On one extreme, you have the 'communist' idea where there's inadeqaute incentive for people to contribute - a lack of reward. Again and again, history shows us that motives such as patriotism and community spirit are not long-lasting as replacements for material reward.
In the middle, you have a system where there are good rewards for people to contribute. It's a balance between some money going to take care of the poor and sick, while allowing people to get more for contributing.
On the other extreme, you have a concentration of wealth so high that the meritocracy is broken - people can't get justly compensated for contributing because having wealth is the lock on gaining wealth; there is waste in society, such as a lack of education to save the social spending, etc. It's an oligarchy where the protection of the interests of the few comes before the good of society, and overall gains are reduced in order to protect the wealth of those who have the wealth already. If you aren't one of them, it's hard to get to be one.
Consider what's happened in the last 25 years as the US has moved from the middle towards the second extreme, for example, with CEO pay.
The uninformed simplisitcally respond to any comments on increases in CEO pay with 'they contribute and so they get rewarded'. But is that what's happening? Or are they simply able to game the system more and more, harming society?
In 1980, CEOs made 45 times the earnings of nonsupervisory workers. In 2000, it was 458 times the earnings. Did they become not only ten times more valuable - but ten times more valuable compared to workers? Or was it simply gaming the system?
Worker pay was *lower* after inflation in 2000 than in 1980; CEO pay was ten times higher, after inflation.
In 1980, full-time production and nonsupervisory workers made $28,950 on average and CEOs made $1.3 million (in 2000 dollars). Last year, workers made $28,579 while CEOs made $13.1 million.
At the same time US CEO pay has reached $13.1 million, top people at the 100 largest British companies are still at an average of $1 million.
This is the problem - the right are tyically ideologues who are buying the *theory* that the 'rational' market means that the compensation will be appropriate, that checks and balances will prevent abuses - and they can't be bothered to look at the facts and notice when it's broken.
Most CEO pay leaders underperformed the market going up, and have underperformed it going down. According to a new report by the Boston-based United for a Fair Economy, "If you had invested $10,000 in Walt Disney stock on December 31, 1993, the year CEO Michael Eisner topped Business Week's highest-paid list, held the stock for one year, then sold it to buy the stock in next year's pay leader and so on, by the end of 1999, your $10,000 investment would have eroded to just $3,585. A similar $10,000 investment made in the S&P 500 over the same period would have grown to $32,301."
We don't need to be worrying about 'encouraging investment' by the ultra wealthy in an era where they're already skyrocketing past the rest of society in increasing their share of wealth while the average citizen stagnates economically. That policy reflects their increase in political power, not something justified, not good policy.
People with great wealth can continue to make great wealth with no more than letting someone invest their money for them.
Society benefits from society getting to make some increased income, too - which for 80% of Amricans has not happened for 25 years now.
We're in a spiral of the ultra wealthy gaining power - already to the point where the national agenda far over represents their desires, and the gap is bigger every year.
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