A maximum wage?

[Yeekim]

The idea behind a minimum wage is to prevent the gap between the "poor" and the "rich" from growing too wide. It's been of course criticized from the liberal right standpoint as being actually damaging for the "poor", in terms of increasing unemployment and reducing the flexibility of the labour market.

I am just curious, has the opposite of a minimum wage ever been considered?

This morning I saw a report on BBC that the average pay of the top executives in Britain keeps growing, despite the crisis, despite austerity, despite all the mess the financial sector brought about - the people on top just keep getting richer and richer.

So, what if a hypothetical government of a hypothetical country decided to promote social cohesion and lessen income disparity by introducing a maximum wage? That is, a fixed number beyond which all earnings would be subject to a 99% income tax (or something with a similar effect). The maximum wage could of course be set at different levels for different sectors of the economy, in order to promote some at the expense of others. Say, the maximum wage in the financial sector would be set far lower than that in industries which actually produce something.

What effects would that have, in your opinion?

Why do you wish to oppress workers to the benefit of capitalists? Because that´s what instituting maximum wage is.
If you want to "promote social cohesion", institute progressive income tax. That is hardly a novel idea though, with pros and cons having been debated ad nauseam everywhere.

 

[Mise]

I don't know anything about football but I know a fair bit about football. The English Premier League is arguably the best in the world, and that's largely because there's more money in the EPL than in any other league in the world. If there was a wage cap in England, but not one in, say, Italy, Germany or Spain, the English league would surely suffer. I'm sure there is some parallel between the relatively insular nature of the NFL and the globalised, international nature of the EPL that is reflected in CEO pay in a globalised world vs a world that is more protectionist (say, the world as it was 50 years ago).

Also, don't you only have, like, 10 clubs?

 

[Dachs]

I don't know anything about football but I know a fair bit about football. The English Premier League is arguably the best in the world, and that's largely because there's more money in the EPL than in any other league in the world. If there was a wage cap in England, but not one in, say, Italy, Germany or Spain, the English league would surely suffer. I'm sure there is some parallel between the relatively insular nature of the NFL and the globalised, international nature of the EPL that is reflected in CEO pay in a globalised world vs one that is more protectionist.

it seems like the first two sentences are telling a completely different story from the last two sentences

 

[downtown]

I don't know anything about football but I know a fair bit about football. The English Premier League is arguably the best in the world, and that's largely because there's more money in the EPL than in any other league in the world. If there was a wage cap in England, but not one in, say, Italy, Germany or Spain, the English league would surely suffer. I'm sure there is some parallel between the relatively insular nature of the NFL and the globalised, international nature of the EPL that is reflected in CEO pay in a globalised world vs a world that is more protectionist (say, the world as it was 50 years ago).

Yeah, given the way transfers work in international soccer, the only way it would be a good policy is if leagues in Spain, Italy, Germany and France also agreed to a salary cap. You're right...with only one league doing it, there would be a talent drain. This could suddenly makes clubs near the bottom of the table in the EPL competitive, which may make the total value of the EPL more...but I think a desire for competitive parity is more of an American thing than anything else.

 

[dIZZyBlIZZy]

Because you as the employer do not decide the value of labor, merely the price.

Agreed, if noone believed hammering nails was worth only $8.75 then I would be forced to raise the rate after Cutlass quit and I couldn't replace him. If someone put an ad out for $11 to hammer nails and I didn't raise my rate, then I'm the fool for not keeping up. However it's my money, if I change the pay rate, I took nothing, and I only set the value from my perspective.

Right, but financial equality within the NFL meant that if your team sucked for multiple years in a row, it was because you were totally unable to draft or coach, not because you were always outbid for talent (compare that with baseball). By giving every market the chance to be successful, the NFL drastically raised the value of the organization, and of individual teams. A few superstars in NY, Boston and the Bay lost out on some money, but it allowed teams to flourish in New Orleans and Green Bay, which has been great for the league.

True, but there was equal success before salary cap. Wasn't this really more to fix a problem that occurred when free agency was introduced? A problem still not corrected in the MLB?

 

[GenMarshall]

The place where I used to work had utalied a salary cap on their workers. I dont favor the system of a maxiumum wage since it prevents the worker from gaining more in their income.

