What about a "maximum wage"?

Great Debates
41

Shaq brings in a lot of money for a lot of people. “Shaq” TM creates a lot of jobs for a lot of people. Doesn’t he deserve a large portion of that?

That has nothing to do with setting “maximum wage”. Do you think that people in power wouldn’t find a way to reward themselves even if their was a cap on their income?

Soooo…“laws” contribute nothing to society? The criminal justice system contributes nothing to society? How about environmental lawyers or the lawyers who represent you when your boss touches you in a bad way? It seems to me that the creation and application of laws is the foundation that a society is built on.

There are all kinds of lawyers and like every other service professional, they fulfill a need in society.

You assumption that every lawyer makes a boatload of money merely showcases your ignorance. For every corporate lawyer making $200,000 a year putting together an M&A deal there must be 1000 making not a whole lot of money.

I would argue that a large portion of multi-million earners deserve what they earn. Take Jack Welch (former CEO of GE) for example. His job is to run a multi billion dollar company that employs over 200,000 workers. There are almost a quarter of a million people, not even counting suppliers and other dependents outside of GE, who rely on his decision making ability. Does his contribution to society not warrent his compensation?

I would sumbit that your opinion on “rich people” comes from watching too much TV where anyone who makes over $100,000 a year is portrayed as either a backstabbing, amoral Gordon Gecko or an arrogant, spoiled brat.

42

Poppycock. Most modern causes of action are statutory – they were created by legislators, some of whom may be lawyers but many of whom are not, and all of whom are more concerned with winning votes than shoveling money to lawyers (indeed, one sure-fire way to win votes is to accuse your opponent of being in league with the legal community). Representative democracy is responsible for creating the society we have, at least in this context.

Consider what I do: it’s basically a specialized subset of contract law. Our clients pay for legal advice because if there are problems down the road after a major acquisition, they want to be sure they don’t get stuck holding the bag. The other side’s counsel will seek to do the same. What usually ends up happening is both sides share some measure of the risk of the deal failing. Our job is to spell out the rights and obligations of both sides ahead of time so things aren’t messy (or are, at least, less messy) later on.

43

puddleglum: These things have been tried and did not work. As someone mentioned it was tried in England and the result was all their rich people moved to Monaco and the government missed out on the tax money they had previously collected from these people. Also during the 1930’s the top tax rates were hiked several times up to about 75% and the effect on the economy was disastrous.

What country are you talking about in that latter statement? In the US, the top marginal tax rate (PDF) was indeed sharply raised from 25% to 63% in 1932 (and to 79% in 1936), and the economy was lousy. But the economy had been steadily sliding into depression since the 1929 crash; the indicators only started to improve after 1932, despite the higher tax rate. On the other hand, the top marginal rate was over 90% all through the 1950’s, while the economy did just fine (and AFAIK it wasn’t negatively impacted by rich folks moving to Monaco, either).

The top rate has been steadily decreasing from 1963 (when it was 91%) till now (35%), except for a couple of comparatively small upward bumps (from 70% in 1967 to 77% by 1969, back down to 70% in 1971; and from 28% in 1989 to 40% by 1993, decreasing since 2001 to the current 35%).

I agree with most posters here that a top marginal rate of 100% is probably too drastic a distortion to make good economic policy. But I don’t think you’ve made a convincing case that the top rate is somehow inversely proportional to economic health. Certainly, there’s every reason to think that the economy can do well with a top marginal tax rate of 70% or so.

Also, relatively recently the tax laws were changed to make executives salaries taxable at a different rate above a certain amount

Could you be more specific about the changes you’re referring to? Every change in the top marginal tax rate makes “salaries taxable at a different rate above a certain amount”, for executives and anybody else.

and the result was that companies starting giving executives stock options which has not lead to more equality but to executives being overly concerned with stock prices.

Really? Way I heard it, the shift to stock options in executive compensation (which began in the 1980’s) was triggered not by individual income tax incentives, but rather by changes in corporate structure and governance.

44

What an obscene comparison!

Doctors are in the business of saving lives and improving peoples’ health. Lawyers are in the business of playing an elaborate game set up so as to make themselves the beneficiaries of the game no matter what the outcome.

