UKBouldering.com
the shizzle => shootin' the shit => Topic started by: LucyB on February 10, 2010, 08:26:18 pm
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Heard this on the radio last week. The suggestion was that the maximum pay in a company (or sector I suppose) shouldn't be higher than 10x the average wage in that company.
After much debate with friends, I was left thinking that this could be a really good idea. The beauty is that in order for those at the top to have a pay rise, the average wage would also have to go up.
I wasn't sure how this would work in reality, though. To have a max 10x higher than average, would you end up with appalling pay at the bottom end?
It does seem to take some of the better ideals of 'equality' while retaining some healthy capitalist competition.
We figured pop stars/ artists would be excluded as they are paid whatever someone is prepared to pay for their work. Footballers, however, are on a salary so would be included.
Would you go for this system?
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Broadly yes. Differentials between top and average salaries in the private sector in the Anglo-Saxon world have increased massively over the last two or three decades and grossly out of proportion to other relevant indicators of economic growth. I'm far from convinced this has made our societies happier, fairer, or, crucially, more competitive.
The whole idea of a functional international labour market for CEOs regulating salaries is largely bollocks.
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I like this idea. Do you remember where you heard it? Would be interested if it's on iplayer or similar.
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sounds like a good idea, not sure on the practicalities of it tho, if brought in as a law will probably cause companies to divide up into workers and senior managers as separate companies or some shit like that.
Footballers are an intresting one. I can't stands watching the game and think some of the wages are ridiculous and when ever you hear on the news about a club going under I can't help thinking "good", obviously its the poorer clubs that tend to go under which isn't good but it just seems so in sustainable. Salary caps should definitely be brought in
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Here's one source of data on the growing divide:
http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20060621/ (http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20060621/)
I've recommended it before but anyone interested in issues around inequality should read The Spirit Level: Why More Equal Societies Almost Always do Better by Wilkinson and Pickett. More info at: http://www.equalitytrust.org.uk/ (http://www.equalitytrust.org.uk/)
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I heard this too, was on radio 4, can't remember the name of the show but it's a comic who gets the audience to propose new laws and then they vote on them. Sorry if that doesn't help you find it.
I think it's a fantastic idea, last year the organisation I worked for floated on the stock market. The executive board gave themselves 120percent pay rises just before the float, three weeks later they put a pay freeze on all staff due to economic conditions. Thinking that the free market works on a supply and demand basis is flawed. It's a closed shop cartel. I don't work for that organisation any more, as I didn't want to contribute to their further profitability.
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Sounds like Mark Thomas' new thing, can't remember what it's called and haven't heard it but that would be my guess. I imagine it will be on iPlayer. I may have a look for it myself...
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Scale matters if the average salary is taken to be the mean salary of everybody
In a small company with 1 boss and 20 underlings, Le Grand Fromage could earn 18 times the average of the rest of them and still be earning 10 times the mean
In a huge company with 1000 employees, Le Grand Fromage could only earn 10.01 times the average of the rest of them to be earning 10 times the mean
probably
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You need to recalibrate, we're talking multiples of hundreds.
Large wage differentials are probably much harder to sustain in a small company were more face-to-face, less anonymous interaction takes place between boss and worker.
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It was the Mark Thomas thing on R4 on Thursday evening. Highly amusing but food for thought as always.
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A totally rubbish idea, but appealing to some none the less.
Cleaner on £6k would limit ceo to £60k or receptionist £13k ceo £130k, entirely counter productive.
I wonder what the ratio is in local government, something like x30?
We have a problem with an excluded underclass and limiting the pay of the tpp .1% will make no difference to this, let's deal with the real problem rather than distrct ourselves with froth.
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oh my god! a dark day! i was going to say almost exactly what sloper said. oh my god!
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I like this idea. Do you remember where you heard it? Would be interested if it's on iplayer or similar.
The radio 4 Mark Thomas show. It might be called The Mark Thomas' Manifesto.
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Cleaner on £6k would limit ceo to £60k or receptionist £13k ceo £130k, entirely counter productive.
Only if it were a firm of cleaners/receptionists where everybody apart from CEO was on £6/13k*. It's ten times the AVERAGE salary slopes.
Sounds on the surface like a reasonable idea, I don't know if the chosen multiplier is the correct one without a lot more thought but the principle seems sound.
*Assuming the companies in question had sufficient numbers of employees to prevent the CEO's salary significantly skewing the average salary calculation as highlighted in Lagers post.
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A totally rubbish idea, but appealing to some none the less.
Cleaner on £6k would limit ceo to £60k or receptionist £13k ceo £130k, entirely counter productive.
I wonder what the ratio is in local government, something like x30?