 

[luiz]

1) Who says I am not going to do something about these people too?
2) Doing something to stop this spiral of madness is better than doing nothing. It's easier to regulate wages than to prevent people from accumulating capital.

What it would achieve is a degree of confidence among the public that certain sectors of the economy aren't completely removed from reality. It would also force companies to seek other, more sensible ways of motivating their top employees that just more money. With the salaries on the top now under control, perhaps some of this spare money could go to other people - you know, the ones who actually do the real work in the company. And these people could then buy goods and services from other people who do real work, stimulating the economy in the process and without the government doing the redistribution.

1) Considering even the most egalitarian socities in the world, with near confiscatory levels of taxation, have their own super-rich folks, I don't see what you could do about these people short of getting rid of property rights and capitalism as a whole.

2) No, "doing something" about a small part of the issue while ignoring the larger share would achieve nothing positive, and could have the opposite effect. CEOs are after all working people, who usually put up with extremely long work hours, spend a good part of their nights away from their families, and deal with an almost unbearable level of responsibility. OTOH, shareholders can theoretically make millions without leaving their couches (disclaimer: this doesn't happen normally). On your moral scale, CEO pay would thus be a smaller problem. And note that even the most well-paid CEOs will never exceed much beyond the $10M - $20M range (including their wage, bonuses and stock options). That's peanuts for Buffet, Zuckerberg or those Danish and Swedish billionaires I mentioned.

 

[downtown]

True, but there was equal success before salary cap. Wasn't this really more to fix a problem that occurred when free agency was introduced? A problem still not corrected in the MLB?

I don't know the history of the CBA with the NFL. I know that they had particularly draconian rules on player movement until what, the 1980s? (They didn't really even have free agency). I think the better examples might be with the NBA and NHL.

 

[Dachs]

I don't know the history of the CBA with the NFL. I know that they had particularly draconian rules on player movement until what, the 1980s? (They didn't really even have free agency). I think the better examples might be with the NBA and NHL.

also, the size of the team's market isn't nearly as much of a factor in a team's ability to keep a good player on hand in the nfl as it is in the artist formerly known as the nba

 

[luiz]

I don't think the arguement for salary cap in sport is to enforce equality...players are vastly unequal in ability, and nobody would think its a good idea to pay Lebron James what we pay Larry Hughes. Having a strictly regulated labor market has created a better marketplace for talent though. I see some of the stupid, inieffiecent crap that our headhunting firms do for executive searches. I could entertain the notion that tighter regulations could trim some of the "conspicious consumption" that eventually hurts business though.

It's not like setting a max salary at around 25 million/ year keeps the Tom Bradys or the Lebron James from working hard...

Exactly, the cap in sports has nothing to do with greater financial equality among players, and it does not achieve equality. And Winner's idea of a salary cap is precisely to achieve equality.

Sports' leagues are private entities, and if they feel a salary cap would boost competitiveness and thus enhance the overall value of their business, good for them. I have nothing against that, it's a legitmate business decision. People unhappy with it can set up their own leagues.

 

[dIZZyBlIZZy]

I don't know the history of the CBA with the NFL. I know that they had particularly draconian rules on player movement until what, the 1980s? (They didn't really even have free agency). I think the better examples might be with the NBA and NHL.

Pretty much. The 82 strike set things in motion and the 87 strike opened the doors. There was little movement before that because the only time a player changed teams was through trade, which unlike baseball was very rare. Just a draft pick for a QB at the end of his career (Manning, Unitas).

The only thing I know about the NBA is they still have no CBA and if this follows 1998, we can start a poll in sports talk about who will be the next Shawn Kemp.

 

[Cheezy the Wiz]

Agreed, if noone believed hammering nails was worth only $8.75 then I would be forced to raise the rate after Cutlass quit and I couldn't replace him. If someone put an ad out for $11 to hammer nails and I didn't raise my rate, then I'm the fool for not keeping up. However it's my money, if I change the pay rate, I took nothing, and I only set the value from my perspective.