Suppose, for the sake of argument, you had a society where everybody was compelled, by law, to cut off one finger every year and throw it in a giant barrel full of fingers. But, the state offered a way to avoid losing your fingers: a certain class of citizens was set apart that could lobby the state, for a price, to allow citizens to keep their fingers. Let’s call this class “laxyers.” In this case you could say “hey! Look at all the fingers the laxyers saved this year! Isn’t that great, what a wonderful service they have provided, what a great contribution to humanity!”

In a sense it is correct, the laxyers would be saving lots of fingers. Suppose, also, that the laxyer class collaborated with the ruling class to write the laws, and worked very hard to maintain the system to compel people to donate their fingers to the finger barrel. Then, the actual contribution is in playing a game that in some cases helps to alleviate some of the crime the state is committing, a state that is governed by a collaboration of the same laxyer class. In other words, the laxyer class contribution is negative or zero.

This is approximately the situation we have now. The state is designed so as to compel people to have need of lawyers if they want to prevent the state from carrying out various crimes against themselves. So, it is true that in a minority of cases, lawyers actually do serve to prevent some abuses. This is by far the minority of cases, but it does happen. Mostly lawyers exist to help the wealthy extract more wealth from the poor, but in some cases lawyers actually do stand in the way of injustice.

Regardless, though, lawyers do not actually produce anything, either in terms of products or services, that actually benefits anybody. At best they act to play the game with the state, a game that they are always attempting to strengthen the rules of, for their own benefit.

45

The state is also designed to use lawyers to prosecute people who commit crimes against other people. Really, this is silly.

Like the state-appointed defense attourneys who make so much money off of helping people who can’t afford to pay for these money-grubbing bastards themselves? Like the lawyers who specialize in civil cases that only charge for services if they win your case? Those guys? The guys you would seek to help you wade through case law if you thought some company cheated you? Them? The ones that safeguard the standards of what ‘cheating’ is? Those useless ones?

Even if this were true, it would still be a service.

Yes, this is a service. It is not a tangible, divisble, consumer good. Lawyers are in the business of understanding law so you don’t have to. It would be nice if I could understand law myself, and it would be nice if I could be healthy all the time. Since neither is true, I need someone to provide these services for me.

Lawyers do not make laws. The government does. Whether anyone on the senate floor was ever a lawyer or not is quite irrelevant to[ul][]The Million Mom March[]Pro life organizationsThe NRA[/ul]among other non-lawyer-associated organizations seeking to get laws created to help ensure, create, or otherwise serve their interests and perceived rights.

46

Wow Chumpsky, you are exerting quite a bit of effort to espouse a loser of an argument.

I suppose if you are truly an anarchist, then your logic is consistent, but that’s they only way I can begin to make any sense out of your post re: lawyers. Your argument about laxyers begs the question, regardless

If you are an anarchist then why would you support a high tax rate? Shouldn’t everyone just get what they can take?

Also, your statement about top earners not earning their high pay is silly.

This year Harvard’s multibillion dollar endowment lost only half a percent, compared to the average endowment’s 5.5% loss. Each of the 3 managers were paid $15 million for this feat. By paying these people a large amount, Harvard has clearly attracted the best talent for the job. As a result, there is a clearly measurable dollar figure that Harvard has saved by paying high salaries.

Dartmouth, on the other hand does not compensate its fund managers as well, and lost 5.7% of their endowment value. As a result, the school cut the swimminng and diving teams.

Go tell those swim team members that you think the Harvard fund managers are overpaid…

47

Everybody (except myself) loves to bash lawyers.

But I bet if they were accused of a serious crime, or were sued, hardly anyone would turn down a lawyers services!

I think one of the greatest and most awesome things about this country is that we are allowed to hire mercenaries to help us defend ourselves, even against the government (as well as experts to help us understand a complicated world).

Of all the things that money can buy, someone who is on your side when the whole rest of the world seems to be standing against you has got to be one of the best.

And if you can’t afford one, sometimes you can get one for free.
<Yakov Smirnov>What a country!</Yakov Smirnov> :smiley:

Granted, as with the kind of mercenaries who fight with guns rather than with words, if there are too many of them hanging around without enough legitimate work, some of them will tend to stir up trouble… but that’s not the good ones’ fault.

48

racekarl: This year Harvard’s multibillion dollar endowment lost only half a percent, compared to the average endowment’s 5.5% loss.