We have a problem with an excluded underclass and limiting the pay of the tpp .1% will make no difference to this, let's deal with the real problem rather than distrct ourselves with froth.
And your problem is? 130k, even 60 k is a significant amount. Also if the boss wants 65k then the cleaner gets 6.5k. That's the point of the 10x multiplier.
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I like the idea however I think bonuses would also have to be included (or banned) else companies would simply increase the size of the bonuses accordingly.
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To be honest I have real difficulties with the concept that having your earnings capped at 'only' £130K is anything other than disgusting. I think that hard work should be rewarded with higher income, but when has anybody within a company really worked 10 times harder than somebody else?
A totally rubbish idea, but appealing to some none the less.
Cleaner on £6k would limit ceo to £60k or receptionist £13k ceo £130k, entirely counter productive.
Whats wrong with earning £60K or £130K? It wouldn't by counter productive to most of us, seeing as its way more than most of us earn anyway.
I think maybe I just have issues with greed :shrug:
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Oh come on Percy do you really expect us to believe that you run your extensive range of cycling exotica on anything less than a 20x multiplier of your underlings :)
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It's not about effort it's about learning, skills, experience, responsibility and so on.
It's also about risk, if you've made a large capital investment, borrowed money to set up and manage, run and grow a business then you deserve the rewards.
Capitalism may be imperfect but have a look at the alternatives and consider the quality of life of the people at the bottom in capitalist countries and socialist countries.
Our problem is we have an excluded underclass and we have lost the unskilled manaul jobs which used to provide a living wage and underpin working class communities; dealing with this problem should be the priority not dealing with how much Richard Branson makes.
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oh my god..
I've just agreed with Dense and Sloper in one post.
:bounce:
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I think that hard work should be rewarded with higher income, but when has anybody within a company really worked 10 times harder than somebody else?
What has working harder got to do with anything? Cleaner who's working hard physically has absolutely no mental pressures of what the boss is under. I have issues with greed too but there's not a lot you can do about it. i want a bigger house, better car and better holidays than someone who serves me at b+q, but i don't expect to have better anything than a company boss. these are for instances, before someone tries ripping them to shreds. this also introduces the element people that are lazy at work. i want more money than these since i'm actually doing more quantifiable work. of course its all about the "i want" but then again it always is.
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sloper pls stop posting, this is really embarrassing for me :P
dark days fatdoc. can't stop the rot
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It's not about effort it's about learning, skills, experience, responsibility and so on.
It's also about risk, if you've made a large capital investment, borrowed money to set up and manage, run and grow a business then you deserve the rewards.
Unless I've misunderstood, this is wrong. If you have invested in the company you own shares - and you can take a dividend and the value of your equity goes up if the company is successful. On top of that you can take a wage that would be capped. It's the wage for doing a given job that's capped, not your entire earning potential.
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Of course as a shareholder you draw dividends, as an equity partner in a partnership you reap the rewards as well, but let's say that you invest and risk everything that you own in a venture and it pays off, does it really matter whether you take the reward via a share dividend or direct remuneration (other than your tax liability)?
Indeed were the pay structured on a 10x multiplier the shareholding director could say, "I'm taking a paycut so everyone's taking a pay cut", this will mean a greater profit and higher dividend so in effect the director doesn't lose out but everyone else does.
Be careful what you wish for.
I can recall Geoff Hoon arguing that 'there needed to be a public debate about lawyer's fees'; of course what he meant was the fees needed to be capped, reduced and so on.
The consequence of which as you well know is that many are now no longer conducting publically funded work in many areas of practice and geographical areas, thus leading to a two tier legal system where the rich have options and can avoid liability where the poor cannot.
What's the proper rate for the job, well that's for the market to decide. I heard that air traffic controllers on spain can be on, when overtime and bonuses are taken into account 800,000 Euro. Now I'm not saying ATC should be on minimum wage but JFC 800k :jaw: I wonder what they'd be on if there was a free market operating (the UK average is about £70k)?
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If it wasn't the total income from the business (salary, bonus, dividend, BIK) that was taken into account then the system wouldn't work anyway. The people at the top would just take a poxy salary and the rest in dividends, Bentleys or bottles of Cristal. Sounds like a completely unworkable plan to me anyway.
EDIT - Sloper's said basically the same thing while I typed this.
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It's also about risk, if you've made a large capital investment, borrowed money to set up and manage, run and grow a business then you deserve the rewards.
No. You're talking about entrepreneurship, classically defined, and I don't think many people would argue that there shouldn't be a return to entrepreneurship. But the problem really lies in the corporate sector where CEOs etc are not entrepreneurs; they are managers. In formal terms they are agents of the principles (the shareholders who own the firm) and they are supposed to act only in the interests of those principles. This is the basis of shareholder models of capitalism.
