Day: May 16, 2016

Google, Facebook, Amazon and Microsoft Salaries

Over the last month, we’ve seen a lot of compensation data provided anonymously by tech employees. We compiled and standardized some of this data to improve our understanding of what companies are paying, and we realized that we might want to share our findings.

Summary of Results

For this first pass, we focused on engineering compensation at Google, Facebook, Amazon, and Microsoft because there were more data points to work with. We standardized the engineering levels to the best of our abilities to compare compensation across companies for each level. We welcome any feedback or corrections to improve our analysis.

We found that Total Annual Compensation is the highest at Google, mostly due to their cash+stock bonus.  For Levels 1 and 2, base salaries are comparable across the four companies. At Levels 3 and 4, Google and Facebook offer the highest salaries. Google’s cash+stock bonus value trumps all others, especially at more senior levels.

Median Annual Compensation Per Level  

level comparisons

A Closer Look at the Data

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@350nz fossil fuel protesters admit plan was to intimidate ANZ, not peaceful protest

In a letter to the editor today in the Dominion Post defending a climate change protest that closed a branch of the ANZ bank, one of the participants Jimmy Green said

Of course our intention wasn’t to intimidate individuals – our intention was to intimidate ANZ into shifting its investments after the bank ignored us asking.

This honesty about the willingness to intimidate to advance a political agenda shows that climate protesters are engaging in plain thuggery. Peaceful protest has its role in any democracy.

What these thuggish protesters forgot about is how we resolve our differences in a democracy. That is by trying to persuade each other and elections. Let the people decide.

These protesters are keen to pass laws to save the environment but they’re more than happy to break laws they disagree with. I wonder if they extend that same courtesy to others they regard as less enlightened than them? They expect others to obey the laws for which they successfully lobbied.

Why do these climate action protesters think they can break laws that others secured through lawful, peaceful democratic action? Is some direct action more equal than others? Why do these climate action protesters think their vote counts more than mine?

John Rawls makes the point that the purpose of civil disobedience is not to impose your will upon others but through your protest to implore others to reconsider their position and change the law or policy you are disputing.

Rawls argues that civil disobedience is never covert or secretive; it is only ever committed in public, openly, and with fair notice to legal authorities. Openness and publicity, even at the cost of having one’s protest frustrated, offers ways for the protesters to show their willingness to deal fairly with authorities.

Rawls argues: for a public, non-violent, conscientious yet political act contrary to law being done (usually) with the aim of bringing about a change in the law or policies of the government;  that appeals to the sense of justice of the majority;  which may be direct or indirect;  within the bounds of fidelity to the law; whose protesters are willing to accept punishment; and although civil disobedience involves breaking the law, it is for moral rather than selfish reasons, and the willingness to accept arrest is proof of the integrity of the act of peaceful protest.

Rawls argues, and too many forget, that civil disobedience and dissent more generally contribute to the democratic exchange of ideas by forcing the dominant opinion to defend their views.

The civil disobedient is attempting to appeal to the “sense of justice” of the majority and their willingness to accept arrest is proof of the integrity of the act as a contribution to democratic persuasion not intimidation says Rawls:

…any interference with the civil liberties of others tends to obscure the civilly disobedient quality of one’s act.

Rawls argues that the use or threat of violence is incompatible with a reasoned appeal to fellow citizens to move them to change a law. The protest actions are not a means of coercing or frightening others into conforming to one’s wishes.

The intimidation by the protesters at the ANZ bank and their promise to do it again as shown in the adjacent tweet is a breach of the principles of a just society. These climate change protesters blockading an ANZ bank branch were attempting to coerce and frighten others into conforming with their political views. That ‘might does not make right’ is fundamental to democracy and the rule of law. As United States Supreme Court Justice Antonin Scalia said

The virtue of a democratic system [with a constitutionally guaranteed right to free speech] is that it readily enables the people, over time, to be persuaded that what they took for granted is not so and to change their laws accordingly.

When the climate protesters lose at the ballot box, they always claim it is rigged by the corporate interests. This is just sore losers.

The great strength of democracy is a small group of concerned and thoughtful citizens can band together and change things by mounting single issue campaigns or joining a political party and running for office and winning elections or influencing who wins.

Yesterday’s majority of the vote sooner or later and often sooner than they expect will break off into different minorities on the next big issue of the day. These newly formed minorities will use that same ability to band together as a minority to block vote to protect what they think is important and advance agendas they think are to be wider benefit despite the opinion of the current majority to the contrary. All reforms start as a minority viewpoint.

Indeed, it is a strength of democracy – small groups of concerned citizens banding together – is what is holding up legislating in many areas. It is not that minorities are powerless and individuals are voiceless. It is exactly the opposite.

Parliaments elected by proportional representation such as in New Zealand, and in Australian upper houses reinforces the ability of small groups of citizens to band together to win a seat.

