Almost nobody who is poor wants to limit how much money someone can make; it's an irrelevant detail...most poor folks just want an opportunity to escape being poor, themselves. Capping wages does nothing to solve that problem.
pg, despite being a very bright and extremely sincere and decent person, is living in a world quite far removed from most American's reality and gets a lot of things wrong (sometimes hilariously so), based on that disconnect. But, a maximum wage is a ridiculous rebuttal, IMHO.
Of course you're entitled to your opinion, but let's look at why a maximum wage can be used to tackle economic inequality, perhaps you'll not think it's quite so ridiculous after that.
> "The actual problem, as I see it, or, at least the variable that needs adjusting is the other side."
The main reason that a maximum wage impacts the poorest amongst us is that it provides a mechanism by which poverty and wealth can be linked.
For example, let's say every US state adopts a $15 per hour minimum wage. Let's now state that the maximum wage is set at 500x the minimum wage, so $7500 per hour. If the minimum wage worker works 40 hours a week, 52 weeks a year, they'll get $31,200 per year (before tax). If the maximum wage worker works the same number of hours they'll earn $15,600,000 (before tax). Let's say the bottom rate of tax is 15%, and the top rate of tax is 40%. What does that leave us with...
The minimum wage worker earned $26,520 a year. The maximum wage worker earned $9,360,000 a year.
What we've set here are upper and lower bounds on how much someone can earn. Notice that we still have the rich and the poor, and we haven't taken away the incentive to want to get rich. What we have done is slowed down the rate at which the gap between the rich and poor grows, which is at the core of economic inequality. Inherited wealth is also an issue, but at least it would tackle the rate of change in newly generated wealth.
What does this do to an economy? First of all, the rich now have an extra incentive to raise the income of the poor. If the rate between the minimum and the maximum wage is fixed, raising the minimum wage will also raise the maximum wage. Secondly, it channels money that is more likely to have been hoarded back into economic activity. Money only works when it is traded, not when it is hoarded, hoarding past a certain level of security is a waste of economic potential.
> "Almost nobody who is poor wants to limit how much money someone can make; it's an irrelevant detail...most poor folks just want an opportunity to escape being poor, themselves."
I'm reminded of this...
http://www.goodreads.com/quotes/328134-socialism-never-took-...
Being on the poor end of the spectrum leaves you more vulnerable to economic exploitation. If a maximum wage reduces the incentive for economic exploitation, then I see no reason why it wouldn't be welcomed. If you want a concrete example of economic exploitation, take a look at Walmart:
http://www.alternet.org/labor/ugly-walmart-truth-some-manage...
> "rents are being driven up through a variety of circumstances mostly outside the control of the people those rising rents most impact"
Setting a maximum wage would impact the concentration of resources such as housing. More landlords = more competition = more price stability.
One way to tackle this issue in the political space is to forbid for-profit corporations from funding political lobbying. All funding for lobbying efforts have to come from individuals or not-for-profit organisations.
Already in the current situation their main income is not as wages but simply the value increase of assets (companies, real estate, etc) that they own, and with a minimum of legal paperwork all high-end wage income can be restructured as such unless you prohibit owning and selling businesses.
It would be a symbolic statement with no practical effect.
For example, you would not have a SpaceX or a Tesla. You would not have Y Combinator as it exists today. You would not even have the video game that I am about to release next month.
Yes, there are a lot of jerks who amass capital and do nothing with it or who do irresponsible things. But you also have people who use it to work very hard to make positive change in the world, and even if those people are in the minority, their impact is very large.
It's not like you have to pay yourself all your earnings in wages as the owner of a business.
Yeah, just remember the bad old days when we had ~95% income tax and NASA actually had a serious budget.
We definitely wouldn't want to return to the days when space travel actually pushed real boundaries and we didn't have a toy supercar company for the superwealthy.
I wish you well with your game launch, I hope it's a success.
The issue I'm tackling isn't about erasing the rich, it's about setting limits on the differences between the rich and the poor. If you believe the rich should be richer, why shouldn't the poor be richer too?
The issue with wealth accumulation is that it's a runaway process, wealth begets wealth, past a certain point it's no longer based on merit or contribution to the strength of the economy.
