Guaranteed Income, Pay Limits – The New Drugs of Public Life?

There are clever ways to ruin a successful society

by George Handlery

We know that there are no truly local and thereby isolated developments. No criminal insanity that becomes the law of a foreign land will rest in the “Half-Baked Oddities Museum”. Be certain that what you filed as “how did those nuts come up with that?” will be presented to your community to save it and the world.

Bringing coal to Manchester is a deed that responds to a need that is already filled. Knowing that, we could avoid the critique of measures to which the title refers. It is unlikely that the readers, not being inmates of closed institutions, need arguments against the capping salaries to twelve times of the lowest paid by a firm. So, this piece does not intend to recruit support but warns, “You are next”. 

A word is needed about the unlikely venue of the imbecility. Switzerland is a success story where anything above 3% unemployment is a “crisis”. High-tech and luxury exports thrive. The currency is stable; credit costs are low without manipulation. All this regardless of major disadvantages. This is a small landlocked country inhabited by four nationalities, three of which are the people of state across the border. Add to this the climate and little arable land. This explains why, even in the 19th century, poverty was general and communities financed the emigration of their superfluous eaters.

With that said, one could conclude that we have a case of success – confirmed by a top rank in global competitiveness. Not so, at least not for the Left, the Greens, and armchair redeemers. This element is ideologically moved. It assumes that success by merit is impossible because any system to the right of Marx is built on exploitation. Therefore, without socialism, a just system is impossible. Success is explained away with an argument based upon the principle that “property is theft”. 

Before turning to the proposed suicide by self-disembowelment, an observation must be inserted. In open societies, individuals act upon what they think to be their best interest. A corollary is that the individual’s enlightened self-interest is cognizant of the goals of the community in whose context he acts. A flanking notion is that people are imperfect. This explains why the critique of persons and institutions is a basic right. If leaders could be infallible, then their critique would be irrational and illegitimate. The assumed imperfection of institutions and of laws explains why it is unreasonable to expect that all transgressions can be totally avoided.

Some of the blemishes alluded to and the seeming endlessness of economic success has produced disturbing fall-outs. Outstanding among these is the salary of some managers in world-class firms. The income of owner-executives is, generally not a problem outside the far-left that considers private ownership to be a crime.

In March, a plebiscite accepted an initiative launched by an entrepreneur. It reacted to excessive remunerations of executives. In an exceptional instance, one CEO got about $14 million. The corrective involves stockholders’ voting to set salaries. 

Encouraged by what it saw as a vote against the “bosses”, the Left-Greens presented a radical proposal. It will be up to a vote under Switzerland’s direct democracy, and is called “1:12”. If accepted, no salary could exceed a firm’s lowest multiplied by twelve. Problems are imbedded in what might be seen through leveling filters as just. Without further government interference, the law would not change much.

A difficulty is enforcement. Cleverly, constructed bonuses will be a safety valve. A way to raise executive incomes would be to exclude the low-paid. For instance, cleaning could be outsourced to a specialized firm. No remedy would come from another proposal that is now in the pipeline. That one wishes to raise the minimal wage to $4’400/mo. Making incomes independent of markets by giving primacy to politics will cause certain people to be unemployable. 

As with the white rabbits pulled out of the magician’s hat, there is a remedy in store for the resulting idleness. It is a proposition for a Guaranteed Basic Income. The measure allots an income to every resident regardless of the recipient’s economic activity. The result would be many Great Novels –or a lot of pick-up basketball.

Capped salaries, hinder firms to hire the best managers on the international market if their going rate exceeds the imposed limits. The diminution of managerial talent shrinks profitability, employment, and ultimately the income of the remaining employees. 

Lastly, the worse of the attempt to make the purpose of business something other than business. Regardless of how these proposal fare, their primary threat does not stem from their provisions. The embedded negative consequences are less in the regulations’ immediate effects than in their strategic outcome. 

Let us begin with what the initiators really mean when they say “1:12”. Recently, the local Social Democrats have abandoned the flag of moderation under which they like to sail. They have done so by amending the party’s platform. They are now committed to “overcome Capitalism”. This makes “1:12” similar to an arsonists’ suggestion to cut off the water supply of hydrants. Given the initiators’ strategic goal,”1:12” is not an end but a step towards a socialist model rejected elsewhere by those that have been exposed to it. 

Completing the above, “1:12” would bring an expansion of the state’s regulatory role. That, by the way, in an area in which its record has been, regardless of culture, nation or whatever, the poorest. In some ways, this failure suggests that implementing the measure is not devoid of logic. To overcome capitalism, it must be defeated in war or ruined economically.  The past of government management extends the hope that the demise of capitalism and its replacement with equally shared poverty is makeable. 

You can be assured that efforts to apply something like “1:12” and its likes will pop up where you peruse this. In contemplating that dry tsunami, one wonders why such attempts do not provoke more resistance. 

It would seem that, after living the good life for generations, malign growths arise. The minor successors of major fortunes tend to believe that their condition corresponds to a law of nature. Such delusions make concessions to exotic demands seem affordable to those that think that no harm can come to them. Anyhow, giving in quietly on the way to the golf course is easier than to argue with the possessed. The illusion prevails that, handing over a slice of salami will not shorten the stick measurably. The discovery of the finite nature of even the longest salami comes only when there is little salami left. That inevitable end at the end tells this: The mutilation that a community can bring upon itself supersedes the harm its declared enemies could inflict upon it.