The time for half-measures is over. Corporate tycoons have proven that they cannot be trusted to properly run their own businesses. Unnecessary largess at worker and stockholder expense must come to an end. It is time for a corporate maximum wage law. This law must be directed at the top five percent of American earners. It must be broadly written to include hedge fund miss-managers, automotive executives and financial CEOs. Multi-million dollar birthday parties, private jets that escort executives to beg for taxpayer money and golden parachutes for retiring moguls all prove that the time has long since come for Congress to rein in corporate compensation. America needs full-scale government protection against corporations.

I’m kidding of course, but don’t be surprised if you hear this drumbeat in the very near future.

Instead of allowing firms that endanger their viability by engaging in this type of behavior to fail, and thus suffer the punishment of their mismanagement, the government is bailing them out. By removing the natural negative incentive from the marketplace, Congress is going to be forced to install an artificial one; one that they can dictate and manipulate.

This is the problem with socializing risk by providing taxpayer money to bailout failing private industry: there is no longer a justification for not allowing government to control companies for the ‘good of the taxpayer.’ The automotive bailout bill that recently passed the House of Representative but died in the Senate, contained several such artificial negative incentives. They included: limiting bonuses for the top 25 highest paid employees, banning large retirement payouts and in the most petulant of provisions, barred recipient companies from owning private jets.

The executive punishment neatly nestled in taxpayer bailout money is nothing new to critics of corporations. Maximum wage laws are key bastions in the fanciful dreams of collectivist planners and enemies of enterprise. In Greed and Good, the self-described labor movement journalist Sam Pizzigati hatches the Ten Times Rule, his version of the compensation ceiling. He wrote:

In a Ten Times Rule America, no American would be able to earn more than ten times the income of any other. Any income above this ten-times limit would be subject to a 100 percent tax. If this Ten Times Rule were ever to become the law of the land, our nation’s richest would only be able to become richer if our poorest became richer first. America’s wealthiest and most powerful … would suddenly have a personal, deep-seated, vested self-interest in improving the well-being of America’s poorest and least powerful.

Leaving aside the perversion of America’s founding principle of right to personal property, Pizzigati’s plan would only further the entitlement mentality that has contributed to the nation’s woes. His plan does provide an incentive for the capable and driven to carry the rest of the populace through society, but it does nothing to provide an incentive for those on the bottom of the income scale to work harder. If you worked at a minimum wage job and every year you saw your income increase because someone else was motivated to earn more, what is the incentive to work harder, better yourself or get an education?

Pizzigati is not alone in his desire to restrain the earning potential of some Americans. Harvard Professor Howard Gardner took a stab at crafting a similar plan in a 2007 article for Foreign Policy. Gardner wrote:

No single person should be allowed annually to take home more than 100 times as much money as the average worker in a society earns in a year … any income in excess of that amount must be contributed to a charity or returned to the government.

Gardner’s own words expose the mentality of those who promulgate the idea of reappropriating money through a maximum wage. He advocates that the money be ‘returned to the government.’ The implication is that the money never belonged to the individual; everything is on loan from the state. This mentality, much like the proposal, is decidedly un-American and has no place in a self-determining society.

As absurd as these proposals sound, they pale in comparison to what we have seen over the past year. A Republican administration has socialized private risk to the tune of $1 trillion dollars. Major banks, investment and insurance firms are surrendering so-called ‘non-voting warrants’ to the government in return for truck loads of taxpayer funds (nationalism by any other name…) An automotive bailout valued at $14 billion is currently being offered by the White House, circumventing the wishes of the People’s Branch. Not to worry, Eugene Robinson reminded us recently in the Washington Post, this nothing more than “a rounding error in the context of the ongoing financial meltdown.” The incoming Obama Administration is determined to move a Keynesian-flavored stimulus package rumored to cost upwards of $1 trillion. And all of it without any legitimate oversight.

If you think a maximum wage law, which will punish those at the top of the income scale while doing nothing but hurt the rest of the country, is impossible, you haven’t been paying close enough attention.

Sam Pizzigati
December 19, 2008
http://www.americansforprosperity.org/020409-next-maximum-wage-laws