An easier question would be what's right about them. The set of that questions answers would be much smaller, if you only include really solid answers, it would probably be a null set.
In any case even if maximum salaries where a perfectly good idea, that wouldn't change the fact that Ted's post has essentially no connection to most of his arguments and ideas that he posts dealing with the general idea of the rich getting richer "at the expense of" the poor.
Getting back to what's wrong about maximum salaries? (I assume you mean salary limits created by law, not by collective bargaining, or by practical considerations.)
They reduce the freedom of both the employer and the employee. They expand government power in a way that is neither fully just nor clearly necessary. They reduce incentives for highly effective and well compensated employees. And they, like other price controls, are likely to either have no practical effect (if set well above the market clearing rate) or distort supply and demand, and the forms that transactions take. Give a maximum salary (or tax salaries above a certain amount to a much greater degree than other income) and you encourage other forms of compensation. Not that there is inherently anything wrong with other forms of compensation, but there isn't much point in having government favor some forms over others. If more money goes in to lavish offices, then perhaps you get over investment in such things. If you have fantastic health benefits, then the money from those benefits amounts to extra demand for health care services, driving up their cost. Maybe stock options are an ok alternative. They have the theoretical advantage of tying the compensation to the well being of the company. But that theoretical advantage might not work as well in reality, and they also have the disadvantage that the exact amount of compensation isn't really clear at the time it is granted. Any of these forms of compensation is fine if that's what people want and that's what the companies want to give, but an overall political solution is less likely to work well for each individual than one that is agreed to by that individual. And systematically favoring some solutions or disfavoring others is likely to distort the form of compensation in potentially unfavorable ways. |