Nothing stirs up the impassioned (and most other people as well) more than depriving them of their right to support or oppose what is important to them through political campaigns and at an election. The losing side, we all end up on the losing side at one time or another, are much more likely to accept an outcome if they had their say and simply lost the vote at the election or in Parliament. Scalia warned of, for example, the risks of the courts moving in advance of the popular will, and thereby poisoning the democratic process

We might have let the People decide. But that the majority will not do. Some will rejoice in today’s decision, and some will despair at it; that is the nature of a controversy that matters so much to so many. But the Court has cheated both sides, robbing the winners of an honest victory, and the losers of the peace that comes from a fair defeat. We owed both of them better. I dissent.

These climate change protesters want to rob the winners of their honest democratic victory over the balance between oil and coal exploration and other energy options. They are also robbing themselves of a fair defeat.

A fair defeat flows from laws and policies secured through normal democratic means knowing that one day you may be in a majority. Only by respecting the will of the majority when you are in the minority do you have any right to expect future minorities to respect your honest democratic victories as the majority of some future day. Democratic majorities of patched together through give-and-take and the reality that even the most important policies may be reversed in the future.

Climate change protesters should respect the political process because democracy alone can produce compromises satisfying a sufficient mass of the electorate on deeply felt issues so as to not poison the remainder of the democratic process. The losing side, we all end up on the losing side at one time or another, are much more likely to accept an outcome if they had their say and simply lost the vote at the election or in Parliament.

Do Tax Cuts “Starve the Beast”?

International Liberty

There’s a debate among policy wonks about whether a no-tax-hike policy is an effective way of restraining the burden of government spending.

At the risk of over-simplifying, the folks who support the “starve the beast” theory argue that there are political and/or economic limits to government borrowing, so if you don’t let politicians tax more, you indirectly impose a cap on total spending (outlays = tax revenue + borrowing limit). We’ll call this the STB approach, for obvious reasons.

Critics of the theory, by contrast, say that a low-tax policy creates fiscal illusion by making government spending seem artificially cheap. After all, standard microeconomic analysis tells us that people will demand more of something when the perceived price is low (get a $1 of spending for 80 cents of tax = recipe for higher outlays). We’ll call this the “pay for government” approach, or PFG.

There’s almost surely some…

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Australian Election 2016 – Greens Set Terms Of Deal With Labor Party Leader Bill Shorten

#Tories4AustralianGreens are happy with this deal. Any future labour government will be one term if they need Greens support for a majority

PA Pundits - International

Bolt New 01By Andrew Bolt ~

Of course the Labor Party Leader Bill Shorten would do some kind of deal with the Australian Greens Party if it made him Prime Minister. You’d be crazy to think otherwise:

Australian Leader Of The Opposition Bill Shorten (Australian Labor Party)Australian Leader Of The Opposition Bill Shorten (Australian Labor Party)

Bill Shorten would face demands to abandon Labor’s asylum-­seeker policy, ban new coalmines and increase taxes on miners by at least $2 billion a year under Greens conditions for power-sharing negotiations if the election produces a hung parliament.

Greens leader Richard Di ­Natale dismissed the Opposition Leader’s repeated declarations that Labor would not negotiate with the minor party in a hung parliament, bluntly saying he did not believe the ALP would give up the chance to form government…

Senator Di Natale outlined the terms the Greens would set for any negotiation, saying they must include “strong action on global warming. With that comes an…

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China’s continuing economic failure

croaking cassandra

In my post on Saturday on the 80th anniversary of the formation of the National Party, I noted that New Zealand’s main political parties haven’t got much to be proud of in their conduct of New Zealand’s economic affairs.  But our problems need to be kept in perspective.

Today is another anniversary.  It is the 50th anniversary of the launch of the Cultural Revolution in China by the Communist Party government led by Chairman Mao.

Newspapers and magazines around the world have been drawing attention to the fact that the Chinese Communist Party government will not be marking the occasion: “China deploys amnesia” was the FT‘s headline, “China buries memories” was USA Today‘s and “Cultural revolution anniversary now ‘taboo'” was The Australian‘s headline.   For whatever reason, New Zealand newspapers seem to be sharing in the burying of memories –  no mention at all in today’s Dominion-Post, and as far…

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How big are @JohnKeyPM’s $3 billion tax cuts in 2017 going to be?

On morning radio this morning, Prime Minister John Key said "We are not ruling that out for 2017 or campaigning on it for a fourth term in 2017, but having a bigger one, to be blunt, than $1 billion." Asked how much was needed to deliver meaningful tax cuts, he said: "$3 billion, I reckon."

The table below uses the Treasury scoring of how much tax cuts can be delivered through $3 billion. That scoring is static. That is, no behavioural changes are assumed as the result of the tax cuts on labour supply, investment or entrepreneurship.


Source: computed from Revenue Effect of Changes to Key Tax Rates, Bases & Thresholds for 2015/16 — The Treasury – New Zealand.

