What would the economic implications of salary capping be?

The high tax rates didn't last long enough for him to leave although is brother emigrated. People always have. His uncles(3 of them) emigrated after the 1920s recession and some of my ancestors came to the UK because of teh irish potato famine. People have always moved across the globe. That movement is good for the gene pool too as we mix in more.

China in the cultural revolution tried to pay doctors the same as street sweepers and it failed. At the moment China is trying salary capping by the way in a big way - go and look at that. They want to keep making cheap goods so if you want to put wages up in some regions there you have to ask permission ()there has been huge wage inflation there recently) and the local officials are refusing for political reasons.

Sorry "swingeing" - I wasn't commenting on whether your childhood home had pampas grass!

I went for doctors as an example as NHS pay scales are published, so I could be sure of the figures; and because it's an obvious example of a well remunerated profession where we clearly want the best here, but in which it is easy for British trained practitioners to move elsewhere so international salary levels cannot be ignored.

UK may be an island geographically, but it would be imprudent to try to act as an island with a unilateral swinging tax regime.

Off-topic, but interesting to see how many on this thread are children of doctors (I am too)

I agree that 100% tax and asset value capping are likely to make the current situation worse. I strongly disagree with Xenia's attitude and self-justifications!

I don't think it's a case of saying that you have to stay with the status quo.

It's saying that 100% tax rates and asset value capping are going to make the situation worse not better.

My father benefited from an excellent education courtesy of the state, and an excellent medical qualification, courtesy of the state. In return, he worked hard for what he got and took advantage of all opportunities he was given and ended up very successful. He went through medical school with a cohort of people who were all entirely privately educated. He viewed many of them as nice but dim. Accordingly, he didn't object to paying high levels of tax in the hope that the more intelligent and/or hard working would continue to receive a sufficient level of education and healthcare that they stood a chance over those born with a pre-existing advantage which they were not willing to give up. So, not all of the "fittest" see the logic in complaining about high tax per se, it's just a question of where and how the money is spent and how you deal with those not willing to join in with the spirit of the enterprise.

My memory, being a doctor's daughter, of my childhood is that we led quite a charmed life and didn't suffer at all at the hands of high tax. We were all well fed, well clothed, well educated, well loved and well housed throughout the 1970s and beyond. I think doctors had to work harder then than they do now, though.

Xenia - did your father leave the UK and if not, why not?

Which is merely another way of saying we are trapped with the status quo - and the status quo will not protect us from a future generation finding that the 75% can no longer expect the protection of unemployment benefit, state pension, free health care, free education, disability benefit, etc., just that it delays the day when that happens.

Ah yes, it would hurt pubilc sector workers and their pension, this proposed cap too.

We had it in effect in my lifetime int he 70s whenthe top rate of tax was 99%. That was pay capping. My father on an NHS doctor salary was paying 66% as his highest rate of tax and then anotehr 15% on top of that so over 80% on any interest from building society savings. If so much of your pay is taken away there is little incentive to earn more and people move abroad as indeed they did in those years.

I can do the work I do from anywhere and I certainly would not stick around if all but £80k less tax were taken away. It is the clever and entrepreneurial people who are most mobile. If you look at immigration to the UK from abroad you will see that in many cases it is the bright best people from abroad (in many sectors, not all) who move here and do so well in the UK.

The level of salary cap suggested in OP might not mean that people would starve, but it probably would mean people would die. Too many doctors would be caught by it - as if UK were to pay less than half what they would get elsewhere, then we'd see enough of an exodus to stymie NHS totally.

Entrepreneurs would seek other bases - so there would be fewer start ups. Small businesses would seek to move (or would the £320k apply to moving as well as selling assets). Families in SE would be ruined, as negative equity problems surge (you paid £400k for your rather less than average house? Well, you'll have to keep financing that, but you'll not be allowed to sell it other than at a loss: bye bye all your forward planning).

And bye bye private pension. Once you've allowed for employers contribution £320k is a moderate sized pot (which may have to be surrendered partly or entirely if you've already sold assets recently), thus reducing the amount of annuity you can purchase. A typical sized annuity is already down £2k per year. How much poorer do you want to make pensioners? Are they 25% of the population yet?

