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Businesses The Almighty Buck United States

Should the US Copy Switzerland and Consider a 'Maximum Wage' Ratio? 1216

Posted by Unknown Lamer
from the survival-of-the-least-competent dept.
Hugh Pickens DOT Com writes "John Sutter writes at CNN that as Swiss citizens vote on November 24 to consider capping executive pay at 12 times what the lowest-paid worker at a company makes in a referendum. Some say the idea of tethering top executive pay to some sort of concrete metric might stop American execs from floating further into the stratosphere. 'Here in America, the land of unequal opportunity, the CEOs of top-500 companies make in a single day about what it takes an average "rank-and-file" worker a year to earn, according to the AFL-CIO, the federation of unions,' writes Sutter. 'Democracy starts to unravel if a few people become wildly, ethereally successful, while the rest of a country struggles.' A $1 million salary worked for American CEOs from the 1930s to 1980s, says Lynn Stout. But CEO pay, including options realized that year, jumped about 875%, to $14.1 million, from 1978 to 2012, according to the Economic Policy Institute. 'What we've got is basically an arms race,' Stout says, 'where the CEOs are competing on pay because they each want to have higher status than the others.' Peter Drucker, the father of business management, famously said the CEO-to-worker salary ratio should not exceed 20:1, which is what existed in the United States in 1965. Beyond that, managers will see an increase in 'resentment and falling morale,' said Drucker. Stout has suggested that the IRS make CEO pay a non-deductible business expense when it's higher than 100 times the minimum wage. 'Limiting CEO pay to 100 times the minimum wage would still allow top execs to be millionaires,' concludes Sutter. 'And here's the best part: If the fat cats wanted a pay increase, maybe the best way for them to get it would be to throw political weight behind a campaign to boost the minimum wage.'"
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Should the US Copy Switzerland and Consider a 'Maximum Wage' Ratio?

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  • Yes. (Score:5, Funny)

    by Anonymous Coward on Saturday November 23, 2013 @12:44PM (#45501457)

    But it will never happen. Because (looks up the current thing we're supposed to hate) because socialisim!

    • Re:Yes. (Score:5, Insightful)

      by Joining Yet Again (2992179) on Saturday November 23, 2013 @12:55PM (#45501535)

      Socialism is, of course, worker control of the means of production, which is orthogonal to government regulation of pay.

      Now the owning classes have learnt that it'll get you richer to milk the fat cows of UK and the USA until they countries have run dry, by which time they can retire somewhere off the Caribbean coast. Is it society's job to curtail this behaviour? Sure, why not. The free market is supposed to be a tool, not a ruler - if it won't do its job, we rework it.

      • Re:Yes. (Score:5, Insightful)

        by polar red (215081) on Saturday November 23, 2013 @12:57PM (#45501549)

        . The free market

        does NOT exist.

        • Re:Yes. (Score:4, Insightful)

          by Bing Tsher E (943915) on Saturday November 23, 2013 @01:18PM (#45501753) Journal

          Right. No extreme degree of anything exists. They are simply tendencies.

          Now, the long lines in more socialistic economies to buy anything at all not locally produced- they do exist. Try buying a large screen TV in Venezuela this coming January. You might be able to, if you're a member of the right Party. . .

          Better red and dead.

          • Re:Yes. (Score:5, Insightful)

            by noh8rz10 (2716597) on Saturday November 23, 2013 @03:03PM (#45502641)

            Now, the long lines in more socialistic economies to buy anything at all not locally produced- they do exist. Try buying a large screen TV in Venezuela this coming January. You might be able to, if you're a member of the right Party.

            US here... I waited in line to buy a ps4, what's your point?

          • Re:Yes. (Score:4, Insightful)

            by dryeo (100693) on Saturday November 23, 2013 @04:10PM (#45503103)

            Wouldn't a better example be Norway or other N European first world countries? Using Venezuela as a typical socialist country is like using Somalia as a typical capitalist country.
            I'd guess there are more large screen TVs available in Scandinavia then in Somalia.