Lets go back to an earlier point. Inequality has grown massively in the last twenty years - a period of huge economic growth. Thus, some sections of society have been able to capture a much larger share of the fruits of that growth. Either we just accept that this represents a fair reflection of the various contributions different actors make to that economic growth (eg. Fred the Shred fully deserved his massive payouts) or we ask questions about the ability of certain classes to capture returns for themselves.
One explanation of that paradox lies in the so-called Principle-Agent problem, which argues that agents are self-aggrandisers who will look to their own interests rather than those of the principles (shareholders, which is actually most of us through pension funds etc.) Corporate governance is meant to align the interests of principles and shareholders but corporate governance has either been shockingly lax or has been repeatedly trampled underfoot (see Enron), Worldcom, Tyco etc ad nauseum). So, for example, supposedly independent remuneration committees are actually stuffed with non-execs who are your mates and you sit as non-execs on their remuneration committees etc. Top management teams have in effect been able to set their own levels of pay with often only the losest relationship to performance.
Sloper talks about capitalism as though its some monolithic, homogenous system whereas in fact this problem is much more pronounced in the so-called Anglo-Saxon system (the UK and the US). There are other economic systems that are fully capitalist but also produce much more even distributions of wealth (Scandanavia and Japan spring to mind, so wages differentials in Japanese corporations are much narrower than in US equivalents for example). The question doesn't have to be capitalism vs socialism - this is a false dichotomy designed to close off the argument - but between competing models of capitalism.
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The suggestion was that the maximum pay in a company (or sector I suppose) shouldn't be higher than 10x the average wage in that company.
You'd have to exclude your own salary though.
If you got a management job in a company with 10 people earning 10k, you could get 100k.
But then the company would have 11 people and the average would be £18,181 so the next year you'd maybe get £181,818.
Then..... ad infinitum.
Although there's nothing to say you would get a pay rise, but there's potential there.
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We figured pop stars/ artists would be excluded as they are paid whatever someone is prepared to pay for their work. Footballers, however, are on a salary so would be included.
So Cashley would very suddenly be at the mercy of Ferral?
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The problem in the corporate sector, where as you say the people on the big salaries are not the start up investors, is differential.
Mangers are and almost always will be paid more than the staff that they manage, salary being a consequence of the responsibilities of management and to denote 'superiority'.
Would you want to take on more work, more stress, greater responsibility without some extra reward? The simple answer is no you wouldn't.
So, in large structures with multiple lawers of management and complex structures you end up with the people at the top being remunerated more than the people below them and so on; now if in this mix from the char lady to the ceo you have sales people, traders, designers and so on who create value and realise profit then their salaries will reflect this as will their bonus. This means that you will have their managers package reflecting this and so the relationship will not be linear.
I'm not pretending that the current system is perfect, far from it; rather that the proposals mooted will probably make the poorest worse off, demotivate those in the middle and make no difference at all to the people at the top.
In short, a lovely lefty ideal which looks great on paper but doesn't stand up to the first breath of the harsh wind of reality.
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The suggestion was that the maximum pay in a company (or sector I suppose) shouldn't be higher than 10x the average wage in that company.
You'd have to exclude your own salary though.
If you got a management job in a company with 10 people earning 10k, you could get 100k.
But then the company would have 11 people and the average would be £18,181 so the next year you'd maybe get £181,818.
Then..... ad infinitum.
Although there's nothing to say you would get a pay rise, but there's potential there.
I think that they're suggesting that the average should be modal rather than mean. Havign said that I would imagine that in a medium size FTSE250 company the modal average would be around £20k so even with the x10 'cap' you're probably not a great deal out of step with the current salaries of FTSE CEO (although their overall package may be much higher)
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If it wasn't the total income from the business (salary, bonus, dividend, BIK) that was taken into account then the system wouldn't work anyway. The people at the top would just take a poxy salary and the rest in dividends, Bentleys or bottles of Cristal. Sounds like a completely unworkable plan to me anyway.
I'm neither either in favour, nor against this scheme, but some of the arguments against don't make sense.
This doesn't make sense either. It's a cap on top wages, not a method of reducing bottom wages. If a director capped his wage at, say, £150k, recalculated the average wage of everyone else at £15k to save costs, all his workers would resign and work elsewhere. The company still has to operate in the jobs market. A company is already at liberty to reduce wages if it wants to, a cap on the top wage will not affect this.
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I don't understand your point Ru. Mine is just that it would be very easy to find loopholes by which to abuse the system. I'm in favour of the broad principle behind the idea I just can't see how it could work.
