In Friday’s Guardian, Andrew Simms resurrects the idea of a maximum wage to “tackle inequality". The actual consequence: employers would no longer be able to attract the best workers by offering them higher salaries, so would instead offer them more perks and less hours. That is, the most productive workers (not just bankers, but doctors, business owners, and Guardian editors) would work less. Many others would move abroad.
All it would achieve is a fall in the level of economic activity, and a corresponding fall in tax revenue and trickle-down spending. This is the nonsense of equality by levelling down: dragging down the rich, out of sheer envy, to the detriment of everyone.
But his argument avoids this sort of practical concern for what the actual effects of the measure would be, relying instead on bashing ‘the market’. He complains that the market “interferes with life, the universe and everything else," and that after government saved the banks, “there must be a serious quid pro quo" from the market. This is nonsense: the market is the structure that allows the buying and selling of goods and services. It’s a system permitting voluntary exchange. It isn’t an agent - it doesn’t interfere with anything, and it can’t owe anything. Perhaps Simms means that the banking industry interferes in our lives, and owes society something: if so, he should say that, but it will not sustain the argument he tries to make.
Simms goes on to attack the “failed neoliberal economic model", blame inequality for “most social problems", and claim that “we know now all too well how destructive are the forces of seeking profit and pay maximization for their own sake." If he had a memory longer than a year or two, or a field of vision wider than the prosperous West, Simms would reach very different conclusions. The neoliberal economic model of free market capitalism is not a failure, it is the most successful model in human history for improving standards of living and lifting people out of real poverty. It’s not inequality that’s responsible for most social problems, but tyranny, corruption and theft. And it’s been people seeking profit and pay who have driven the economic miracle that provides him with everything from the clothes on his back, to the keyboard on which he types this drivel.