        • Re:Yes. (Score:5, Insightful)

          by ShanghaiBill (739463) on Saturday November 23, 2013 @01:21PM (#45501773)

          . The free market

          does NOT exist.

          Absolute zero Kelvin doesn't exist either. That doesn't mean that Minnesota isn't colder than Florida.

          It is idiotic to claim that there is no difference between free markets and socialism because there are no mathematically perfect markets with infinite sellers, infinite buyers, and zero barriers to entry. There are plenty of markets that are free enough that the advantages (and disadvantages) of free markets are clear.

          • Re:Yes. (Score:5, Insightful)

            by countach74 (2484150) on Saturday November 23, 2013 @01:57PM (#45502113)

            +1. What's interesting to these arguments that say "the free market does not exist," is that they propose the solution is to move in the exact opposite direction of the free market: a direction in which the ruling class controls and will use to its own advantage. If, on the off chance, something like this ridiculous 12:1 pay cap thing gets passed, you will see one of the three things happen: 1) creative ways to subvert the law, possibly bringing in unforeseen consequences that impact far more than just the CEO's; 2) companies and the wealth that they generate flee to more prosperous regions; 3) a combination of both.

            But alas, people think that laws can just magically make everything better and people more "equal," by whatever definition they arbitrarily choose. Equality can only ever be objectively defined as equality of opportunity, not equality of distribution. After all, the only way to achieve equality of distribution is via coercively taking from those who have accumulated their wealth via mutually-beneficial exchanges on the free market[1]. There is nothing equal about taking from one and giving to the other. Furthermore, what exactly is the problem with a CEO making 500x the rate of the lowest (or even median) paid worker? Inherently, nothing. What matters is the wealth and progression of the middle class and the freedom to move freely through the classes, based on ones' abilities and desires[2]. I would much rather live in a world with a strong middle class where the CEO's make 1500x what the average worker makes than a world where the middle class barely squeaks by while the CEO's only make 20x what the average worker makes.

            Forbidding people from signing contracts that both parties deem as mutually beneficial is wrong and destructive to the economy. After all, it is not the CEO's who own corporations, but the shareholders. As such, it is the shareholders who ultimately decide upon the pay of the CEO. If the owners of a company decide that it is in the company's best interest to entice the top executives with $x, there is absolutely nothing wrong with that. Contrary to popular belief, the only way this is possible in the long run, is if the executive actually brings that worth to the corporation. These sorts of laws will *not* bring up the wage of the workers just so that the executives can be paid more; after all, the most an employee can be paid without the company losing money is the discounted marginal value product that he or she brings to the company.

            [1] There are, of course, many who make their wealth by rigging the system to keep competition out or via other mechanisms such as exclusive rights or privileges to government contracts, etc. Wealth obtained this way is illegitimate. It is not mutually beneficial, such as those exchanges that occur on the free market.

            [2] Individuals' abilities tend to vary during their lifetime. There is nothing wrong with a young, unskilled worker not making as much as a man or woman in the prime years of their earning power. This is the primary source of the disparity between incomes.

            • Re:Yes. (Score:5, Interesting)

              by profplump (309017) <zach-slashjunk@kotlarek.com> on Saturday November 23, 2013 @02:40PM (#45502497)

              You can analyze literally any proposal for regulation with:
              1) People will try to cheat
              2) If we stop them from cheating they will leave
              and you wouldn't be wrong.

              But I don't understand why that means we shouldn't try.

              • Let 'em leave. (Score:5, Interesting)

                by rsilvergun (571051) on Saturday November 23, 2013 @04:59PM (#45503423)
                They can go home, but they don't get to take the ball. If they don't want to participate in the economy they don't get to own it. That's what "Eminent Domain" is for. If you let them a small group of people will claim ownership of everything. What you end up with is a huge amount of under utilized capital. It sits around doing nothing and the entire economy grinds to a halt. Before long you see "Dark Ages" like Europe. Once that happens you either tax the rich and use the taxes to get people moving again or wait for a plague to kill them off...
            • Worked fine in Japan (Score:5, Interesting)

              by rsilvergun (571051) on Saturday November 23, 2013 @02:47PM (#45502551)
              Japan had laws like this for years, and they kept worker wages high. It was only when the laws were repealed you started seeing traditional western style wealth inequality. Now Japan's back to tent cities for the homeless. Something I never thought I'd see in that country.

