Maximum Wage

Steven Johnson:

In other words, the tech sector doesn’t have to be the poster child of inequality’s abuses. It could actually be a role model. Take just one potential remedy as a thought experiment. Let’s say we decided as a society that no private company should have a pay ratio above 40:1. That would lead to a radical decrease in income inequality, and it wouldn’t involve a cent of additional taxes. Every private company would be allowed to keep the exact same portion of its income. The government wouldn’t be extracting money out of the private sector; it would just put some boundaries on the way the private sector distributes its money internally. Critics would scream that such a dramatic intervention would be terrible for business, but of course the one sector of the economy that has already voluntarily embraced this ratio turns out to have nurtured the most profitable corporations in the history of capitalism. This would no doubt be fiddling with the natural markets for wages, but we fiddle with these all the time, through progressive income taxes, earned income tax credits, subsidies, and tax incentives. We have a minimum wage. What if we had a maximum ratio?

★ Friday, 29 January 2016