What would the economic implications of salary capping be?

[Whirliwig72]

Just musing as I dole out fish fingers and smiley faces to my son... If a law were to be brought in making it impossible to earn more than a set amount (say £80k pa) and illegal to sell an asset for more than 4 x times this amount what would the implications be on society? Would it create more or less employment? ... Would people be less motivated to work hard?... Would it make people happier?... Create a more utopian society? Please give me your thoughts....

'then have nots start to get peeved to the point of revolution'

the have nots did not rebel. A small gang of activists stirred revolution and were funded by rich capitalist outside forces. Germany helped Lenin back into Russia as they wanted revolution to weaken Russia so that Russia would pull out of the First World War, which is what happened.

Is a form of capitalism that allows colossal multinational companies and banks to take over really that different from communism in the end? Or does it end up with the same result of a minority telling the majority how it is?

'Germany's form of capitalism seems to have been more successful than our own.'

Yes, they don't believe in New Labour's 'light-touch regulation'.

'Is a form of capitalism that allows colossal multinational companies and banks to take over really that different from communism in the end? Or does it end up with the same result of a minority telling the majority how it is?'

That is crony capitalism and casino capitalism, not the capitalism that Germany have. We need regulation for crooks and raiders

Attempt much in the way of regulation and we start being accused of being anti-business and verging on communist.

I am a pragmatist. Therefore I do not believe in a blanket law capping salaries. However I believe that a change in attitudes combined with education and changes in tax laws can deliver a better life for all.

McCarthyist scaremongering benefits no one.

No we need teh right type of regulation, not New Labour 'light-touch regulation' or socialist regulation and red tape on small businesses and enterprises struggling to stay afloat and give people employment. We need regulation that regulates the fat cats and knights them for 'services to the country' not just to banking.

We have laws in the land which are regulations. We need law and regulation, but not punitive ones that stifle enterprise. We need regulation that prevents fraud, reckless risks, moral hazard and financial collapse.

I agree it's all about changing attitudes. As I've always said, that is best done by leading by example, rather than continuing to behave in the same way but kicking everyone else about beneath you. You can't expect the weakest in society to change everyone else's attitude by forcing them to accept less and then carrying on as usual yourself.

'McCarthyist scaremongering benefits no one'

McCarthy falsely accused people of being communists.

Pointing out that East German communists shot their citizens who tried to escape to freedom and that millions died in gulags and that Cuban citizens drowned in samll boats escaping to freedom is not scaremongering, it is the facts. The price of freedom is eternal vigilance and pretending that communist regimes have a good theory is against human freedom and supports serffom.

'Power corrupts and absolute power corrupts absolutely. It doesn't matter whether it's religion, capitalism or communism, their greatest ideas and principles are all wrecked by power hungry human beings intent on getting a bigger share of the cake than anyone else.'

rabbitstew you were right when you said it is about people. It's not about capitalism, it is about people. It is those powerful people that need regulating. There is nothing wrong with capitalism, but those who exploit it for their own ends need regulation.

Changing attitudes is key. And in a way it has already started. Fair-trade isn't something that you participate in by buying the right coffee. It is something you are part of or not. Paying taxes is ethical. Tax avoidance is scummy. Tax evasion should be heavily punished.

Be individual or corporate.

rabbitstew you were right when you said it is about people. It's not about capitalism, it is about people. It is those powerful people that need regulating. There is nothing wrong with capitalism, but those who exploit it for their own ends need regulation.

I'm afraid this is utter nonsense, and fails to take in to account the way different economic systems and rules and regulations which are in place that encourage, cause, help, or instead discourage and prevent abuses from taking place.

Unfortunately, one of the problems with the way things are set up right now is that sometimes the actors are acting 'rationally' given the defined constraints: if they know they can take huge risks and either be given a bonus if they fail and cost the banks billions and tens of thousands of jobs or be given an enormous bonus if they succeed, then they make the rational decision to take the huge risk.