BTW: as they now give notional values to public section pension pots (which can be done either in terms of a scale of contribution, or in terms of how much you would need in the pot to buy the benefits on the open market) then the £320k cap could apply there too. It would make the changes under discussion now look trivial.

This issue isn't about harming bankers - they will leave and take their profits with them. Do think about who else would leave at the £80k salary cap, and what other harm would be done by £320k assets cap. The generation at the time of transfer would be utterly, utterly ruined.

That really is unbelievably stupid, given that it's the poorest 75% who do the work growing the food. The top 25% just turn it into the sort of junk that makes us all fat and riddled with heart disease. I think, Xenia, you would find that if the 75% downed tools, the 25% would starve incredibly rapidly, along with most other people (probably sooner, given that they would be lynched if they all had your attitude).

dont be stupid xenia what a ridiculous and arrogant post.

If the 25% downed tools the others would starve. There needs to be less envy and more gratitude.

Remember Luke 16, 19-31

The Rich Man and Lazarus
?There was a rich man who was dressed in purple and fine linen and lived in luxury every day.
At his gate was laid a beggar named Lazarus, covered with sores and longing to eat what fell from the rich man?s table. Even the dogs came and licked his sores.
?The time came when the beggar died and the angels carried him to Abraham?s side. The rich man also died and was buried.
In Hades, where he was in torment, he looked up and saw Abraham far away, with Lazarus by his side.
So he called to him, ?Father Abraham, have pity on me and send Lazarus to dip the tip of his finger in water and cool my tongue, because I am in agony in this fire.?

?But Abraham replied, ?Son, remember that in your lifetime you received your good things, while Lazarus received bad things, but now he is comforted here and you are in agony. 
 And besides all this, between us and you a great chasm has been set in place, so that those who want to go from here to you cannot, nor can anyone cross over from there to us.? 

  ?He answered, ?Then I beg you, father, send Lazarus to my family, 28 for I have five brothers. Let him warn them, so that they will not also come to this place of torment.? 

  ?Abraham replied, ?They have Moses and the Prophets; let them listen to them.? 

  ??No, father Abraham,? he said, ?but if someone from the dead goes to them, they will repent.? 

 ?He said to him, ?If they do not listen to Moses and the Prophets, they will not be convinced even if someone rises from the dead.??

Well, you could view someone who cleans hospitals for very little pay, or who childminds other peoples' children as being a net taker from society, but I think that would be a somewhat unfair analysis, Xenia. It would be more fair to view them as essential to the people going out to do the most profitable work. You can't have the top 25% without the bottom 75%, so take out the majority who "take, take, take" and you'll find the top 25% can't do what they want to do any more, either.

'if we dissassociated ourselves from the parts of the UK which make nothing and are pretty useless those of us in the 25% would be a lot better off'

How would the 25% receive their mail in the morning, supplied and delivered by workers who have been up all night? How would their children and parents receive medical care by nurses and doctors who have been up all night? How would they be rescued from disasters and accidents by emergency workers who work all through the night? There is no useless 75%, but some of teh 25% are less useful than they think and less grateful than they should be.

We always have been unless we live separately and self suffiiciently etc. Most people don't want that. They don't have the skills to be prosperous or without being supported by others,. 75% of people in the UK are net takers from the system and the few (25%) who are successful and competent and pay a lot of tax support all the rest. All this banker bashing is very unfair. if we dissassociated ourselves from the parts of the UK which make nothing and are pretty useless those of us in the 25% would be a lot better off btu we don't because as in the famous quote we are doing God's work and unlike with vicars the ungrateful poor don't think us for it. C'est la vie.

The more we invest in our own pensions, the more we encourage them. We suffer if we do save and we suffer if we don't. We are all still completely at the mercy of the fluctuations of the market and always will be.

And when asked what she would do about the current economic crisis, rabbitstew confidently said, "I wouldn't start from here..."