              As for the rich using loop holes; just because something is hard to do doesn't mean you don't do it. I've noticed that capitalists throw their hands up and say "I give" at the slightest challenge. As near as I can tell the "Free Market" means leaving things to chance and hoping for the best. I've never once in my life seen a situation where people just let the chips fall where they will and had it be anything more than a cluster-!#$@.

              What I'm saying is the solution to our problems isn't hoping some vague principles and ideas will guide us to utopia (an "Invisible Hand" if you will). We need direct human action followed by careful adjustment of policies based and continual testing and data collection. You know, someone should give that method a name. It sounds kinda, I don't know, "Scientific"...
              • by ravenshrike (808508) on Saturday November 23, 2013 @03:52PM (#45502969)

                Because Japan's tent cities have nothing to do with the fact that they forced 2 decades of stagflation upon their population or the massive real estate boom prior.

              • by Mashiki (184564) <mashiki@NOspAM.gmail.com> on Saturday November 23, 2013 @04:33PM (#45503269) Homepage

                Japan had laws like this for years, and they kept worker wages high. It was only when the laws were repealed you started seeing traditional western style wealth inequality. Now Japan's back to tent cities for the homeless. Something I never thought I'd see in that country.

                Really? I'd love to know where you get this from, when my parents visited there in the 70's there were tent cities, and when my grandfather came over there were tent cities. And when he visited, back in the 50's and 60's there were tent cities. You want to know the difference between then and now? If you were poor, broke, and living like that you were expected to stay out of sight of the general population and hide your shame. These days, that idea has pretty much fallen by the wayside.

                It's the same deal with the "salaryman" mentality that permeated the society for 30 odd years. Which of course has done a wonderful job of destroying the entire family unit.

            • Re:Yes. (Score:5, Insightful)

              by Squiggle (8721) on Saturday November 23, 2013 @03:21PM (#45502753)

              There is nothing equal about taking from one and giving to the other. (...) What matters is the wealth and progression of the middle class and the freedom to move freely through the classes, based on ones' abilities and desires.

              But reality is more messy than that, there are all sorts of people whose abilities and skills (ranked on how useful or desired by others) are a poor match for today's society. Having a system that only rewards those who fit in best is a recipe for disaster and dehumanizing/neglecting those that don't fit in / are less fit. Diversity is longterm strength, but more importantly we have the capability for rational compassion and care for others and the wealth to make supporting everyone a minor burden at worst. Anyone who has experience with family who cannot succeed financially, but brings them great joy otherwise could tell you how important compassion and care for others is for their entire family.

              Setting up a system that takes away the fears and worries about living with a decent quality of life: food, shelter, health care, meaningful work, etc brings unimaginable, but generally indirect (until something terrible happens directly to you or your family), benefits to all. Think reduced crime, more opportunity for someone to make the thing you've always wanted, etc. In a perfect world, this would be common sense and giving and support of others would be voluntary, but (especially in societies that emphasize the rightness of owning and hording regardless of the impact on others) the enforcing of distribution of wealth is a useful but blunt tool.

              In addition, in this particular example, capping pay has a direct benefit to the companies: the last sort of person we want running a large business/organization that is designed to outlast their tenure is someone motivated strongly by financial incentives. That sort of leader is a real risk to the organization as they will always make mistakes in their favour rather than sacrifice for the organization.

            • Re:Yes. (Score:5, Insightful)

              by whoever57 (658626) on Saturday November 23, 2013 @03:33PM (#45502825) Journal

              As such, it is the shareholders who ultimately decide upon the pay of the CEO.

              Hah, hah. Very funny. Shareholders have so little rights these days and boards are stacked with the CEO's buddies in ways that make it such that CEO pay is almost impossible for shareholders to control. Do you really think it was in shareholders' interest for the former CEO of Home Depot to get a $200M pay-off?

