To subdue the enemy without fighting is the supreme excellence. - Sun Tzu

Wednesday, July 28, 2004

Business as Usual: Manifesto

I only have one thing to say, and I'm tired of saying it over and over again, so here it is all at once:

The best thing that we (citizens of the United States) can do in the interest of improving society
is
to impose an upper wage-limit (wage cap).

 
This is the concept:  an example CEO is given $10 million/year (in wages, stock options, corporate gifts, etc).  A new wage limit is imposed at $4 million/year.  Now the CEO is only making that much.  The other $6 million/year is freed up for use by the company again.  The Company can do one of three things with it:  1) Charge less for their product, 2) Pay other employees more (or hire more employees), or 3) Invest the money in expanding the business.

In the first two cases, the money is given back directly to the people, improving their standard of living.  In the third case, the business becomes more profitable and more productive, also improving everyone's standard of living.

 
Some skeptics have brought up problems with this idea.
First, they say, arbitrarily limiting a person's income is unfair to them.
To that, I reply:  $4 million/year is still an astronomical amount of money.  That $6 million means much, much more to people that have nothing than to people who are already rich.  What creates more happiness:  Giving $10 to someone with $1 million, or giving $10 to a starving person?

Second, they say that standards of living would not increase meaningfully since the extravagantly wealthy make up such a small percent of the population.
Even if the median person gets only 3% more per year, that is in fact a significant sum, since it is effectively free.  For someone making $30,000/year, that's $900/year.  Bush's one-time tax cuts gave most people much less than that.

Third, the impact to the economy would be massive.
Yes, but in a good way.  The very wealthy would not be able to buy *as many* yachts and mansions and jewelry, so those "industries" would be hit.  They would have to make cuts, and fire people. 
But at the same time, demand for less expensive consumer goods, like personal electronics, cars, and family houses would increase substantially.  Inflation would come as the "rich toys" industries are firing.  Economic chaos.
The solution is simple, though:  The newly-fired go to work making cars, houses, and personal electronics.  Not at once, of course, but within a few years (and certainly by the next generation).  With more goods being produced, prices will drop back to better levels.

Fourth, it will be extremely hard to track.
This is valid.  The very wealthy are skilled at avoiding taxes, so the government will have to vigilantly plug all loopholes as they are identified.