect the source of the company’s real economic activity. When 40 per cent of real economic activity is in a country with a lower or (perhaps in rare cases) higher limit, for example, the $10 million limit would be reduced or increased proportionally. In any case, such a limit would help to slow the growth of economic inequality and prevent reckless risk-taking by CEOs who otherwise might feel motivated to try to drive up the stock price of their company and therefore their bonus, while also discouraging the paper relocation of companies to ‘billionaires’ club’ jurisdictions, and putting younger, less traditional and potentially more creative leadership at the top.

Mark R Reiff

This article was originally published at Aeon and has been republished under Creative Commons.

Printing a digital newspaper

Krautreporter is a news service, run by journalists in Berlin. More than 12,000 subscribers pay a minimum of 5 Euros a month to get daily updates on the news and well-researched long-reads. Just like newspapers used to do.

Wir drucken Krautreporter from erik spiekermann on Vimeo.


Once we had finished restoring our Johannisberger stop-cylinder press from 1924, we were looking for projects to test the machine. When I suggested to the friends at Krautreporter that perhaps we could print one special issue, they immediately went for that crazy idea.

We had already built our laser-setter and were able to make metal-backed plates up to 52 by 72 cm (approx 20×28in) directly from data, without going through photographic negatives. These plates fit our Heidelberg Cylinder press where we can print 8-up, i.e. 8 book-size pages on one plate. For the newspaper, however, we wanted to print the classic Nordic format, 44×57cm. In Germany we still have a few daily papers which are printed that size, the FAZ – Frankfurter Allgemeine Zeitung – being the most prestigious one.

The newspaper folded down for mailing


Making four aluminium bases to get the thin plates to the height of metal type (23.56mm = 0.928in) was an adventure in itself. All the other things we didn’t know about this large press took us five months to figure out, but eventually we started to print. We had enough paper (60gsm newsprint) to print 6000 copies, 8 pages, all on one sheet, back and front, 88×114cm plus some trim. One side black only, the other black and red. 18,000 prints altogether, at a speed of not much more than 300 an hour, with 2 people at the press at all times. We ended up with almost 5000 good copies. The sheet was perforated in half inside the press but not separated. We wanted the readers to get the full effect – the exact opposite of a smartphone screen. For the mailing we folded the large sheet into a narrow strip with a label around it.

The movie shows our own Daniel Klotz at the press. His buddy Sebastian came to help whenever he could. Daniel spent more than half a year figuring out how to make everything work. Now we know why printers used to go through a three-year apprenticeship. That press wasn’t made to print from polymer plates, and it still holds a few secrets. But we have our proof of concept, a full-size newspaper. It is so popular with Krautreporter subscribers that we may have to print more issues.

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Spiekerstuff is on p98a

We keep making all sorts of things – posters, magazines, notebooks, house numbers – and some of those used to be available from the website aptly named spiekerstuff.com. That url still exists, but now takes you to the real site: p98a. We finally have a proper backend which works out sales tax (or not) and shipping cost and provides you with a proper invoice that you can print out and show to your accountant (or not). The shop is here: p98a.com/shop.

And even if you don’t need house numbers or posters (but who doesn’t?), you can find other information; about the typefaces we hold at the workshop, some of the presses we have and what else goes on there at Potsdamer Straße 98a in Berlin. We make display type, publish our own magazine, PAPER,  and even roast our own coffee, inevitably named Letterpresso.

 

 

Back to Basics – why the old is new

Graphic designers have been bending over backwards for years, pulling all the stops in order to turn a message into communication. We’ve spent hours finding the right typeface, fussed with tiny increments in size, introduced refinements in OpenType fonts containing hundreds of ligatures, alternate characters and content-sensitive positions.