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With all due respect Tom, I don't think you've really engaged at all with my argument - which is not about any specific proposal but a broader one about trends in wage differentials in recent years (and not, please note, about the very existence of wage differentials. Of course they always will - and should - exist). For me, the question remains; is this widening gap a true and fair reflection of varying contributions? My answer would be no - it is far more a reflection of highly skewed access to economic power within the Anglo-Saxon system of corporate governance. It is simply not enough to say top management pay reflects a competitive labour market (the standard defence); all markets are imperfect, this one probably more than most.
I think you arguments are defeatist, drawing on some scary bogeyman of unbridled socialism. This isn't about how things COULD be different in some lovely ideal world. Things actually ARE different in some highly effective capitalist societies.
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Mark Thomas: The Manifesto (Series 2 episode 1) (http://www.bbc.co.uk/programmes/b00qcn23) (~9hrs left to listen again).
Interesting idea, you'd need to see the distribution of pay in order to judge which measure of average (mean, mode or median) is most appropriate and this will likely vary based on the size of the company.
Would certainly help curtail fat cat bank managers etc. who's pay is grossly disproportionate to their responsibility as they do pretty much fuck all as far as I can tell.
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I don't understand your point Ru. Mine is just that it would be very easy to find loopholes by which to abuse the system. I'm in favour of the broad principle behind the idea I just can't see how it could work.
Ok, speaking broadly, there will undoubtedly be some loopholes which it may or may not be possible to iron out. I don't see that as a major problem. My point in general is that it would be possible to separate wages (which would be affected by a cap) from income from dividends or capital gains. Hence the risk associated with capital investment is still rewarded. I don't see this as an abuse of the system. Sloper's point in response, and I took yours to be the same, was that this left for the possibility for a shareholder-director to say "I'm taking a paycut so everyone's taking a pay cut" whilst keeping his own income high through increased dividends (for example). I don't think this argument works as his workers would just leave and go elsewhere. That was my only point.
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Average Goldman Sachs salary is roughly £500,000 which would mean the guys at the top would be on 5 million...............clearly ridiculous
Average civil engineer 35-40k. meaning people at top on 350-400k. This definitely isn't the case!!
Using 10x the average salary is not going to be realistic for many organisations in my opinion. The only way you could constrain top end salaries would be to look at companies on a case by case basis. Who would do this?! Where would all the excess money go?!
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I thought the Goldman average took into account the top wages? Obviously you can't factor in the top wage when calculating the average or it defeats the point.
I think the idea of some sort of cap is a worthy one. The current system seems to be that those at the bottom get paid as little as possible and those at the top take as much as possible, which is inequitable. Whether the cap is worked out as 10x average or not is detail that would need much thought.
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Apologies, yes you are right it must factor in the higher salaries. But I thought this was how the average is calculated, from the salaries of every individual in the company. Otherwise where do you draw the line? Senior management? Directors? The board?
As you said though you would have to look at the details more thoroughly for a law to be put in place.
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I completely understand people's anger re the obscene salaries of CEOs of big businesses, but on its own that's a separate argument. What I don't agree with is the broader philosophical argument about rewarding entrepreneurship. Forget the detail about 10x / mean / mode, etc - what this is basically saying is that someone who creates a business has some sort of enforced cap on how much he will ever get out of it. Personally, I don't agree with that principle.
Perhaps it's because I'm in the middle of doing exactly that I find the idea so depressing...
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A cap on wages needn't affect reward from entrepreneurship.
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Ah yes, I forgot about my hair gently turning grey...
(Wage is irrelevant in my own case - it's the dividend that matters to me...)
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precisely. wages does not equal dividends
And there's no need to exclude the top earners when calculating the average; just use the median and not the mean. Median salary at Goldman Sachs (US) is $100,000.
Like Rupert I think there's a strong argument to be made for some sort of cap to be made. I don't know where exactly it should be placed.
Another argument in favour that no-one has made is that the existence of very high salaries has a strong distorting effect on society because it pools all the bright talent into one area that may or may not be the most beneficial for society as a whole. Think how many bright quants from the city might have chosen to be teachers or something useful, rather than fucking up the financial system over the last ten years...
About the only argument I can see against is one that salaries need to remain competitive internationally, or the best and brightest will go elsewhere. I've no idea if that still leaves room for a meaningful cap on the highest earners, but I'll bet it does
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But if you merely cap wages then all you'll create is a load of devious and convoluted loopholes...
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There are already a load of devious and convoluted loopholes so people take home more cash.
You can have
a) No cap, and devious and convoluted loopholes
b) A cap, and devious, convoluted loopholes.
Which do you think will do more for pay equality?