Many high profile CEO's are worth tens / hundreds of millions but take $1 salaries.
The government has already taken their cut of the wealth that goes into an inheritance on the first go-around, and they are actively eroding it already by printing additional money and inflating the currency. They shouldn't get to double-dip into the hard-earned and carefully stewarded generational wealth of my family, just because somebody died.
Sure, it feels good to say somebody who was born into the lucky sperm club isn't entitled to the fruits of their wildly successful parents' labors. But I'd rather bring up the floor than pull down the ceiling.
You can call it that if you want. With regards to inheritance, I'm suggesting setting a maximum amount that any single individual can inherit. The rest can go towards funding public infrastructure.
> "Sure, it feels good to say somebody who was born into the lucky sperm club isn't entitled to the fruits of their wildly successful parents' labors. But I'd rather bring up the floor than pull down the ceiling."
I'm not arguing for everyone to be poor, I'm suggesting that there should be a limit on how much richer someone can be. It's the ratio which is important. If a ratio is set, and you want to raise the upper bound, all you need to do is raise the lower bound along with it.
1. "wage" is ambiguous to the point of useless given: executive compensation isn't solely in the form of salaries, a complex tax code, and wealth begets wealth (it's relatively easy to maintain wealth once you're able to reap more from safe investments than it takes you to live).
2. even if #1 could be solved with some complex formula, it's very easy to argue a maximum imposes a hard limit on how much work a person is willing to do. Elon Musk could surely easily hit the limit without all of his current ventures. What would be the incentive for him to continue to innovate once he's reached the limit?
3. estates are the extreme problem for 1 & 2: if they're counted against maximum wages than recipients of large estates likely have no incentive to ever work. If they're not counted then maximum wages are severely limited in its ability to affect change.
Perhaps a complex enough formula exists to make maximum wages work, but given how easily gamed our complex tax code is in the US, I can't imagine it's feasible.
Whilst I can't speak directly for Elon, it does appear that his work is targeted at benefitting mankind. I'm sure that is plenty of incentive on its own.
> "wage" is ambiguous to the point of useless given: executive compensation isn't solely in the form of salaries, a complex tax code, and wealth begets wealth (it's relatively easy to maintain wealth once you're able to reap more from safe investments than it takes you to live)."
Sure, there will be loopholes, but let's start with the basics and wait for the loopholes to emerge. Tackling wages and inheritance should be enough to start off with.
What does it solve that graduated income, property, and estate taxes do not?
I can't imagine it could possibly be any less complex than a tax code since it needs to contain the same estimations of wealth ("wage" in your approach).
As far as I can tell, he does not have a history of taking all the money and blowing it on himself. Whatever he's still working for, it's not because he wants extra money for spending. He clearly has some motive other than just wanting more money to blow.
How is it immoral to set upper and lower bounds on what people can earn? Do you really think it's immoral that someone can only earn 1000x more (for example) than the poorest amongst us? Do you really find that oppressive?
> " Now, your destroying entire industries for people that make things for multi-millionaires."
You're not destroying industries, you're curbing the rate at which private wealth can be accumulated.
> "Honestly, I'm not sure why you do not just argue for outright communism."
Setting a maximum wage is socialist, but socialism is a broad church, communism is not the only system in the socialist umbrella.
Okay, can you show me some evidence?
> "The Beatles, for example, came to America to avoid the grievous taxes being levied in England. U.S. companies locate offices in more tax-friendly locales all the time too."
Both of those are examples of tax dodges. Maximum wage is different, in that people would be required to live in the country they made their main income in. Sure, you could move to the Cayman Islands, but good luck finding enough work there.
We should be closing tax loopholes too, it's not an either/or situation, we can do both.
Look at the Rust Belt.
http://www.thedailybeast.com/articles/2014/12/07/the-rustbel...
There's a bizarre notion going around that protecting the economy requires protecting the rich. However if you look at it, it doesn't make any sense. The strength of an actor in the economic system is directly related to their participation in that system. The rich are where they are because they hoard more of their wealth. Hoarded wealth slows down an economy. The rich are poor economic actors, let them hoard their money elsewhere.
who will take advantage of those opportunities? people who take advantage of opportunities to make money have already moved out, haven't they?