The workshop at Potsdamer Strasse 98a in Berlin
The workshop at Potsdamer Strasse 98a in Berlin

And now ”letterpress” is back. Suddenly we’re happy to take a lowercase l and use it for a figure 1 because that particular typeface doesn’t have enough figures? WTF? Wood type sucks when it comes to kerning because you would have to cut away bits of the letter itself in order to achieve “perfect“ spacing. There are no half sizes, let alone fine increments in letterspacing, unless you want to spend hours inserting slivers of brass or thin paper to refine a line of type. The material defines not only how you work but also what the result will look like. If you only have a large wood type font in one size, you run out of certain characters very quickly. So you’ll pick a smaller size which will have more of each character or you’ll choose another typeface altogether. If that doesn’t help, you’ll change the message.

The typographic system of letters and spaces – horizontal and vertical ones – has been refined since Gutenberg first invented printing with movable type almost 600 years ago. The whole system is one giant grid systems that can be divided and multiplied in myriad ways. Pages will always look good as long as you work within the constraints, time being one of them. If you spend too much time tweaking the system, things will look mannered and inappropriate. Modesty is a virtue when working with well-defined but finite elements and tools.

You need to know what quads are, spaces, reglet, furniture. You learn to use a composing stick, chases, cases, hacksaws, pincers, awls, spanners, screwdrivers and heavy lifting equipment. You’ll be working with dirty rags and virgin white paper, inks, grease, machine oil and petroleum. And you’ll find out that the work isn’t done until all those materials are back in their proper places and that cleaning up can take almost as long as setting up without being any fun. Everything you touch is either very heavy or very delicate. Or both.

p98a_stege_bwFurniture and reglet, the “invisible” parts of the page

You’ll never have the right size type, never enough characters and you’ll always run out of the right size paper just a few sheets from the final print. At the weekend. Mistakes will manifest themselves in loss of materials and too much time spent in the shop. But there is nothing like setting up a forme (yes, with a silent e at the end) from bits of lead, steel, aluminium, brass and wood – a very messy sight, as these materials have all been around and aged differently – and then running a clean white sheet of paper through the press and over that colourful forme. Suddenly and quite magically, there is a message: words on paper, exactly where you wanted them.

You know what it took to compose the words into the forme, with all those bits of metal in between. (No return key here and no tabs either; the white space isn’t.) The dear reader doesn’t know, nor needs to. But she senses that this message is the result of a physical process, made with things that have been touched by many hands. The process communicates itself. It doesn’t get in the way of the message, it enhances it.
Photos: Norman Posselt

Cheap is no good

CfcGhOfWEAANn9DNo idea where this line comes from; I’ve heard it often, not necessarily with “Design” as the keyword. After 50 years in the business, I can guarantee that it is entirely true.

We set the words from our brand new Real wood type (based on FF Real), 20cicero tall, cut for us by Tudor Petrescu in Romania. Tudor is busy right now, cutting a smaller size of 12 cicero in Real Regular as well as in Real Demi.

As always, the poster is printed on MetaPaper Rough Warm White 160 gsm in Black and Pantone Warm Red ink. From original wood and metal type on our Korrex Frankfurt, 50×70 cm.

The 50 posters each are num­bered and signed by Erik Spiek­er­mann. We ship every­where and you can pay by Pay­Pal. Price is the same in these cur­rencies: £, $, €; always 98, includ­ing tax (where applic­a­ble) and ship­ping, wrapped in a solid card­board tube. Please go to spiekerstuff to order. You can also check out the other prints there as well as the metal housenumbers I designed a few years ago. Some of them are still available from spiekerstuff.

Ui/Ux et al

A few days ago I replied to an article on Medium about User Interface design. A lot of the issues brought up sounded familiar, so I dared add a few remarks to put things into perspective.

