DPF critiques a Herald column advocating maximum salaries:
A maximum wage is indeed not socialist, but full out communist.
You see it has been tried. In several countries. In the USSR they had maximum salaries. They had the exact view that Ryan had. They though no one should earn over a certain amount as a salary.
It failed. It was a disaster.
This wasn’t actually how the USSR worked. If you lived in the USSR and were the equivalent of a CEO, ie you were part of the military or political elite, then you were fabulously wealthy. Apartments in Moscow and Leningrad, house in the country, dacha on the Black Sea, thousands of servants etc. When the economy liberalised in the 1990s those people became billionaires overnight. The problem with the Soviet model is that life was pretty shitty for the other 99.9% of the population.
My argument with the maximum wage idea is more basic. What problem is it trying to solve? The problem that people with valuable skills are paid well?
The CEO pay problem is a symptom of a wider failure in our political economy: in a functioning capitalist system the financial sector is supposed to allocate surplus wealth to appropriate sectors of the economy; instead the finance sector sucks money out of the productive economy. The shareholder capitalism model rewards CEOs who collaborate with this process.
I don’t know what the solution is, but arbitrary caps on salaries ain’t one of them.