Your argument is akin to suggesting that we're bound to get sporting cheats, so why have rules...
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The other way of doing it would be to use the system we already have more effectively. Increase taxes on the very rich and increase tax breaks for lower earners. This would redistribute the money and mean that it would become pointless paying salaries above a certain level as you'd be giving 60, 70 or 80 percent of it to HMRC. People who earned under a certain level would pay nothing thereby increasing the worth of their salary.
It'd never catch on.......
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Not a bad idea. I can see one problem with it up front.
There's still an incentive to pay very high salaries because the return on them is not zero, and there is significant caché to being paid a lot. High taxes won't change this.
I wonder which would be more workable in practice. A cap is simpler to legislate and involves a lower administrative burden. Would a tax system be any harder to fiddle?
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I have been arguing for total drugs freedom in the Tour de France for the last 10 years...
No, I agree with that. But it strikes me that a plain salary cap will fail totally to reduce the effective income of any of the people any of us might want to earn a bit less in relation to anyone else, which is what the idea was in the first place.
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The word average should be expunged from the OED, it would certainly resolve a lot of confusion...
The are three "averages"....
(Arithmetic) Mean : Sum the individual values and divide the total by the number of data points.
Mode : The most frequently occuring value.
Median : the mid-point between the two extremes of the observed values.
For data that follows a Gaussian/normal distribution (bell-shaped curve) these are pretty much identical. When the distribution is skewed e.g. by a few highly paid earners in the context of the current discussion then these three measures start to differ and your choice of which you are calling "average" can mask the underlying data (besides which you should never consider these metrics in isolation without taking account of the variation that is observed in your data).
Can't be arsed linking to the articles on WIki
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Not a bad idea. I can see one problem with it up front.
There's still an incentive to pay very high salaries because the return on them is not zero, and there is significant caché to being paid a lot. High taxes won't change this.
I agree but if you crank the top rate up high enough then it should be enough to wipe out the majority of the incentive.
I wonder which would be more workable in practice. A cap is simpler to legislate and involves a lower administrative burden. Would a tax system be any harder to fiddle?
The tax system is constantly adjusted to try to close loopholes and prevent fiddling. Of course, lots of loopholes still exist and new ones are being worked on all the time but I think that a new system will be much more susceptible to fraud than one which is already established.
I disagree that there would be a lower administrative burden incurred by imposing a cap. There'd be a whole new department set up to administrate it and it would require totally new legislation to be made with no precedent to work from. Changes to the tax system are made all the time. This would just be more minor tinkering in comparison.
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I disagree that there would be a lower administrative burden incurred by imposing a cap. There'd be a whole new department set up to administrate it and it would require totally new legislation to be made with no precedent to work from. Changes to the tax system are made all the time. This would just be more minor tinkering in comparison.
Ist that cause Payroll departments are fucking useless cnuts who can't do their jobs properly already?
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That may be true but it's a separate issue. I'm just saying that it'd be much easier to mess about with the tax system than bring in a totally new system.
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I don't really see it as a realistic system - more's the pity. But think as an idea it's very interesting. Often the top earners (for want of a better phrase) in an organisation justify their icreasing wages due to performance. In this case the entire workforce would need to be rewarded to enable the top earners to increase their earnings. I like the idea - but don't think it could ever work. However I don't think that an increasing differential is a healthy way to go - and something along these lines would at least not be an excuse to raise more and more tax.
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I'm getting far too into this and I don't even think it's a particularly good idea (I know of lots of flaws in the argument already) but I'll have to answer that one:
What I've suggested wouldn't raise any more tax. The increase in personal allowance for those on lower incomes would be calculated to cost a similar amount to the projected extra income from the high earners. That's the whole point of the exercise.
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Equal pay for all, high earners get taxed to fuck so that their take-home is the same as the lowest earners :P
(http://www.orwelltoday.com/afdvd1.jpg)
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Funnily enough that absolutely sums up the Labour government.
The problem we have is one of an increasingly unequal society where the people at the bottom are actually on many measures, life expectancy, level of education and so on falling back when everyone else is pushing on to varying degrees.
Throwing £9bn at the problem as Labour has done has not dealt with the problem, indeed the levels of deprivation have increased in terms of depth, spread and number and of course inequality and social cohesion in some parts of the UK have been substantially degraded.
Dealing with what traps these people in the underclass and imposing solutions on them to remedy their problems should be the focus; not some hand wringing nonsense that will not work and fails to address the real issue.
The earnings of the top .1% are socially irrelevant.
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Equal pay for all, high earners get taxed to fuck so that their take-home is the same as the lowest earners :P
I didn't say any of that you twat! :spank: :P
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The earnings of the top .1% are socially irrelevant.