              • Re:Yes. (Score:4, Insightful)

                by shallot (172865) on Saturday November 23, 2013 @04:05PM (#45503065)
                Mod parent up. GP's failure to properly account for this kind of corruption renders their entire argument hopelessly naive.
            • Re:Yes. (Score:5, Insightful)

              by vux984 (928602) on Saturday November 23, 2013 @03:57PM (#45503015)

              Forbidding people from signing contracts that both parties deem as mutually beneficial is wrong and destructive to the economy.

              Right. Because the unemployed guy with a mortgage and family; he's on an equal footing when negotiating his wage with Walmart.

              If he doesn't like the terms walmart offers, he can gamble that he'll find something better before the bank takes his home.

              Seriously, to talk of equals signing mutally agreeable contracts is bullshit. These people are in a "take what they can get" position.

              There is nothing wrong with a young, unskilled worker not making as much as a man or woman in the prime years of their earning power.

              So are you in favor of a rising minimum wage with age then? So that every "man or woman in the prime years of their earning power" are making more than the high school kid dipping fries after school?

              Because right now, they are not.

            • Re:Yes. (Score:5, Insightful)

              by TimboJones (192691) <[timbojones] [at] [timbojones.net]> on Saturday November 23, 2013 @11:31PM (#45505201) Homepage

              What is the discounted marginal value product that a CEO brings to a company?

              I have seen no evidence that the salary of the CEO has any correlation with the success of a company. Nor have I seen evidence that past success is any better than random chance as a predictive indicator of future success by a CEO.

              The ecology of CEOs and shareholders has more in common with feudal oligarchy than it does with free market economics.

          • Re: (Score:3, Interesting)

            by PopeRatzo (965947)

            There are plenty of markets that are free enough that the advantages (and disadvantages) of free markets are clear.

            Maybe not. It's possible in those markets that are "free enough" that it's the part that's NOT free that demonstrates the advantage (or disadvantage).

            You can say that one market is freer than another, sure, but you can't say which of those will be more successful.

            Plus, there is a tendency of those that become successful in the market automatically seek to destroy the "free" part of the market

      • Re:Yes. (Score:4, Insightful)

        by Bite The Pillow (3087109) on Saturday November 23, 2013 @02:02PM (#45502159)

        Socialism is merely a word to ward off the unwanted. A talisman, in this context. Tomorrow the word may be economy, or global warming.
        Any excuse will do when you ask the people who have and control the power to give up some of it.
        Arguing the definition or merits of socialism is irrelevant, in this context.

  • by postbigbang (761081) on Saturday November 23, 2013 @12:44PM (#45501459)

    But it's not going to work in the US, where rapid growth is part of the ostensible "American Dream" -- which includes gobs of wealth.

    • by Joce640k (829181) on Saturday November 23, 2013 @12:52PM (#45501513) Homepage

      But it's not going to work in the US, where rapid growth is part of the ostensible "American Dream" -- which includes gobs of wealth.

      "it's not going to work in the US because citizens won't ever get to vote on anything like that."

      FTFY.

      People will still be able to make "gobs of wealth" in Switzerland, it's just that the people lower down the chain have to make money, not just the CEO.

  • Huh? (Score:4, Insightful)

    by Anonymous Coward on Saturday November 23, 2013 @12:48PM (#45501483)

    I'm the sort who prefers a more socialist state but I don't see how a wage disparity causes democracy to unravel. Bad education and information are what causes democracy to unravel. Not high pay.

    The voters are the ones who keep voting for status quo. If they really are desperately unhappy they should vote for something else. But they aren't. So either they aren't that unhappy, or they are voting wrong. If they are voting wrong it isn't high CxO pay, it's bad education and/or information.

    That's assuming of course the elections aren't completely Diebolded.

    • Re:Huh? (Score:5, Insightful)

      by Joce640k (829181) on Saturday November 23, 2013 @01:01PM (#45501585) Homepage

      Bad education and information are what causes democracy to unravel. Not high pay.

