Payment for what

Tweet I'm not entirely convinced of the argument for imposing a national maximum wage. It's not an unattractive idea, and there is a certain symmetry about having both a minimum and a maximum; but I'm not sure what it would achieve or whether it's entirely practicable.

I'm more attracted by the idea of tying the maximum wage payable by any organisation to a multiple of the average wage in the same organisation, although there are still a number of problems with that approach as well. The difference, though, is that tying the maximum to the average creates a direct incentive to ensure that the average goes up - in short, the interests of the few at the top are related directly to the interests of the many lower down.

And that, in a sense, is what concerns me about the high level of wages paid to some individuals. It's not the amount as such, but the activities for which they are getting rewarded. Paying high rewards for actions which benefit society as a whole is one thing; paying high rewards for actions which maximise the short term benefit to the few at the direct expense of the long term benefit of the many is little short of rewarding a form of anti-social behaviour.

The problem with the culture of bonuses in our banks is that it has encouraged the 'wrong' type of activity and risk-taking. A small number of people have made fortunes as a result; but most of the rest of us have suffered from the destruction and collapse of the banking system. On balance, I'm more interested in ensuring that the rewards of the people at the top are tied into the long-term economic advantage of society as a whole, and that we have a suitably progressive tax regime on those rewards, than in setting artificial limits on them.