I've never read such utter nonsense from you sloper, and that's saying something. Just to pull one social consequence of the top of my head, why are house prices so expensive in central london? I'll give you a clue, it rhymes with wankers.
If you accept that inequality is a social problem, then it is a problem at both extremes. There is no logical alternative.
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Prices in central London are so high largely because the banks unleashed an avalanche of cheap credit, liar loans to buy to let landlords, an undersupply of property, ineffective local planning laws and so on.
The wages and bonuses in the city are statistically insignificant when taken against the above.
If your point was in any way valid, the prices of houses in Frogatt and Curbar would be broadly similar with the prices in central London.
Which of these two facts is more relavent to social cohesion and the broader society?
100,000 city types earning >£1m pa or 1,000,000 people living in real poverty, with high levels of illiteracy, criminality, child abuse and domestic violence, physical and mental ill health etc etc etc.
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Sloper, I love you man but you have a tendency to disengage your critical faculties when your biasses get in the way.
If cheap credit and liar loans are responsible for inflated london house prices, why are london house prices so much higher than the rest of the country, where cheap credit and liar loans were just as available. What does the rest of the country lack that central london has again? Oh yes - The City.
Since The City attracts the highest paid individuals in the country, they can afford to pay grossly inflated prices for all their goods and services, including houses. If you think that doesn't raise prices for the rest of us it's back to economics 101 for you.
Your 'two facts' question illustrates that you're letting your personal beliefs cloud your interpretation of the real world data. Spend some time reading Andy's links - there is clear evidence that income inequality leads to social problems, regardless of the average level of income. Because your port-addled mind believes that all problems are caused by the proles, you fail to see it's because the proles have so much less than the rich, that they start causing all the problems...
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i think threads like these start off well meaning and quite interesting, then descend into utter drivel with people arguing while actually thinking they're the only ones with any sense and if the other person doesn't agree they're wrong and an idiot. now we're talking about house prices? whats next, no house should cost 10% more than the average? :shrug:
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To say we're three pages in I reckon the thread is still remarkably on topic in comparison to the norm!
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I'd take offence at the utter drivel remark as well. The last few points have just been to take issue with sloper's statement that the top salaries are socially irrelevant. They're not, simple as that.
House prices were just an example of the social influence the top earners have. Here's another one - they pay a lot of tax. Whether you think the top earners are a net plus or a net problem, I don't think it's tenable to say they're irrelevant, and that tackling inequality should only mean tackling poverty.
It also seems irrefutable that wage inequality causes social problems. Mental illness, drug abuse, teenage births, obesity, the proportion of the population in prison, educational performance of school children, levels of trust and strength of community life, and social mobility are all worse in societies with greater wage inequality.
What should we do about that? Do nothing and hope for the best? Higher taxes on the rich? A wage cap? Only focus on the poor?
None of those solutions are perfect, but at least reducing the amount of money the richest in society take home is more simply done than finding more money to give to the poor, or could be a way to find money for the poorest, as Jasper suggested (and hurriedly disowned).
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Equal pay for all, high earners get taxed to fuck so that their take-home is the same as the lowest earners :P
I didn't say any of that you twat! :spank: :P
I was just making a joke in general (thats why I didn't quote you ;))
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Which of these two facts is more relavent to social cohesion and the broader society?
100,000 city types earning >£1m pa or 1,000,000 people living in real poverty, with high levels of illiteracy, criminality, child abuse and domestic violence, physical and mental ill health etc etc etc.
Er, both of them? Is it not possible that those two facts are not utterly unconnected? Moreover, across a whole range of non-economic measures of standards of living everyone does worse in more unequal societies. Reducing inequality is good for all, including the rich.
Edit: Having just read Stu's post; what he said basically.
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I've not disowned the idea Stu I just know that it's not as simple as I've made out. All I disowned was the idea of equal pay for all (that slackers made a joke about).
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whats next, no house should cost 10% more than the average? :shrug:
Sounds good to me, I get first dibs on
(http://www.theage.com.au/ffximage/2005/11/03/chastworth_wideweb__430x279,0.jpg)
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I don't think anyone has actually suggested equal pay for all, have they? Unless slack-line's middle name is really Engels and he was being serious...
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No, they haven't and at the risk of repeating myself I'll shut up now! :)
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As for biases getting in the way of critical reasoning :whistle:
Of course social inequality is a problem, it damages social cohesion and is corrosive to both the people at the bottom and wider society.
My point is this, the most significant area of social inequality is between those trapped in absolute poverty and deprivation, the underclass, victims of bourgeois capitalism and neo con liberalism, untermenchen, proles or what ever you would call them and 'the workers' the people who earn say <£20k.