Got a cite? This article quotes a survey by the National Association of College and University Business Officers as saying that the average 2001 drop in endowment was 3.6%, and that Harvard lost $1 billion of about a $19 billion endowment, a more than 5% loss. I sure hope their fund managers didn’t get paid $15 mil for that!

In any case, since Dartmouth has only about a $2.4 billion endowment, I doubt that they’d ever have the scope Harvard has for offering financial officers $15-million salaries, even if there was such a close correlation between pay and performance as you seem to think.

And I rather doubt that such a correlation really exists: for instance, my SRI mutual fund has done a lot better than the average this year, and our managers don’t get paid no fifteen million dollars. And as we all know, plenty of high-profile executives have raked in huge salaries for grossly incompetent, if not downright criminal, mismanagement.

I think Chumpsky’s frothing denunciations of all lawyers and high-paid types in general are pretty silly (though his username is clever :)). But I think that attempts to defend multimillion-dollar salaries across the board as representing genuine free-market rewards for exceptional talent are equally silly. Ain’t you people ever heard of rent extraction? And wait till jshore gets in here and starts talking about “winner-take-all syndrome”. :wink:

49

This is how I figure it. If a CEO makes 10 million a year, and if everything he makes above 5 million would be taxed into non-existance, that would force the company to give that extra 5 million to the employees.

What’s the difference between 5 million and 10 million a year to a multi-millionaire? What is he actually going to DO with that extra money other than buy a bunch of gold and swim in it like Uncle Scrooge?

Since a lot of rich CEOs and actors who could have easily retired for life and gone to live in their big mansions are still working, I think what keeps them motivated to work is not money, but the sense of accomplishing something.

50

Well that’s about the dumbest anology I’ve heard anyone say…anywhere…ever:

I assume the barrel of fingers you speak of is “taxes”. Well those fingers are generally used for stuff that benefits all or most people. They aren’t simply kept in a barrel somewhere.

There is no “class” of people called anything. You want to be a lawyer, go to law school. You want to lobby the state? Start knocking on doors and collecting signitures. Nothing is stopping you.

Aren’t you the one who suggested cutting all the extra fingers off anyone who happens to have more than 10?

51

That rate of 70% was meant to be temporary when it had been enacted, during the second World War to cover war costs. So I wouldn’t characterize the elimination of that rate as Reagan “throwing a party for the rich”. He was just putting the rate back where it was supposed to return to during peacetime.

52

**

Why do you say that? Why wouldn’t they pocket it or give it out as dividends to investors? Why do you assume it would go to other employees?

**

The difference is 5 million. The day you win the lottery for 10 million and the state says to you “Hey, you know, we thought it over and 10 million is too much, so we’ll just give you 5 million instead…” is the day you’ll understand what 5 million is (and that’s where you didn’t even earn it. Imagine if you actually worked for it!)

What people do with their own money is really no one else’s business. Maybe they want to buy a business? Maybe they just want to buy a bigger house? Maybe they want to invest it in other businesses?

They probably choose to work for both reasons (money and professional motivation). I don’t think they’d work for free, even if they didn’t need the money.

Zev Steinhardt

53

I just hope the finger-cutting guy doesn’t get to me before I can properly salute Chumpsky.

What an incredibly dumb-ass analogy.

54

You all know that people can be compensated in ways OTHER than money, right? Back in the old Soviet Union days (which I imagine Chumpsky would call “State Capitalism”, since they weren’t really communists…), the party elite made only modest cash salaries.

But they recieved fancy offices from the state. And assistants and staff. And personal servants. And cars. And houses. And access to special party-only stores. And state-paid vacation trips to the Crimea. And state-arranged meetings with eager-to-please figure skaters and gymnasts. And KGB bodyguards. And lavish state-paid parties, where costly food and drink were served by state-paid staff. And they got to order people arrested and killed and their families tortured. Stuff like that.

If you increase marginal tax rates, suddenly these perks become a way to compensate people without compensating them. If the company assigns you a company limo and a company driver for your exclusive use it’s not going to show up on your 1040 form. But how much is access to that company property worth?

And of course, there’s always the option of moving to the Caiman Islands.

55

No. There is no reason why he would do that. Maybe he just buys a lot of “corporate” stuff that only the CEO and his cronies get to use.