      Not always. There's been a lot of CEOs lately who:

      a) Take a working company
      b) Outsource it to India
      c) Fire all the workers (they call it "downsizing")
      d) Pay themselves a mega-bonus with all the money made in short-term cost savings
      e) Set themselves up a monstrous pension plan based on "projected earnings" (which will suck all the profit out of the company for years to come)
      f) Move to another company before it all comes crashing down in ruins

    • I'm the sort who prefers a more socialist state but I don't see how a wage disparity causes democracy to unravel. Bad education and information are what causes democracy to unravel. Not high pay.

      I'm not quite sure yet if I support what the article is talking about... but this one seems like an easy one to answer. Education isn't free. Those with money can get a better education. Those with little money get less or no education. It's all the same thing.

    • by Okian Warrior (537106) on Saturday November 23, 2013 @01:37PM (#45501945) Homepage Journal

      I'm the sort who prefers a more socialist state but I don't see how a wage disparity causes democracy to unravel

      Here's a thought experiment:

      1) Allocate an array of floats and set each value to 1.0.
      2) Randomly choose a float, weighted by its value, and increase its value by 1%, then replace it.
      "Weighted by its value" means that the probability of choosing any float is it's value divided by the sum of all values in the array.
      3) Repeat 2 above for a large number of rounds.

      What you will find is that over time some values will skyrocket exponentially. This happens regardless of the number of floats or the amount of increase, or whether the increase is gifted or zero-sum (ie - whether the increase is deducted from the other values). It's an effect inherent in the "increase by percent" rule, which defines an exponential growth. It also doesn't depend on the initial values, so long as the value isn't zero (negative values will skyrocket the other direction).

      This mathematical model underlies much of our current economy, with net (invested) worth being the float value, and compound interest being the rule. The old saying "the rich get richer, and the poor get poorer" is rooted in mathematics.

      Different rules affect the rates in different ways: compound interest is an exponential increase on value, but inflation is an exponential drain. The difference between two exponentials is itself an exponential (unless they are exactly equal), so the result is still an exponential. Government subsidy is the zero-sum rule of increasing the value of one float by taking it away from others, &c.

      Consider now the effect of a fixed consumption level: food, shelter, and so on. As the system becomes more mature, ever more of the total value is stored in fewer floats, and the majority of floats become proportionally small. As mentioned, government subsidies serve to increase a few values at the expense of others, as does inflation.

      When the situation matures enough that most people cannot afford food and shelter, they will revolt. They will burn down the system and try something new. (Viz: French Revolution [wikipedia.org])

      Something that takes us out of the exponential mathematical model might serve to defuse discontent and revolution. Whether capping executive pay is effective or sufficient remains to be seen, but on the surface it looks like a rational response to avert a foregone outcome.

      • by TerranFury (726743) on Saturday November 23, 2013 @06:04PM (#45503821)

        I really like this post. I have been playing with (or -- threatening to play with) a nearly identical model myself. There are a number of things to prove about this Markov chain, including what the stationary distribution is.

        One additional effect to consider would be something like a "blur kernel," which could describe the flow of wealth within the economy to "nearby" individuals (e.g., the coffee shops in the finance district might be able to charge more, and so wealth will tend to diffuse to them). I think that effects like this are, at least in theory, what are supposed to prevent the excessive concentration of capital. Modeled on a graph, one could ask questions like, "How does income inequality (e.g., Gini coefficient) change as a function of graph connectivity (e.g., Fiedler number)?" The obvious story then would be that, as the economy becomes increasingly centralized in a topological sense (with some appropriate graph-theoretic measure of centralization), or as people become less dependent on commerce with their peers, distributions sharpen and inequality grows.

        Finally, I'll add that there are other models of social phenomena, like armed conflict, with similar "inequality exacerbating" properties; see e.g. Lanchester's square law [wikipedia.org] of combat. In fact, I think RTS games like Starcraft are an interesting model for this kind of thing -- they're really-abstracted models of violent societies -- and, between Lanchester's square law, and the exponential growth of the economy (the rate at which you can build SCVs is the rate at which you can mine minerals is the rate at which you can build SCVs...), you see the same kind of positive feedback there. Of course, I don't think you need a full-on video game to demonstrate this; the old board game Monopoly was invented by a Quaker woman to exhibit the same property and so demonstrate the evils of capitalism (...and everyone missed the point). In short, I think it's easy, and interesting, to construct mathematical systems that broadly have these properties.

