Mar 12th 2011, 17:49:13
The "Wealth of Nations" is one of the greatest macro-economic books ever written!!! And indeed, there must be balance. The question is WHERE that balance is, and how to achieve it.
Also, that book was written long enough ago that the current "small world" and the ability to simply relocate, or out-source, was not yet quite as feasible.
There must be balance, but Unions (even if good), heavy regulations (even if good), and high taxation (even if needed) all add up to "somewhere else" being a better place to conduct business. While it gets some tax revenue, or raises in wages for the workers, at some point they shoot themselves in the foot as well, as there is no way to force that rich CEO from just moving operations.
People ALSO frequently mix up CEO and executive pay, with the corporation itself which may be making next to nothing on a net profit basis. We usually see revenue figures when people point out "the rich".
For ME, I think Unions are bad, as things stand today, unless they back off some and take corporate profit into account. If the Exec pay is an issue, buy up stock and force the issue by that means. Other shareholders SHOULD be doing the same.
The government could further encourage balance by ELIMINATING all corporate taxes entirely. That money will be taxed anyway when it leaves the company in the form of wages, dividends, etc. This will encourage companies to retain more earnings for growth, profitability, AND pay for workers higher than they could otherwise afford. Balance this with tax increases on PERSONAL income at high wage brackets, or even create additional brackets at the high end. The tax revenue is then covered by those same CEO's. Now, they have a choice, retain earning and grow the company faster, or continue to take a huge salary that is taxed MUCH higher. Eliminating any LONG term capital gains tax while increasing short term capital gains would further increase that balance.