Sunday, February 05, 2006

Vintage Kya yaar tu bhi

Since I am still resisting updating my blog professing some important business that has kept me occupied (which is reality may just be a cover for my laziness) I am posting a comment by one of my favourite commenters in the blogosphere... Kya yaar tu bhi. For a brief introduction to this 'hasti' read his comments here and here. This comment was posted on The Other India blog on the post regarding income disparity. The comment policy of the blog reagarding off-topic comments and use of language has probably led to the deletion of the said comment. Since my blog does not have any issues with language and since I think that CEO salaries is one issue that rallies even otherwise right leaning persons, it might be interesting to host a discussion on this topic. So feel free to voice your opinion in the comment section.

Can give you very simplistic US POV ( no inflation etc. )

Say software shop = 100 programmers, 1 Ceo
100 pgmmers work for 1 year @ 50,000$ salary to code product foo.
cost of foo is atleast 100 * 50,000 = 5,000,000 usd
in reality, cost of foo atleast 4 times ie. 20,000,000 usd ( office,pc,bijli,lagaan etc )
now our "lazy ceo" goes to work & identifies a million user US market
per user foo price $100
1,000,000 * $100 - $20,000,000 = $80,000,000 "profit"
so ceo takes that 80 mil, keeps 20 mil aside ( cost of foo for next year ), another 10 mil for r&d, so 80-20-10 = 50 mil.

1 programmer = $50,000
1 ceo =$50,000,000
disparity = 1:1000

next year, US market saturated. only 300,000 customers.
300,000 * 100 = 30,000,000
ceo keeps 20 mil aside for foo, 9 mil for r&d, takes home 1 mil.

1 programmer = $50,000
1 ceo =$1,000,000
disparity = 1:20

ceo wife children used to royal lifestyle. they can't stomach huge diff in paychek, so naturally file for divorce, childsupport, alimony…

now our bachelor ceo works twice as hard, spends all day in office.
suddenly one strange socialist country decides to liberalize. our ceo goes into overdrive. schmoozes CM, FM, PM, every bereaucrat & jamadaar of this socialist country paid off.
next day US market india market = 10,000,000

10,000,000 * 100 - 20 mil foo - 10 mil r&d = 970 mil.

1 programmer = $50,000
1 ceo =$970,000,000
disparity = 1:19400

with new riches ceo buys brand new supermodel wife, big bed, lot of sex.
all this is too much for H1B programmer Muchkund Dubey.
Dubey goes to ceo and says, first you make 1000 times my salary, then 20 times, then 19,400 times! I don't like this widening disparity.
ceo says - where it is widening ? sometimes it widens, sometimes it shrinks. it shrank from 1000 to 20, now it increased from 20 to 19,400, next year who knows…
Dubey says, no, no, so much disparity create social instability. i must be paid more to reduce disparity.
ceo says, why, are you doing more work ? did you find new market or did i find it ? did you take risk and form company or did i ? did your wife leave you or my wife ? are you paying child support or am i ? did you bribe CM FM PM or did i ?

Dubey quits in disgust and returns to mera desh bharat.
There he tries very hard to form company. but because he is confused with all these conflicting social implications of disparity etc, his company goes bankrupt on first month payday itself. his employees lift him on their shoulders and throw him out on street to the dogs.

poor muchkund dubey joins some GoI org CSD & writes long long article about widening disparity and simmering social tension. said article done cut paste job on leftist blog and i am commenting for that. meanwhile our ceo makes the remaining 99 employees work harder, saves the dubey salary of 50,000 which is given as pocketmoney for infant baby of supermodel to buy diaper made of soft cashmere cloth.