        Of course, to turn this kind of mathematical play into something with actual predictive power -- to do science -- would be a whole 'nother undertaking.

  • by pecosdave (536896) on Saturday November 23, 2013 @12:51PM (#45501499) Homepage Journal

    We should simply stop giving tax dollars to these companies enabling these huge differences due to inflation paired up with government contracts. Put actual supply and demand in place and the problem they're attempting to address goes away on its own.

  • by Anonymous Coward on Saturday November 23, 2013 @12:51PM (#45501509)

    So the execs will layoff the lowest paid workers and hire other companies in to do the job of those workers.

    Or they will split the company and have one company own the other. Low paid workers in the one company and high paid workers in the other.

    So many ways around this they will never close all the loopholes.

  • Ratio (Score:5, Insightful)

    by Anonymous Coward on Saturday November 23, 2013 @12:52PM (#45501517)

    I know Americans don't want to hear this... but a large gap between rich and poor is BAD for society.

    How do the rich get rich? By selling things to the lower and middle classes. They then put that money into economic development... which creates jobs, money that gets spent on more shit ... which goes back to the rich.

    In the last 30 years, the rich have openly grabbed everything to themselves... and held down wages for the lower classes. So how do you do that and still get richer... you LEND to the lower classes. Hence the debt apocalypse we've been having.

    Like it or not... the solution to all this is to income redistribution. You FORCE the rich to pay tax and put it back in at the middle and bottom - which they then spend on shit. The rich are too greedy and short-sighted to realise that this doesn't jeopardise their position... they get the money back along with development for society, the economy and less societal unrest and crime due to the massive wealth gap.

    • by argStyopa (232550)

      Really? Because contrary to current dogma, the bulk of human history has had "haves" and "have nots" - and the disparity between the two has been STAGGERING.

      The fact is that neo-socialists (and people who derive political power from such positions - let's not forget the original mission of the AFL-CIO quoted in the OP) have as just an illusionary utopianist view of "what society should be" with as much rationale as do the Tea-Partiers.

      The fact is that some people are capable, some aren't.
      Take a mythical cr

    • Re:Ratio (Score:5, Insightful)

      by girlintraining (1395911) on Saturday November 23, 2013 @03:49PM (#45502947)

      I know Americans don't want to hear this... but a large gap between rich and poor is BAD for society.

      Excuse me, but when you use the phrase "Americans", you are claiming what follows is true of the majority. It is most certainly not. The majority of Americans are right now either below or near poverty guideline; And they will tell you in no uncertain terms that the rich getting richer is not okay. We tried to organize a resistance to this; You seem to have already forgotten Occupy Wall Street. You may also have forgotten what happened: The police sent in tanks and armed para-military squads to arrest and jail the protesters. Department of Homeland Security coordinated strikes across 28 different cities effecting mass arrests, while orchestrating a minimal media presence; Over 15,000 people were arrested and not a single major media outlet covered it. In California, workers went on strike and joined protesters to seal the entire port off in an attempt to gain media attention. It failed.

      So let me be very, very clear on this point: The majority are fed up. We've tried rebelling. But when we see every attempt to organize for social change squashed and people jailed and stripped of their assets... it tends to have a chilling effect on future protest. And maybe you've been asleep all this time, but we have some rather pervasive surveillance. Police today come at protesters sideways... for every tear gas canister lobbed into a crowd, there's fifty more people having their door busted in on bogus drug warrants, or police sent to find something, anything, to detain those involved. And they sleep quite well believing they're protecting America from the dirty, filthy protesters, who are probably forming little terror cells too.