> Again and again I am pleasantly surprised that, as an older designer (69 now and computer literate since the late 70s) I find that what is considered a specialty discipline (UI, UX and whatever the flavour of the month) keeps finding the same constraints and thus solutions as us old print designers. When I design a magazine or a book or a newspaper, I need to consider the substrate (resolution, grain, coarseness…), the audience (viewer, reader, user, the client!), the content (long, short, informative, vital, not-so-urgent, entertaining), the audience’s situation (sitting down, in meetings, traveling, at a table, in a hurry, at work, under water), the audience’s motivation (interested, bored, dependent, adverse, reluctant) and, of course, the technology that generates the marks (not always pixels), how many colours it can display and how the pages are marked (offset, inkjet, flexo, silkscreen, letterpress, laser).
Now that resolution on screens often matches that on paper and typographic features can pretty much all be emulated across browsers, we get down to the real issue: taking the information apart and reassembling it for the specific purpose. I always start with the smallest element and work up from it. In a book that may be the footnotes, in a timetable that would be the numbers, in a magazine the main text. If those elements work, the other ones are scaled up from them. The baseline for the footnotes is the common denominator and all other text follows multiples of it. As you go up in sizes for subheads or headlines, certain sizes are eliminated for certain formats. A tabloid newspaper will have smaller headlines than a full size Nordic spread. If you count the hierarchies, the biggest element will be H1 and you may have to get down to H5 or more for complex publications.
You do the same for screens. So what’s new? The present generation of UI/UX designers may think that they invented a new way of designing, but we’ve had these issues forever. Trying to fit a lot of text onto the how-to page inside a pharmaceutical package is probably more difficult than doing the same on a screen. There’s no zoom on that paper, so it has to be really well done just for that one version and circumstance.
My method? Think. Consider. Sketch. Think again. And look around you. It’s all been done before, albeit with different code. My code was having to convince clients with rough sketches, pencil lines emulating small text. If you can do that, everything else is easy. You can call it Mobile First or Small Screen Rules or Whatever Makes Us Feel Important. Ultimately what we do is take messages apart and rearrange them. We are the interpreters and our purpose is to serve our clients and their customers, the users. We can only do that if we understand all the constraints as well as the content. I couldn’t design a book I haven’t read nor a website in a language I don’t understand. <

Type for science

A message from Adam Twardoch about the forthcoming ATypI conference in Warsaw reminded me of the work we did for De Gruyter, a publisher of science books in Berlin, a few years ago. Ralph du Carrois and I designed a family of typefaces for them, each one with approx. 2500 glyphs. They are extensions of FF MetaSans and FF MetaSerif, with four weights each.

As always, our friend and typographic expert, Andreas Eigendorf, did all the quality control on the fonts and produced this “spitter”: a document with all the characters in it. I made it into a movie, which is the least painful way to see them all.

True typomaniacs will notice that quite a few characters hadn’t had their overlaps removed at the time.

New poster by P98a

This quote by Jean-Luc Godard has always intrigued me. The discussion about style versus content is as old as the profession of graphic design, and he puts it into perspective.

This is a longish quote which uses quite a few characters (8 lower case e and 5 o – all we have in that size), so we couldn’t resort to our larger Akzidenz Grotesk, but had to go to 12 cicero instead.

As always, the poster is printed on MetaPaper Rough Warm White 160 gsm in Black and Pantone Warm Red ink. From original wood and metal type on our Korrex Frankfurt, 50×70 cm.

The 50 posters each are num­bered and signed by Erik Spiek­er­mann. We ship every­where and you can pay by Pay­Pal. Price is the same in these cur­rencies: £, $, €; always 98, includ­ing tax (where applic­a­ble) and ship­ping, wrapped in a solid card­board tube. Please go to p98a to order. You can also check out the other prints there as well as the metal housenumbers I designed a few years ago. Some of them are still available from p98a.

Letterpress workshop at P98a

One of the joys of running a letterpress studio is to share the experience with others. At galerie p98a we regularly set up workshop sessions for a group of individuals or an entire team. We’ve had design teams here for a team-building exercise, for a day of reprieve from sitting in front of their screens or simply for the fun of getting their hands dirty.

You’ll find a list of planned workshops on spiekerstuff. That page links to Eventbrite, from where you can reserve a workshop and find out about the financials.

Our friends from Construct London