Why Capping Salaries is a Bad Idea

posted by: Jean Gagnier on

Québec Solidaire, a socialist provincial Québec party, has recently proposed a maximum wage in Québec (in French). Françoise David, one of its co-spokespersons, finds that “there is no philosophical, moral or practical reason justifying someone earning in a day what others earn in one or two years”.

I find this proposal appalling, and certainly not desirable public policy. At the core of this matter is the role the state ought to play in society. It varies between two extremes: authoritarianism and libertarianism. Economically, between a planned economy, in which the government decides what every person does for a living, where they live, how much they get paid and so forth, and between a free economy, in which people can do whatever they want. Of course, a nuanced view is probably better, but I’ll argue it is very close to be libertarian. I’m all for a free market… but I think total freedom can impede upon my personal freedom. And that’s where I think government comes in. I want government to insure that I can create a construction firm without being threatened by the mafia. I want government to insure that the meds I purchase aren’t junk. I want government to allow me to thrive, not to impede my thriving.

A case study of totalitarianism vs. libertarianism could be the consumption of cigarettes. A totalitarian regime might think smoking is bad and thus enact a smoking ban altogether. The libertarian will claim that people should smoke whenever and wherever they want. What I think is right, and most would probably agree, is that smoking, while not contributing much to society, should be tolerated, and smokers allowed to indulge – just as long as it’s not in hospitals, public buildings, etc.

Back to economy. What I think we should strive for is collective enhancement – a society in which everyone is free to pursue whatever endeavour they desire, and where government insures that this is possible. I want to live in a wealthy, healthy society made up of people who can read and write. And it turns out that is is more readily offered by a slightly bound free economy that allows people to offer their labor, goods and services to anyone, at any price. If I can convince someone that by giving me $40,000 a year for my services, they will gain an extra $60,000, they have the right to refuse, but it benefits both of us, and they should hire me. If I purchase a car, I don’t want collusion between manufacturers, as it artificially restricts my selection. I don’t want the government to tell me which car to buy. I want the manufacturers to try their hardest to sell me the best car they have to offer at the lowest price possible. That’s what drives innovation.

This long ellipse being done with, let’s go back to Québec Solidaire’s proposal. What it does, in essence, is put a moral judgement on the top value of a labourer’s work. It means that if my services to a company will make them gain $10,000,000 a year, say, I should not have the right to request, say, half of that as my salary, even though I am worth it. I find that profoundly unfair and preposterous. Not only that, I also find it socially counterproductive. It means one of two things: either I offer my services elsewhere and Québec loses on my huge taxes while the company shuts down, or I accept the offer, and my employer is thrilled while I, the worker, get less than I deserve. It’s unfair, it hurts the economy, and I don’t know why a socialist government would propose a measure that makes us collectively poorer, and gives employers more leeway than employees. After all, this is a fair and mutually agreed upon contract, done between two private institutions. The Montréal Canadien spends around $60,000,000 on player salaries, and earns a whole lot more due to these expenses. Why is it thus unfair for the players to ask for these salaries, for their fair shair of the value they generate? Players get rich, the team gets rich, it is mutually beneficial.

The larger issue is this: I do not feel it is right to restrict people’s freedoms for the sake of a philosophical judgement. I don’t think the government should impose limits on what we can and cannot own – if I’m worth a certain amount, who is the government to tell me that I cannot ask for that much? Why regulate this? The accumulation of wealth is not morally wrong – if anything, it should be encouraged! Indeed, these measures aren’t just wrong, they are counter-productive: they impoverish us collectively, they drive people away from the province, and the ones that stay pay less taxes.

I think a much more lofty goal than capping income is insuring a minimal standard. If we, collectively, want to make sure that everyone has the possibility to enjoy a fulfilling life, we need to provide for them with health care and education. Good public transit. Tax incentives. And these are paid for in part with the very rich. By abolishing this class, you abolish a lot of tax income. If you want to redistribute money to the poor, you need to have money in the first place.

Let’s level up, not level down.