      So no. You do not get to say the majority doesn't want to hear this. The majority has heard it. Too many times. The majority, however, is sick of losing everything and seeing little to no actual change for their troubles. If there's going to be a change, it will have to come from outside. America is no longer a democracy. It no longer responds to democratic pressure. If there's to be a change anymore, it will have to be external. And historically, such change only comes at a cost in blood.

  • by sixsixtysix (1110135) on Saturday November 23, 2013 @12:55PM (#45501539)
    Seeing that investing is just like gambling: tax the gains like lottery winnings.
  • by Anonymous Coward on Saturday November 23, 2013 @12:58PM (#45501559)

    Using the Physical Resources Department (Janitorial Department) of a company as an example: All a given business would have to do is contract out the work of the lowest paid employees. Since those lowest paid employees would no longer work for the original company, the CEO's pay could increase accordingly to fall in line with 12 times the next highest employee.
    Repeat until every different cast of employee has formed its respective company for contract based work. There will be the association of: Janitors, Nurses, Doctors, Engineers, Car Wash Attendants, McDonalds staff, Retail Clerks, etc. At this point society will still be classed based, and very much like "A Brave New World".

  • by GlobalEcho (26240) on Saturday November 23, 2013 @01:00PM (#45501575)

    "Make your society egalitarian with this 1 weird trick!"

    If we postulate that this measure will leave company profits unchanged, then the cap will send extra money somewhere else. Its backers seem to assume that it would go to the rank and file workers, but I think it likelier that the owners of the firm would begin experiencing a better return on their money. That cohort, too, is wealthier than average, though not by so much as CEOs since a lot of it is comprised of pension funds and mutual funds. In any case, the loopholes around this kind of measure are so numerous that it would be silly to pursue.

    What we really need is to bring back serious inheritance taxes, even if some people want to call them "death taxes". In the long run, huge wealth is not a societal problem so long as it doesn't become dynastic. Rather than playing havoc with the incentives of the living via convoluted tax laws and weird rules, let's concentrate on fighting the growth of entrenched classes.

  • by PapayaSF (721268) on Saturday November 23, 2013 @01:02PM (#45501597) Journal

    How about a law that says movie stars can only make 100 times what the lowest wage guy on the movie set makes? Perhaps recording artists should only make some multiple of what some guy in the studio does? Maybe authors can only make some multiple of what the editors at their publishing houses make?

    Does anyone really believe laws like that that would lead to net improvements in those areas, or for society in general? Paging Harrison Bergeron [wikipedia.org]. This way lies madness, folks. As P.J. O'Rourke put it:

    ''The free market is not a creed or an ideology that political conservatives, libertarians, and Ayn Rand acolytes want Americans to take on faith. The free market is simply a measurement. The free market tells us what people are willing to pay for a given thing at a given moment. That's all the free market does. The free market is a bathroom scale. We may not like what we see when we step on the bathroom scale, but we can't pass a law making ourselves weigh 165. Liberals and leftists think we can."

    • by Teckla (630646) on Saturday November 23, 2013 @02:01PM (#45502151)

      How about a law that says movie stars can only make 100 times what the lowest wage guy on the movie set makes? Perhaps recording artists should only make some multiple of what some guy in the studio does? Maybe authors can only make some multiple of what the editors at their publishing houses make?

      You can argue until the cows come home how fair or not fair it is for so much wealth to pool to the top. But at the end of the day, if you live in a democracy, and it is the people's perception that the wealthy have gone too far, the people will say Enough Is Enough, and take the wealth from the wealthy, by force, if necessary.

      It's in the enlightened self interest of the super wealthy (this includes CEOs) to not allow their massive wealth accumulation to become so severe that The People rise up and take their wealth from them. CEO compensation has pretty obviously crossed the line to the point where the vast majority of people think they are dirty rotten overly greedy bastards.

      Wealthy people should consider this sooner rather than later.

  • Politics of envy (Score:4, Insightful)

    by sparkydevil (261897) on Saturday November 23, 2013 @01:07PM (#45501651)

    This is just typical anti-capitalist politics-of-envy bollocks. "Democracy starts to unravel"? Really? Getting paid the going rate *is* the sign of a free society. Attracting the best talent cost real money. I bet most of the commenters here don't complain when their favorite sportsperson gets paid millions.