The big sensitivity is how the company tax rate cut scoring treats offsets for dividend imputation credits. If there is no change in the other tax rates, a cut in the company tax forgoes $225 million a year per percentage point because some of it is clawed back through dividend imputation. The costing of the company tax cut by the Treasury when the other income tax rates are changed is assumed to be $350 million per percentage point. When calculating the dividend imputation offset, the Treasury assumes that shareholders are on an average tax rate of 30%.

If the Prime Minister chooses not to match the company tax rate announced by the Liberal National party government in Australia ahead of their election, there is certainly more room for individual income tax cuts.

What happened when a restaurant chain abolished tipping?

Joe’s Crab Shack tested a no-tip model in 18 of its 130 restaurants. A 12-15% service charge replaced tips. Joe’s Crab capture is the first major restaurant chain to experiment with a tipping policy to experiment with abolishing it. The tipping minimum wage is far less than the federal, state and local minimum wages.

Joe’s Crab Shack had high hopes. The aims were customers would pay less, get a greater value experience, reduce labour costs and increase profits. The reactionary left represented by Salon and Huffington Post have quite strong views on tipping. Salon says

Tipping is a repugnant custom. It’s bad for consumers and terrible for workers. It perpetuates racism. Tipping isn’t even good for restaurants, because the legal morass surrounding gratuities results in scores of expensive lawsuits.

Tipping does not incentivize hard work. The factors that correlate most strongly to tip size have virtually nothing to do with the quality of service. Credit card tips are larger than cash tips. Large parties with sizable bills leave disproportionately small tips.

We tip servers more if they tell us their names, touch us on the arm, or draw smiley faces on our checks. Quality of service has a laughably small impact on tip size.

According to a 2000 study, a customer’s assessment of the server’s work only accounts for between 1 and 5 percent of the variation in tips at a restaurant.

Salon adds that federal and state law requires restaurants to ensure that tips bring employees up to minimum wage, but few diners know that.

Huffington Post managed to marshal 9 reasons why tipping should be abolished arguing that it was in no one’s interests either employers, employees or customers. The old efficiency at wage argument was rolled out arguing that employers gain in terms of diligent motivate employees by paying a straight wage rather than leaving it up to customer judgements of the services tended.

Not surprisingly this sounded like a business opportunity to Joe’s Crab Shack. Better customer service, better motivated employees and lower labour costs were promised by abolishing tips. You wonder why tipping survived in competition against alternative forms of restaurant service formats for all these decades?

Well, Joe’s Crab Shack got more than it bargained for when it abolished tipping. The pilot restaurants lost an average of 8-10% of customers during the test run.

The restaurant’s research showed that around 60% of customers disliked the policy because it took away an incentive for good service and that they don’t necessarily trust that management is passing along the money to workers.

The no tipping structure worked at four restaurants and will continue to work out why it succeeded there but failed at 14 other places.

What is even more interesting that the abolition of tipping lead to some workers quitting. This outcome at Joe’s Crab Shack is inconsistent with the notion that tipping is a by-product of the inequality of bargaining power between workers and employees. Turnover is supposed to reduce when tipping is abolished rather than increase with the employer losing their best workers.

Lazear found in data for Safelite Glass that average productivity will rise and the firm will attract a more able workforce will rise when it shifts to piece rates. The 44% increase in output per worker suggested the firm previously had a suboptimal compensation system. Half of the increase in labour productivity came from workers quitting when piece rates are introduced and being replaced by workers motivated to apply by the lure of piece rates. The average worker received a 10% increase in pay as a result of the switch to piece rates.

The only economic analysis of any value on tipping was written in 1985 by David Sisk at the Federal Trade Commission. He wrote a paper about both tipping and commissions. Sisk approached tipping not as a motivational device but a form of contracting.

Sisk points out that tipping takes the place of reputation as a way of guaranteeing good services are at a restaurant. Many do not plan to return to a restaurant  so an alternative form of contracting emerges to ensure good service because the threat of taking future custom elsewhere does not work.

In the case of a tip, the buyer (or customer) is provided with a final means of automatic redress which serves to prevent unsatisfactory performance on the part of the seller.

The possibility of unsatisfactory performance arises when the brand-name, repeat purchase mechanism is not effective or because employees of the seller are too costly to monitor.

An example is tourists. They are protected from inferior service relative to the locals because they pay tips too and are well able to judge good and bad service.

Sisk argues that once a customer sits down at a restaurant, the customer commits ever increasing amounts of time and the restaurant commits ever increasing amounts of physical resources. As one commits more irrevocable resources, the greater is the incentive of the other to renege on the contract.

A tip allows the customer to withhold a portion of the price without further negotiation. The tip serves to protect the customer from bad service and to protect the restaurant from bad service by an errant employee

The system of tipping provides the motivation for the waiter to properly identify and accommodate the individual desires of customers subject to the profit maximizing constraint of the restaurant owner…

The tip protects the buyer from exploitation by a seller (when the brand-name mechanism is insufficient) or from exploitation by the shirking employees of the seller

The worst tippers are single males; the best are couples and groups. The biggest tippers are single males on a date.


Source: OkCupid, A woman’s advantage.