If you sell it for the same price as you did before, then yes, you are stealing from him, because the value of a product is reflected in the costs required to obtain/create it. Keeping the price the same when costs drop is price inflation. Profits, being the return on the investment of creation, a process derived from Cutlass' ability to perform productive labor, is his reward. By cutting his wages whilst retaining identical prices, you are in fact stealing from him, because the money from those profits would not exist without his productive hands that worked on that product: that money is his.

 

[Crezth]

1) Considering even the most egalitarian socities in the world, with near confiscatory levels of taxation, have their own super-rich folks, I don't see what you could do about these people short of getting rid of property rights and capitalism as a whole.

You're so right, every single country has the same type of executive compensation as America and there's nothing anyone can do about it.

Judging how the average salary of an American CEO is something like $5000/hr (something like 400 times that of an American worker), I don't see the problem with capping executive compensation at $500/hr (for instance).

 

[downtown]

Exactly, the cap in sports has nothing to do with greater financial equality among players, and it does not achieve equality. And Winner's idea of a salary cap is precisely to achieve equality.

Sports' leagues are private entities, and if they feel a salary cap would boost competitiveness and thus enhance the overall value of their business, good for them. I have nothing against that, it's a legitmate business decision. People unhappy with it can set up their own leagues.

I wonder though, if such policies could have a benefit for other industries, or if they are unique to professional sports?

 

[Mise]

Japanese corporate culture is definitely not something we should be emulating...

 

[dIZZyBlIZZy]

If you sell it for the same price as you did before, then yes, you are stealing from him, because the value of a product is reflected in the costs required to obtain/create it. Keeping the price the same when costs drop is price inflation. Profits, being the return on the investment of creation, a process derived from Cutlass' ability to perform productive labor, is his reward. By cutting his wages whilst retaining identical prices, you are in fact stealing from him, because the money from those profits would not exist without his productive hands that worked on that product: that money is his.

No, I'm the owner operator, he just hammers nails. If I tell someone that for $20 to spend an hour hammering nails, the entirety of that $20 belongs to me. At the end of the week I'll pay Cutlass the $9 he earned for hammering the nails, but it's mine until that direct deposit slip or hard check shows the $9. until then, I'm obligated to budget myself to make sure that there is $9 left from that job on Friday so I can pay him. Saying it's his because I wouldn't have hammered without him is a slippery slope that assumes I was incapable of hammering nails for an hour myself.

 

[Crezth]

Japanese corporate culture is definitely not something we should be emulating...

Okay, but even in European countries like Germany, Japan, Italy, etc., the CEO-to-worker pay ratio is much, much lower than 400:1 (I think it's 30:1 in Germany, but I am not sure). So it's not just Japanese corporate culture that differs from the United States corporate culture.

Furthermore, what is it about US corporate culture that is worth preserving? Could it be the lack of accountability? The obsession with profits over other tangible results? The proclivity towards business implosion that doesn't effect executives at all thanks to golden parachutes?

Saying it's his because I wouldn't have hammered without him is a slippery slope that assumes I was incapable of hammering nails for an hour myself.

*Would* you have hammered without him? There are certainly some tasks that *you* cannot do which you would pay others for, be it electrician work, plumbing, or even hiring somebody to build and design a new type of smartphone (pick what you will, I know not your profession).

 

[amadeus]

Judging how the average salary of an American CEO is something like $5000/hr (something like 400 times that of an American worker), I don't see the problem with capping executive compensation at $500/hr (for instance).

Judging how the average salary of an American teacher is something like $52k/year (something like 50 times that of an Indian worker), I don't see the problem with capping American teacher compensation at $5,000/year (for instance.)

 

[Crezth]

Judging how the average salary of an American teacher is something like $52k/year (something like 50 times that of an Indian worker), I don't see the problem with capping teacher compensation at $7,500/year (for instance.)

Hey, let's compare cross-polity and cross-society! I'm sure there's something absolutist we can always reduce it to!

I'm curious how the defenders of the 1% justify something like this.

 

[Cheezy the Wiz]

Judging how the average salary of an American teacher is something like $52k/year (something like 50 times that of an Indian worker), I don't see the problem with capping American teacher compensation at $5,000/year (for instance.)

American teachers don't make their much larger salaries at the direct expense of Indian workers. Try again.