Re: “The Wage Gap Game” March 24-30
At the end of your editorial, you asked, “would [forcing every multi-millionaire CEO to follow Bill Gates’ lead of giving away their fortune] kill our capitalist incentive or rejuvenate it?” There is an excellent book, The Spirit Level—Why Equality is Better for Everyone by Wilkinson and Pickett that at least partially answers this question. If decreasing the spread in wealth killed capitalist incentive, one would expect countries like Finland, Sweden and Norway with the lowest spread in wealth, to have the fewest patents per million citizens; countries like the USA, Australia and the UK with highest spread should have the most patents. In fact, the opposite is true, with Finland having the most patents of all countries measured (about 15 times higher than the US). So one must conclude that forcing a more equal distribution in wealth rejuvenates rather than kills capitalist incentive. There are some anomalies (e.g., Japan and New Zealand), which means that other factors in addition to disparity in wealth (culture perhaps) are also important. The overwhelming evidence in this book shows that many factors, from infant mortality through education, homicides, health and much, much more all benefit from a more even spread. This raises the question, “how do we improve our own society?” Tax cuts are certainly the wrong way to go, as they increase the spread in wealth. But raising taxes, even on the very wealthy, would seem, at the moment, to be political suicide. Capping salaries of top-paid CEOs is equally politically difficult. I’ve wondered if there might be another way. Would it be practical to cap everyone’s spending at say $200,000 a year? Let people earn what they wish, but if annual spending is limited, at least the apparent disparity in wealth would be reduced. That might be all that’s needed.
Philip Symons, Victoria