A pre-owned 1975 Gulfstream Gll s/n167 private jet. Price tag $4.9 MM.
http://www.gulfstream.com/preowned/

56

I’ve exactly the same position. I’m not going to debate it on this board because I’m really not interested in trying to adress 200 counter-arguments in english, especially since many will be based on totally different premices about what is “right” or “wrong”, but very quickly, my arguments fall down to :
1)As the OP pointed out the gap between the very richest and the very poorest is plainly scandalous. Absolutely nobody needs so much money, and it’s, IMO, morally unnaceptable that such wealth could be concentrated in the hands of only one person, given the situation of many others. 5 millions dollars could be in the income of a whole little town in some places. The basic needs of many people are way more important than your “right” to earn a 6th million dollar.

2)Such an income is likely to be spend on marginally useful or totally unuseful expenses. If you buy a diamond necklace it sure gives some work to diamond miners and cutters, but in this case, a lot of ressources are devoted to something which is a totally uneeded luxury. A more equally shared wealth would be spend for things more useful and needed (housing, for instance), and still would create as much or more jobs. More generally, people who own less money are very likely to use it much more wisely and efficiently (individual farms as opposed to latifundias, micro-loans in develloping countries could be examples of this, if examples are really needed).

3)I don’t buy the “incentive” argument. It works up to a certain point. But the incentive to earn 10 000 more for 500 people who only own 10 000 will be much more efficient than the incentive to earn 5 millions more for only one person who already owns 5 millions . There’s a limit to what an individual can do and to the wealth he can create single-handedly. The concentration of wealth in a limited number of hands prevent numerous other people from entering in the competition.
4)I don’t buy the “they deserve this money” argument, either. The concept that most wealthy people deserve their income, for instance for their hard work, is BS. A lot of people with a high income don’t particulary deserves it. Some never did any hard work at all. And many people who did a lot for the progress of the community, or even of humanity, did a lot of hard work, and created a lot of wealth don’t get much in the way of income. The income doesn’t reflect the actual part each individual had in the creation of wealth. And wealth is self perpetuating to a large extent, which runs contrary to the “it’s the result of hard work” argument.
5) People aren’t irreplaceable (“graveyards are full of people who believed they were irreplaceable”). If someone already earn 5 million dollars and decide to stop working since he would be taxed at 100%, , someone else who would want to earn 5 millions dollars too and who is as skilled as him will take over. Similarily if people want to buy computers and you stop selling computers because you’ll be taxed 100% on your income, someone else who wants to earn as much as you will open other shops selling computers.
6)Money is power. It buys influence. The concentration of wealth in some hands also results in the concentration of power in these hands. This is a danger for democracy. Actually, it already seriously twists the democratic system. That’s a major issue IMO.

And by the way, not only I’m highly in favor of capping income, but also in favor of capping the total wealth which can be owned by a single individual. But the second one should logically result from the first one. Except for inheritance, which should be capped too IMO. The hereditary power gained from money isn’t much better than the hereditary power gained from nobility.

57

I don’t know how it works in the US, but these perks are taxed too here. If you’re using a limo and driver payed for by your company for leisure, you can be sure as hell the french equivalent of the IRS will go after you. So, that’s not a real issue. You only need to decide that these perks will be included in your income and taxed too.

58

It doesn’t matter. Given as dividends or as salaries, it still result in a better distribution of wealth. And a company “pocketing” benefits means it invests this money, which is good too. It will create more wealth and more jobs.

59

None of that matters. So what if the money went to the lower workers (which, as others have pointed out, it would not), he has "enough’ money already, or does not care about making more? None of that gives you the right to take the CEO’s money. It is his. He earned it. It was given to him voluntarily in exchange for his services. He is responsible for it. For you to take it is theft, no matter what your intentions are. This is like my deciding that I do not like how you are living your life and then putting a gun to your head and forcing you to live it as I say.

More so, how low do you want to go with this “need” argument? There are lots of dirt poor people in the world who could lay claim on virtually all of your property. “Aww, what is he going to do with that second house, car, TV, shirt, loaf of bread when I do not even have one?”

I know that you do not intend it, but the only way to carry out and the consequence of your ideas is tyranny. You will be using the government to put a gun to peoples heads and live as you see fit.

60

clairobscur: I don’t know where you got the idea that the poor were somehow more moral or more efficient than the rich, but since all of your points are based on this rather shaky premise, I’m inclined to just toss them all, unles you can provide some basic proof that the poor will work harder and spend their money more wisely.