The Trouble with Billionaires by Linda Mcquaig & Neil Brooks

Author:Linda Mcquaig & Neil Brooks [McQuaig, Linda]
Language: eng
Format: epub
Tags: inequality, billionaire, tax, austerity, poverty, rich, power, welfare, wealth, democracy
Publisher: Oneworld Publications
Published: 2013-04-02T16:00:00+00:00

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None of this is meant to imply that financial incentives don’t matter. They clearly do – particularly at the lower levels, where workers need powerful inducements to get them to perform work that is often dreary, repetitive, unpleasant and unrewarding. Financial incentives also matter at the upper levels. While the deep psychological satisfactions of work may matter most, money does act as a proxy for these rewards. Earning an income reinforces an individual’s sense of personal competency and self-esteem. Earning a large income greatly reinforces an individual’s sense of personal competency and self-esteem, leaving him with very pleasantly favourable attitudes toward himself.

Financial incentives can act as powerful motivators that encourage effort, diligence, creativity, and just plain hard work in people at all levels. The question is: how much is enough to provide the crucial level of motivation? If even some billionaires are willing to acknowledge that they would have worked just as hard for less, it’s worth considering whether society could pay them less – or tax back significantly more of what they receive – without diminishing their incentive to work.

And here another important psychological factor comes into play: what seems to matter most to people, once they get above the breadline, isn’t how big their compensation is, but how it compares to the compensation of others. Karl Marx observed this human characteristic when he pointed out, ‘A house may be large or small; as long as the surrounding houses are equally small, it satisfies all social demands for a dwelling. But if a palace rises beside the little house, the little ‌house shrinks into a hut.’6 Robert Frank made a similar observation: ‘The middle-class professional who lives in Manhattan is unlikely to be burdened by dissatisfaction that her apartment has no room for a Ping-Pong table or wine cellar, and she almost certainly entertains no expectation of having a swimming pool. Yet that same woman living in a Westchester county suburb might not even consider a house that lacked these amenities.’ In other words, it’s not the absolute size of the material reward that matters, but how that reward stacks up against the material rewards of others – where it puts the individual in the pecking order. As Frank says: ‘Evidence from the large scientific literature on the determinants of subjective well-being consistently suggests that we have ‌strong concerns about relative position.’7

As early as the fourth century BCE, Aristotle noted that humans are, above all, social animals who naturally seek to relate to and engage with other humans. They feel the need to be part of a larger human community in which they enjoy the acceptance and good opinion of others. Receiving pay for work is a key way that people in our society can establish their place in the community, by proving their competency and worthiness.

So what matters most about a pay package is not its absolute size but how it measures up against others. This perhaps explains why, in the early postwar years, business executives,

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