Incentives are used to persuade people in to doing something.For example, if you have ever purchased a kids meal just to get the toy, you purchased it with the incentive of receiving. Negative incentives punish someone financially for making certain choices and behaving a certain way.
Unless you go to jail -- and does anyone think any of our modern malefactors of great wealth will actually do time? And no, we're not talking about a few bad apples.
Statistics for the last five years show a dramatic divergence between the profits companies reported to investors and other measures of profit growth; this is clear evidence that many, perhaps most, large companies were fudging their numbers.
'' The point is, ladies and gentlemen, greed is good. As people, corporate leaders are no worse (and no better) than they've always been. Twenty-five years ago, American corporations bore little resemblance to today's hard-nosed institutions. Executives didn't focus single-mindedly on maximizing stock prices; they thought of themselves as serving multiple constituencies, including their employees.
Let me be clear: I'm not talking about morality, I'm talking about management theory. salaries were tiny compared with today's lavish packages.
In fact, during the generation that followed World War II the nation's standard of living doubled.
But then, growth faltered -- and the corporate raiders arrived.
The raiders claimed -- usually correctly -- that they could increase profits, and hence stock prices, by inducing companies to get leaner and meaner.
By replacing much of a company's stock with debt, they forced management to shape up or go bankrupt.
Greed can cause people to stop at nothing to obtain what they desire most, without considering the consequences that may come along with their quest to obtain the thing they want most.
Incentive is what motivates and encourages someone to do something.