Jealousy is still alive and well in Australia. Only a week after the left were pointing out that cutting taxes actually means giving more tax back to those that already pay a lot, we now have the same hand-wringers whinging over the $21 million a year (or $1.8m/month, $400k/week, $60k/day, $2500/hr, $40/min or 67 cents per second) man, Alan Moss.
Poor old Mossy. This bloke works hard to get to the top. Starting at Mac Bank's predecssor in 1977. He worked his way up, playing a key role in the formation of the Bank. And, instead of lauding him as an example for all Aussie kids to aspire to, our journos just pour forth envy and complain that surely $21 mill is far too much.
But how do we know how much is too much? Far from being overpaid, could Mossy be getting less than he is worth?
The sin of jealousy is not confined to the Antipodes, over in the States there has been a similar controversy over the six fold increase in executive pay since the 1980s. Two economists have recently shown that there is a perfectly rational reason for this growth.
Their basic thesis is that a manager's value is a function of his talent multiplied by the size of the firm he is managing. Thus, a manger who adds 5 per cent value will be worth $45 more in a $1000 firm than managing a $100 firm. This is why the MD of your local fish and chip shop probably gets paid less than Sol Trujillo.
So applying this analysis to Al's pay packet it is clear that Mac Bank shareholders are getting him at a steal. Back when Big Mac first listed in 1996 it's market capitalisation was $1bn. Benefiting from Mossy's oversight, the firm's capitalisation has increased by a factor of 15, to $15bn. Unfairly, Alan's only recieved a just under 1000 per cent increase in his salary, from $2.3m back in 1996. The gap is so great that even the 8k/week ($1.1k/day, $48/hr, ...) donation from the Treasurer can't make up for this massive injustice.