There is of course a serious problem with ossification of social class and economic opportunities and that too needs to be addressed.
The relavence of the .1% of top earners in the grand scheme of things is like a fat bloke jumping up and down on the rotation of the earth.
As for the point about the prices of property in London vs Property prices in other areas.
http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=OUTCODE (http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=OUTCODE)^2222&minPrice=1000000&radius=10.0
http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=OUTCODE (http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=OUTCODE)^2222&minPrice=1000000&radius=10.0
http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION (http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION)^787&insId=3&radius=10.0&displayPropertyType=&minBedrooms=&maxBedrooms=&minPrice=1000000&maxPrice=&retirement=&partBuyPartRent=&maxDaysSinceAdded=&_includeSSTC=on&x=18&y=12&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false
http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION (http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION)^813&insId=4&radius=10.0&displayPropertyType=&minBedrooms=&maxBedrooms=&minPrice=1000000&maxPrice=&retirement=&partBuyPartRent=&maxDaysSinceAdded=&_includeSSTC=on&x=67&y=21&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false
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Not quite the same as this (http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION^87490&insId=1&radius=10.0&displayPropertyType=&minBedrooms=&maxBedrooms=&minPrice=1000000&maxPrice=&retirement=&partBuyPartRent=&maxDaysSinceAdded=&_includeSSTC=on&x=111&y=20&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false) though is it?
Surely that's exactly the point. A 2 bed appartment for £3.3m intead of a massive country estate.
Prices in London ARE bonkers because of outrageous earnings in The City.
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don't take offence to quickly stu, its only an internet forum. plus i get confused when people start using big words and iggy popp paraphrases from books i don't know.
all i want to do in life is climb, and make love to a beautiful woman. its snowing today, but one out of two ain't bad
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You're climbing in the snow?
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one man just couldn't be stopped.
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Wages in the city are part of the picture, not the reason why.
Prices are bonkers because of (in declining order of importance)
1. a lack of supply
2. silly mortgages
3. the sale of council houses (see 1) and BTL
4. rampant inflation due to 2
5. higher wages generally
6. wages in the city
Wages in the city includes lawyers and people like that who are really socially useful. :whistle:
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and iggy popp paraphrases from books i don't know.
Yeah, I know, I know, sorry. But Sloper brings out the worst in me and sometimes I just can't help myself when it strays into areas where I know what the fuck I'm talking about.
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You're the Chair of Iggy Popp studdies 8)
Seriously though, which do you consider the bigger issue; dealing with inequalities that are real, i.e. those at the bottom or the inequalities between say a fat doctor and a hedge fund trader?
For me, as a one nation tory it will always be the former, but then again I'm not a green (one) eyed socialist authoritarian fool. (not that you are Andy, but many who propose the fuck the rich, tax them on a penal basis etc are just that)
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The relavence of the .1% of top earners in the grand scheme of things is like a fat bloke jumping up and down on the rotation of the earth.
No again. A quick bit of searching suggests that in 2003 the top 1% owned 23% of national wealth. In the US in 2007 the figure was nearer 35%.
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http://www.statistics.gov.uk/cci/nugget.asp?id=2 (http://www.statistics.gov.uk/cci/nugget.asp?id=2)
Of course they do, they're the bloody rich, it's like saying the morbidly obese own a disproportionate amount of skin.
What matters more than the rarified plutocrat is whether the people at the bottom are socially and economically engaged; this divisions is the cause of the real social ills, the crime the anti-social behaviour, the generational deprivation, not whether the chief exec of Brum City Council is on £210k or £140k, it's not whether a consultant surgeon gets £130k or £90k, whether Bob Diamond made £24m or 'only £12m'.
At the moment they real problems are largely being ignored because politically it's much better to point a sharp stick at the fat piggy bankers who won't vote Labour than to deal with the real social problems.
Arguing otherwise is like saying 4x4 cuase less damage than mtb's etc.
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I can see the rationale behind your point - that it's the inequality between the poorest and those earning 40-50K that drives social problems. I'm not convinced. I can see a common-sense argument for it, but I can see a common sense argument for the alternative as well. If the difference in living standards between the well-off and the underbelly causes social friction, surely the difference in living standards of the über-wealthy causes exponentially more? After all, it ticks me off on my comfortable salary. I can't imagine how it makes someone trying to raise a kid on 15K feel.
The fact that the top 1% have so much of the money is important. To a fair approximation 20% of the cash means they account for 20% of the economic activity and that shapes the economy that we all live in. And you ignored my point about the socially distorting effect that the economic elite have by their mere existence. Without spending a penny they affect society - how many brilliant young graduates will be able to resist earning millions in the City, and teach, or research, or heal instead?