And yes, the argument isn't really helped by referring to "bankers" since traditional banking techniques (eg lend money for a specific project and get paid back with interest) and retail banking are not the hugely profitable part of the finance industry, but then all types of banks have had a habit in recent years of getting involved in all sorts of things, regardless of the original purpose of the bank in question, and don't want to separate out that more risky work. And even if they do separate the more speculative work from what most people regard as traditional banking, those sorts of activities will still be allowed to go on, it seems, possibly even less regulated than ever if everyone thinks they've been very clever protecting the money of "ordinary" people by making their banks far less profitable but more safe, so it won't do anything to stop continuing booms and busts, colossal disparities in wealth between those who have the money to play about with speculation and withdraw their cash just in time before the next crash and those who don't, and a drawing of all the best talent into the world of finance and away from real innovation and job creation in which a wider pool of people in this country can share. It isn't really "the banks" which started the problem, they just had enough money available to them to join in with it and were encouraged by those who wanted a share in unsustainable profits. The banks just want a share of what plenty of other people in the City are playing about with (and whom most people lump together under the general "banker" designation to mean anyone willing to take excessive risks with other peoples' money). The real problem is with the magnitude of the risky behaviour - small numbers of people can mess about with colossal sums of money as they use their existing profits plus the cash of anyone else who wants a share of the action, and cause no end of havoc for the "ordinary" people at the end of the day. This problem will not be solved by breaking up the banks, it will just mean that runaway greed and wealth will be whittled down to a smaller pool of people, controlling more and more ridiculous amounts of money and wielding their power in any way they fancy, because they don't see what's wrong with affecting the markets in ways unpredictable for everyone else.

I think the worst thing that could happen would be to break up the big banks and let the private hedge funds and their like continue to make a small group of hugely wealthy investors even more wealthy at everyone else's expense, because that way we still all suffer the busts, but get less share of the booms. I would rather some sorts of behaviour just weren't tolerated at all...

I entirely agree with MoreBeta. Yes, of course it is very bad for the economy if banks leave the City, but the fact is, they have been exceptionally toxic for the health of the overall UK economy precisely because of their success at the expense of all other industries - to the point that we need them because we were stupid enough to encourage them so much that we lost all other profitable sources of income. All the best talent was sucked away from alternative industries into the City, where HUGE amounts of money could be made - and the talents of the people enticed that way could have been much more appropriately and effectively used elsewhere. The City is, after all, an environment where the too-clever seem to think they can come up with clever mathematical models removing all risk and they always come acropper in the end. Perhaps they should have used their considerable brains in an industry less dominated by fight and flight hormones - somewhere where their talents genuinely are in short supply. After all, the City operated quite happily for years with really stupid people running it on the basis of school ties and big lunches, so I don't believe it requires THAT much intelligence (besides which, I've worked in the City myself, so KNOW it doesn't), just that it has attracted intelligent, greedy people to it with promises of great wealth.

Of course it will be the secretaries, print room staff, etc, who suffer most if City people pull out of the UK - but do we want an economy where you are either a banker or work in a banker's print room? Yes, in a way to make a fuss is cutting off our nose to spite our face, but to say nothing when you think there is something badly wrong is just cowardly.

While I agree that finance is one of the UK's biigest exports and revenue generators. It has also been a curse. In essence the UK economy has become so unbalanced that it the UK has suffered the classic 'Dutch Disease' where all of the brightest graduates, capital and investment that might have been deployed to build new firms in other industries is diverted to finance.

The Icelandic economy was just the same until the Icelandic people voted to allow their banks to go bankrupt and already their economy is recovering. The Icelandic President was on TV recently describing how that recovery has been in a broad spread of industries with graduates now entering industries and even setting up their own ventures that they would have shunned previoulsy and gone straight into banking.

In my view the City has become over large in the UK economy and we need to get away from the idea that it is our only saviour and wealth generator. For example, there is potentialy a fantastic technology cluster in the Thames valley and M4 corridor. How much bigger would that be if the young graduates and capital had not been so skewed towards the City. We might have our own version of Silicon Valley without any need for Govt spending money on Regional Development Agencies.

The stupid thing is, it is your middle-of-the road UK nationals that suffer most: the brightest people whose skills are much in demand (and who speak more languages than English) have been leaving for a while now, it is the secretaries, the mail and print room staff, the juniors, the clerical and even the middle management staff, the cleaners etc who now find themselves with no jobs. Not to mention those who work in the City but no in finance: the sandwich shops, the tailors, the dry cleaners, the hairdressers etc. less jobs for them too. And the nannies, cleaners, shops that used to workforce those who have now left.
RBS itself might not leave (it can't), but many others are and once a critical number has left it is much more difficult to re-establish credentials.