August 03, 2003
Flat Tax for the Left

A simplistic and yet apparently common-sense policy occured to me the other day. I call it "market communism", though it may as well be a flat tax of the far left, as it is undoubtedly too simple to work well. And yet, I find it compelling.

It works like this. First, a cap is placed on all salaries, everywhere. No one can be paid more than four times the amount paid to the lowest-paid employee. Any time the top-paid folks want a pay raise, they have to raise the salaries of all of the lowest-paid by 25% of their desired raise.

The rest is details.

A whole new set of laws would be needed to keep people from finding ways around this, and substantial sum would be needed to enforce it. This could be accomplished with the death penalty. Not that death penalty, the corporate death penalty. If executives at a certain corporation were found to be paying themselves more than 4x the lowest paid, the corporate assets would be used to pay severance to the employees of the firm, and the rest could go to an unemployment insurance fund.

Aside from some fine-tuning (the range of pay might need, to some extent, to be calculated by state, by type of business, etc.) I have trouble seeing any problem with this plan.

There is nothing about capitalism that says that one has to accumulate insane amounts of money. On the other hand, the more evenly income is distributed, the more it is likely to be spent or reinvested, making for a much more dynamic economy. Even Warren Buffet agrees with me on that.

A lot of other problems would be easier to solve after a few years of market communism. It would be easier to find funding for decent journalism, for health care, for new environmental and cultural ventures. As the "money primary" states clearly in its name alone, money is power, and the easiest way to get power to more people is to give them more of the money.

This also explains why market communism isn't likely to happen. For some strange reason, rich people never have a strange need to be richer than everyone else. Mutual prosperity doesn't cut it.

The inverted version of the market communism policy is concisely addressed by Conceptual Guerilla's piece on cheap-labour conservatives, which I recommend.

posted by dru in article