Maximum Wages: Focus on Achievements Instead of Bonuses

The New Economics Foundation‘s blog posted this last Friday about creating a salary cap for everyone. Steady state policies would encourage a maximum and minimum wage in order to create a fair distribution of wealth.

Creating a wage cap changes the focus – another common theme in our discussions. We have seen the destruction created in the wake of profit maximization policies all around our recession-laded land. Instead of constantly trying to make more money (phantom wealth), we can worry about more important issues:

“an executive’s performance has to be judged against achievements other than personal accumulation. So, instead of status derived from higher incomes, the desire to excel can instead be directed toward the social contribution and environmental performance of the bank or company involved.”

This does not remove the ability for you to receive promotions and bonuses, or further your career. It is a matter of scale – it is unjust for a CEO to make 500 times their entry level employee, they are not actually worth 500 other employees.

As Herman Daly and Joshua Farley put it,

“Distribution of wealth is about how we divide up the economic pie, and it’s critically important for a steady state economy in which the pie is not growing. Economic growth has been used as an excuse to avoid dealing with poverty. Without growth, there are no more excuses. People who are too poor tend not to care about sustainability. If daily life is a struggle for basic needs, there’s not much time or energy to consider the future. On the flipside, people who are excessively wealthy tend to consume unsustainably.

A key policy for ensuring fair distribution of wealth is to establish a cap on personal income. Such a cap would eliminate the worst cases of conspicuous consumption and curb overall throughput of resources in the economy. An income cap would also prevent the social unrest that comes from huge gaps between the ‘haves’ and the ‘have nots.'” (Ecological Economics)

Read the nef Triple Crunch blog post here.

Update August 18, 2009: nef’s follow-up post and the movement you should support to create a High Pay Commission.

Say No to Bonuses

AIG paid more than 20 times the average US yearly income to executives in bonuses.

We own a substantial amount of companies that were on the brink of going under not to long ago. Now they are trying to defend what they call “retaining” bonuses: extra money to keep on executives. These are not the average “good-job, here’s a grand” bonuses that most professionals might be accustom. These are more than $1,000,000 bonuses. That is 20 times the average yearly income in the US – in a yearly bonus! 52 people who received these payouts are no longer with the company.

Continue reading “Say No to Bonuses”