e-hadj's closing statement about the evil of a wage cap is misinformed.
A Wage Cap is a socialist idea, certainly, but there is no slippery slope toward a Stalinist regime. All of the Communist failed-states (which is to say, all of them) degenerated to dictatorships because they involved war, revolution, social upheaval, and all that rot. At no point were they ever true Communisms.
So here's how a wage cap works: All salaries, stock options, and gifts to any employee (generally an executive) cannot exceed a certain amount per year. Let's say, for argument's sake, that the limit is set at $5 million. For the CEO who makes $8 million per year, let's call him Rex Thane, this is upsetting, but let us also assume (fantasize, more likely) that there's nothing he can do about it but eat it. He can't take 4 1/2 months off each year, becuase then he will be accruing greater expenses without any income. Rex took a $3 million pay cut.
Fortunately, Rex won't miss it. He's making $5 million per year! That is an astronomical sum of money. At that wage, he could work for a few months and retire to a healthy middle-class lifestyle until he dies. What's the difference between $8 million and $5 million? Maybe an extra mansion at Martha's Vinyard or whatever. No one deserves that sort of money. Yes, Rex may be very skilled, or he may have invented something very useful, but it is ludicrous for them to have that much reward.
So what happened to that $3 million? Since the company is now not paying it to Rex, it has several options. It can lower prices, raise wages, hire more people, or reinvest the money. In the first three cases, the standards of living of other people go up at effectively no cost. In the fourth case, the company becomes wealthier and more productive, advancing society. Win-win-win-win.
So where do we set the cap? It doesn't matter too terribly much, since we're dealing with such large amounts. Let's start it at $5 million and adjust annually for inflation.
Any other complaints?
Edit: e-hadj said: "Coupla' points. How come the vast majority of Communists I talked to (prior to e.g. the Sov invasion of Afghanistan) defended Leninism/Stalinism, etc. as stages towards, or the realization of, true communism? Why weren't they protesting the Sov's abuse of the label "Communist"?"
I dunno, man, I wasn't around back them.
"Also, did you read all of my footnote 5? FDR and Nixon's flirtation with socialism / managed free markets (My POV, the two are nearly =, but <> Communism) failed also."
Yeah, but that's an unfair generalization. If *all* socialist policies were unmitigated disasters, as you claim, then we wouldn't have, say, health insurance. Or, heck, a government at all, since the very idea of Government is socialist.
"Next, high wages for upper management aren't nearly as inflationary as for workers. Given sufficient unit sales, labor cost has far more effect on inflation than exec compensation (except in very rare cases were exec comp. is tied to sales, not profit)."
True, raising worker's wages across the board leads to inflation under the current system, because more people are able to purchase the same number of things; when demand increases but supply stays the same, price increases.
However, in the long run, total purchasing power would still improve for the non-Rich because of similar market forces. Since the very wealthy now have less money, the industries that they supported (yacht construction, gold mining, etc) will have reduced sales and have to shrink. Many of the people that they employed will lose their jobs. So where will they go? Why, the economy car market is expanding, since that's what non-rich people buy. The housing market would positively explode. Manufacture of less frivolous goods will increase. The people ousted from the industries that catered to the upper class will find new employment in industries that are demanded by the non-rich.
The Point: While, in the short run, inflation would indeed increase, in the long run it would be canceled out by more production.
"Also, if CEO's pay is limited by government, they will be compensated in other ways (e.g. they will become employees of an offshore management company or otherwise 'outsourced'...) Companies have to compete for a scare resource, good CEOs, just as they do for good workers."
No one ever deserves to make as much money as three hundred other people. That is more than compensation- that's looting.
Enforcement is the only problem with a wage cap. Total compensation, including benefits, gifts, salary, stock options, and 'outsourcing' would all have to count toward the cap for it to be effective.
"Even if Kerry wins, we are 1+ year from enacting these limits, which will probably phase in over 5-10 years (bureaucracy *very* slow, court challenges even slower!). Meanwhile, within months of Enron, the free market had already started taking action. My guess is the free market will arrive at a reasonable consensus on exec comp far sooner than the law. If one doesn't like that consensus, shop for socially responsible goods/services, if even a do so, the market will provide, vs. a majority required to pass the law."
I try to avoid companies that pay excessive executive compensation. However, the average consumer only cares about one thing: Price. The people are not fit to decide policy via the market.
Edit: katanil says: "You should also probably support your claim that all communist system degraded into dictatorships because of war, social upheaval and whatnot. Plenty of capitalistic republics have come about by those means."
Right, to clarify: War, social upheaval, and whatnot are related to Communisms turning into Dictatorships not by causation, but by correlation. Not every country that goes through those things turns into a dictatorship, but every country that is a dictatorship first went through them.