As far as I can see there are arguments to be made that the über-rich are a blessing, and arguments that they are a curse. Which wins out? I'll be convinced by data, not hyperbole. Does anyone have any?
And, on the subject of data I thought you might like to see this graph, showing historical levels of income equality in the UK. Labour might not have made much impact on inequality, but your claim it has increased doesn't stand much scrutiny, and you might want to look at when the problem arose :whistle:
(http://slittlefair.staff.shef.ac.uk/images/inequality.jpg)
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oh, and dense -
I didn't mean real offence, obviously.
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Social and financial inequality has increased, I don't think that I've stated otherwise, the issue is on what measure and why.
Of course if the people at the very bottom, i.e. those dependent on benefits stay on benefits then the pay rise of the nurse, the person working in Tesco and so on will result in greater disparity. Also the people at the very bottom are economically inactive and therefore don't share in the benefit of economic growth.
The question is then where you draw your data from, comparing someone long term unemployed in Rotherham with a hedge fund trader in Westminster is meaningless, just as it's meaningless to compare the long term unemployed in Rotherham with a consultant surgeon living in Whirlow.
What's important is not tinkering with the incredibly tiny percentage of people at the top but dealing with the masses at the bottom. One of the reasons societies in Scandinavia are more equal is because they don't have the massive underclass that we've developed.
If we could bring the underclass back into social and economic integration then the damage caused would be substantially remedied.
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I think earlier in the thread you said that inequality had increased under labour. Or at least that was my Reading. It's a side issue but I thought it worth pointing out that that isn't necessarily so.
I think you're in danger of constructing a straw man with the rest of your argument. No-one is suggesting we ignore the underclass. Merely that it makes sense financially and practically to tackle inequality both ends. This has the added benefit of appealing to a sense of fairness that has developed as a result of seeing bankers escape relatively lightly ckmpared to the rest of the UK.
And as a side point I can't see how it is irrelevant to compare any salary with any other. Surely that is how inequality is measured?
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Social mobility has declined under Labour, that's different from income disparity.
I don't actually see income inequality per se as the problem the problem is the consequences of the inequality. If you have someone living in Whirlow on £80k and their neighbour is on £200k their relationship will not be damaged by the inequal financial position; to put it simply because they have enough.
If you have some one on the manor living on benefits with a very low quality of life and their neighbour works for the council on £16k this inequality and the way it impacts on quality of life will damage their relationship. Multiply this damage and you get a breakdown in social cohesion and all the ills that flow from that.
I actually differ in that I think that the under class have been ignored, by successive governments but the problem now is that we have this bash the banker nonsense to disguise the wasted years and billions that have failed to address the really fundamental and dangerous problems.
There's only so much legislative time and energy and wasting it on this would be like hunting with dogs mk II, really popular with the middle class lefties but utterly irrelevant, unenforceable and counter productive.
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You claim to be a One-nation Tory but consistently maintain that what happens at the top and the bottom of society are entirely unrelated. I would argue there's good reason to think the simultaneous existence of a large underclass and a top 1% who own nearly 25% of the nation's wealth is not some random coincidence but instead are intimately connected facts. The long-term unemployed in Rotherham and the City billionaire are products of the same system, culture, and political-economy that have (simplifying massively, but the gist is right) for more than a century favoured financial services and the Southeast over manufacturing and the provinces. Inequality is a property of the system or structure as a whole - you cannot isolate one bit from another. I agree that the underclass have been ignored by just about all but I agree with Stu, you cannot deal with this one 'problem' in isolation. As for consequences
I don't actually see income inequality per se as the problem the problem is the consequences of the inequality. If you have someone living in Whirlow on £80k and their neighbour is on £200k their relationship will not be damaged by the inequal financial position; to put it simply because they have enough.
You'd think so wouldn't you, but there seems to be a lot of evidence that high inequality has a negative impact on every level throughout society. We're back to systemic effects.
And, sorry but I don't get this, inequality isn't a problem, only its effects? There are some niceties there that elude me.
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I think the richness of the uber rich is far and away the greatest danger. Once people have more money than they can spend, money is simply power. My pretty ignorant understanding is that the 10,000 UK bankers paid >£1m this year will largely use that money to distort the world economy so that even more money goes to them in future. The Goldman Sachs induced spike in wheat price a couple of years ago that caused 100000000 to go hungry is just a foretaste of what this is leading to. The fact that Lansdowne Partners can afford to pay back Tony Blair so much for "lectures" and also be the main funder of the Torys shows how dangerous this is not just to a functional capitalism but also to democracy. In the UK we have a large part of the world finance system. Letting our system go to shit effects far more people than just those in this country.