For being a Libertarian, you sure come up with some damn creative government regulations. Don't you think the investors who own the corporation should have the right to pay their employee - the CEO - whatever the hell they please? Why would they go against the financial interest of the corporation they own by paying the CEO more than they think his talent is worth? And who are we to complain about it? Do we even have a dog in the hunt?
Originally Posted by: texaspackerbacker
Technically, I'm an anarchist not a libertarian, but the point is made.
Sure, the investors can do what they want. I didn't prohibit larger salaries (the more usual proposal). I merely limited the amount of a deduction for those salaries. The investors can do what they want, but they aren't "entitled" to a tax deduction.
[One might argue that they shouldn't be taxed at all, but that's another debate for another day.]
Personally, I would entirely get rid of the grant of extra legal rights that come with use of the corporate organizational form (limited liability, etc.) that ultimately enables such excesses. But no one will ever go for that.
But the real social problem with executive salaries is not the amount, and its not that no one should earn income that high for what they do (as you say, if shareholders think its worth it, it's worth it). The real social problem is the excessive distribution of wealth that occurs as a result. Every dollar that an executive consumes ensures that part of his/her income gets shared with the producers of the goods he/she consumes. While that also happens when the executive buys more capital assets, the capital investment also serves to further skew the wealth distribution by virtue of compound interest. My proposal would merely limit the amount of new wealth that the executive could gain the whole of that compounding gain to the return on investment from $5 million a year. If the executive wants to get a bigger compounding gain, he's going to have to risk his own pre-existing wealth not shift that risk to the shareholders who employ him or the people who the shareholders shift their risks to via the corporate form.
As for minimum wage, indeed it does increase unemployment - thereby harming a lot of the people it is supposed to help. I would expect there to be a slight Keynesian positive effect, however, as increased money in the hands of those who would be likely to use it on consumer goods would multiply. That would outweigh the lost income of those losing jobs, as sooner or later, they would be employed again, in addition to receiving unemployment compensation. The overall benefit of increasing the minimum wage, therefore, would be pretty much a wash, maybe slightly beneficial.
I don't like minimum wage laws, and I think increasing it is a bad idea all around, for the reasons you and Zero and wpr have put forth.
Nor am I bothered by anyone getting paid all that they can get from a willing buyer, whether it's a CEO or a movie actor or a college/pro football player. Employment contracts are voluntary. No one has to pay if they don't want to, and if they pay, presumptively they see the benefit being greater than the amount paid.
On the other hand, I think there is a real danger that comes as the distribution of wealth becomes more and more skewed. That way lies feudalism and its bastard children, mercantilism and fascism. And those, to my mind are worse by orders of magnitude for the long run growth of economic prosperity, because with feudalism and mercantilism and fascism, economic success depends on on productivity but on power.
I'm not so naive that I believe that power can be taken out of the equation. That's why I'm a minarchist rather than a full-blown anarcho-capitalist. But I do believe it is possible to limit the importance of power.
And I believe that you don't limit power by direct regulation and prohibition. You do it by constitutional-type rules of the game that detach the incentives to pursue power and control from the incentives to increase productivity.
(I forgot to say that I would make my proposal one of constitutional amendment rather than mere statutory enactment. That would constrain both legislative action -- which is shaped by the degree of power to influence it, which the wealthy always have more of) and judicial action (the powers of corporations in America can be traced in significant part to the Supremes decision in
Dartmouth College v Woodward way back in 1817). Changing tax rules just reinforces the importance of having the power to influence those who make tax rules. And the wealthy, who can always afford more $1000/hour lawyers and lobbyists are always going to have more of that power.)
And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God.
Romans 12:2 (NKJV)