  • by c5402dc53929211e1efb (3084201) on Saturday November 23, 2013 @01:08PM (#45501665)

    Switzerland voted on that too. Why not give everyone enough for food and housing and healthcare. Only let the 1% get rich after society is taken care of.

  • by Max Threshold (540114) on Saturday November 23, 2013 @01:18PM (#45501751)

    A pay ratio should be the metric for achieving a more egalitarian society, not the means. If we tried to make it the means, corporations would just find loopholes. First they'd hire outside contractors to mop the floors. Then they'd form companies to provide the service of executive management. "The lowest-paid employee at our company makes $1 million, so I can make $20 million!"

    What we need is a progressive individual income tax structure in which the top marginal tax rate approaches 100% as income approaches minimum hourly wage * 24 * 365. Close all the investment and offshore accounting loopholes. With this in place, we can completely eliminate all corporate taxes.

  • by istartedi (132515) on Saturday November 23, 2013 @01:48PM (#45502033) Journal

    Income inequality in the US has been like this before in the 1920s, then flattened out during the Great Depression into the 1950s. It'll flatten out again. The only question is "how?". It can be more or less disorderly. We can suffer from inequality for a long time though. Why does it cause problems?

    I used to be part of the "oh noes! socialism" crowd, but when you look around the world and start thinking about it, you realize disparity is a problem.

    I always like to pull this out of politics, and conduct a though experiment. The experiment is this: What would happen if one king had all the money?

    That's the absurd projection of where we're headed. IMHO, what would happen is that money would lose its value. Long before the king had all of it, people would give up on money. They'd go to barter, or invent their own form of money.

    Well, guess what? We've seen alternative currencies that people ignored like gold and silver become more popular. We've had people taking interest in novel currencies like BitCoin. Why?

    Because the original money is hoarded by the wealthy. The original money game has been won. A strange thing happens when you win the money game though. Your money doesn't circulate, so it's no longer worth as much as money. Surprise, surprise, the elites are pressed to devalue the dollar. The Fed is just responding to the fact that a hoarded dollar cannot have much value.

    So. If you want the dollar to have value again, it must circulate more widely. The dollar might die, but money will live on. A new generation will build wealth some other way, because the old generation is winning the money game, and... if they are allowed to fully win it they'll be left with a lot less than what they think they have. It may be due to loss of relevancy or loss of revolution.

  • by mindstormpt (728974) on Saturday November 23, 2013 @01:48PM (#45502039) Homepage

    I've been having plenty of discussions on the topic. It's funny, as Switzerland is probably the country that needs something like this the least. The median salary is around 75,000 USD, and although there is no global minimum salary in the law, there are sectorial conventions. The salary for a supermarket cashier starts at around $4,000 USD per month [info.rts.ch], but a gardener with technical training, for instance, will not earn less that $4,600 [jardinsuisse.ch].

    It's also one of the few where citizens can change their constitution easily and directly, i.e. one of the few where this could ever happen. It won't happen this time (according to the polls), although many voters I talked to just disagree with the number, not the principle.

    The BBC has a nice article on it [bbc.co.uk], showing the minimum and maximum salaries, and of course the ratio, for a few major Swiss companies. If you want to learn more about the direct aspects of Swiss democracy, the federal government publishes some information in English [www.ch.ch].

  • by holophrastic (221104) on Saturday November 23, 2013 @01:54PM (#45502087)

    The problem with the 12:1 or 20:1 ratio is that you take the mail-room guy who is earning minimum wage, and you limit the executives seven levels and thirty floors up. What'll happen is quite simply that this company won't hire any mailroom employees -- instead they'll simply contract it out. Personally, and professionally, I like that. But it won't solve your problem at all.

    Not allowing a company to deduct more than 100:1 as an expense makes a lot of sense. It's also quite consistent with your laws in general -- it's not socialism at all. It simply because taxable revenue. It won't stop the executive from making the same amount as now, it'll just give you tax dollars when he does -- something that you desperately need these days.

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