pdog
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I have asserted that there is nothing “unfair” about progressive taxes under the idea that it is not hard work or education level that gets you an extraordinary salary, but simply a mechanism of the market. If your salary is not entirely a component of something that you do, then the theft argument has no teeth. If the only reason you have it is that you took it from the market, than there’s little against saying that the market can’t take some of it back.
I like to think of it like this. Big box stores mark up their goods above wholesale in order to provide a brick and mortal experience. Most people understand that they are going to pay a few bucks more than they would on amazon, but I think most people understand that the big box store isn’t ripping them off.
The same can be thought of progressive taxes. A tax could simply be looked at as a markup – something the market does to keep the lights on and everything in balance.
So if the going rate is determined by the market, then the market could make a pre-correction before it got into your bank account.
But what if these market anomalies weren’t just anomalies, but were actually caused by human irrationality and nothing more?
I’m currently reading a book called “Predictably Irrational”. In the first chapter, author Dan Ariely describes a problem in human logic and our need for baseline comparison. He presents 3 options from an online/print magazine:
1-online only: $59
2-print only: $129
3-online and print: $129
While this looks like a typo it’s not. The print only version is a “decoy”. The company does expect any body to buy it when they could have gotten “online” for free. But what it does is give the more expensive option an advantage as a person now see it is “better” than something else. Ariely ran many studies and groups that had only two options to choose from heavily favored the cheaper option and groups that had a decoy in the mix favored the more expensive option.
Bring this to ceo salaries. Like I said in 1980 the ceo/worker ratio in pay was about 40:1. Buy the 90s it was 130:1. However, this is where it gets interesting. When a 1993 regulation went into affect requiring executive pay to be published, the ratio skyrockeded to 360:1 as the CEOs now had a way to compare themselves against others. You could certainly use that to make the case of less regulation, but is it the regulation causing it or simply human irrationality? Should human irrationality go unchecked in our market?
https://en.wikipedia.org/wiki/Predictably_Irrational.
I like to think of it like this. Big box stores mark up their goods above wholesale in order to provide a brick and mortal experience. Most people understand that they are going to pay a few bucks more than they would on amazon, but I think most people understand that the big box store isn’t ripping them off.
The same can be thought of progressive taxes. A tax could simply be looked at as a markup – something the market does to keep the lights on and everything in balance.
So if the going rate is determined by the market, then the market could make a pre-correction before it got into your bank account.
But what if these market anomalies weren’t just anomalies, but were actually caused by human irrationality and nothing more?
I’m currently reading a book called “Predictably Irrational”. In the first chapter, author Dan Ariely describes a problem in human logic and our need for baseline comparison. He presents 3 options from an online/print magazine:
1-online only: $59
2-print only: $129
3-online and print: $129
While this looks like a typo it’s not. The print only version is a “decoy”. The company does expect any body to buy it when they could have gotten “online” for free. But what it does is give the more expensive option an advantage as a person now see it is “better” than something else. Ariely ran many studies and groups that had only two options to choose from heavily favored the cheaper option and groups that had a decoy in the mix favored the more expensive option.
Bring this to ceo salaries. Like I said in 1980 the ceo/worker ratio in pay was about 40:1. Buy the 90s it was 130:1. However, this is where it gets interesting. When a 1993 regulation went into affect requiring executive pay to be published, the ratio skyrockeded to 360:1 as the CEOs now had a way to compare themselves against others. You could certainly use that to make the case of less regulation, but is it the regulation causing it or simply human irrationality? Should human irrationality go unchecked in our market?
https://en.wikipedia.org/wiki/Predictably_Irrational.