The problem is a systemtic one. We are rewarding risk taking and not punishing failure. We are encouraging short-term thinking while ignoring the long-term consequences.

All these things require systemic change.

Also, you can't 'regulate people'. It's complete nonsense.

No, McCarthy falsely accused anyone who didn't believe in the capitalist status quo of being communist in the (successful) attempt to instill fear.

It was a bit like calling those opposed to the monarchy "nazis". Being anti capitalist does not make one a communist.

America is the heart of capitalism and has far greater regulation than we have. They used to have the Glass Steagall Act which prevented retail banks from having risky investment arms. I think it was that leftwinger Clinton who finally got rid of that good act.

In America lots of people went to jail - Bernie Madoff and Kenneth Lay of Enron was sentenced. They try to stop monoplies forming just as we do too with our Monoplies Commission. They have regulation to try to stop powerful people cornering the market. But things still go wrong as lobbyists convince their politicians to discard some of their regulation such as the Glass Steagall Act.

But none of this is due to capitalism, it is due to people and power as rabbitstew said. There are far more checks and balances in American capitalism with its Freedom of Information Act and its lawyers who sue companies for huge amounts if they endanger public health or defraud the public than there ever are in communist or fascist dictatorships where a small gang make all policy.

Powerful people do need regulating.
Power needs regulating.

'Also, you can't 'regulate people'. It's complete nonsense.
'

You regulate people by making and enforcing laws, just like the anti-smoking laws in pubs etc.

Saying it is complete nonsense is defeatist and smacks of 'light-touch regulation'

'All these things require systemic change.'

We don't need seismic change or revolution, all we need is regulation, laws and the enforcement of law. Those who pretend that these things are not possible are deceiving the public. There is an alternative to 'light-touch regulation' and knighting people for their 'services to banking;.

Well claig, we do have a basic Freedom of Information Act, thanks to the last government. What we don't have is a written constitution. I think that guarantees a lot more freedom to Americans.

Agree joan, Labour did a good thing with the Freedom of Information Act, but I don't think that our one is as effective as teh American one, but I don't really know.

America takes regulation very seriously. Gillian Tett was on Newsnight a few days ago and Paxman mentioned that in America quite a few powerful people have gone to jail and he asked her how many had gone to jail here, and I think she said that she thinks none.

I was wrong about Clinton repealing the Glass Steagall Act. He signed the repeal into law but only because some Republicans had initiated it and it won a majority in the House etc.

'The bill that ultimately "repealed" the Act was brought up in the Senate by Phil Gramm (R-Texas) and in the House of Representatives by Jim Leach (R-Iowa) in 1999. The bills were passed by a Republican majority, basically following party lines by a 54?44 vote in the Senate[15] and by a bi-partisan 343?86 vote in the House of Representatives.[16] After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bill resolving the differences was passed in the Senate 90?8 (one not voting) and in the House: 362?57 (15 not voting). The legislation was signed into law by President Bill Clinton on November 12, 1999.[17]'

en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

Yes, i think the exemptions in ours cover more ground.

I also think that whenever an American cottons on to just how unfettered the power of a UK prime minister is, as opposed to the real checks and balances in the US government, they realise we're effectively an oligarchical dictatorship. However, since we are just a little chunk of Europe, it doesn't really matter.

Yes I think you are right joan.

What we all want is more democracy, more transparency, more freedom.more checks and balances, more regulation of the powerful and more representative government. The more of those things we have, the less is likely to go wrong, because scrutiny and transparency prevent the powerful from rigging the free market.

"> Professionals are already leaving the UK in higher numbers than in the past.

And what evidence do you have of this? Did you just make it up?"

I don't like being accused of lying. This article from 2008 claimed that Record numbers of Britons are leaving - many of them doctors, teachers and engineers - in the biggest exodus for almost 50 years. And if that was the picture in 2008, and since the economy hasn't got better since, I believe the same would be true today.