Any Effort To Reduce Inequality Would Make Us All Poorer? Nonsense.

CEO pay has gone up more than 14 fold from 1970 to now, and not because of their compensation equals their marginal output.

It's more because of rent-seeking.

The Pay of Corporate Executives and Financial Professionals as Evidence of Rents in Top 1 Percent Incomes | Economic Policy Institute

Furthermore, the claim that cutting CEO compensation (and thus rent-seeking) would make the world poorer, is nonsense. For instance Harvard ivory tower-dweller Greg Mankiw states:

http://scholar.harvard.edu/files/man..._percent_0.pdf

Then, one day, this egalitarian utopia is disturbed by an entrepreneur with an idea for a new product. Think of the entrepreneur as Steve Jobs as he develops the iPod, J.K. Rowling as she writes her Harry Potter books, or Steven Spielberg as he directs his blockbuster movies...

There's one fatal mistake in this theory. JK Rowling chose to stay in England despite their high taxes because she had a moral obligation to their welfare system.

So the going theory that reducing wealth inequality will make the world poorer because we'll have fewer Steve Jobs and JK Rowlings, is nonsense.

I've got another example to refute that, too: Linus Torvalds, the maker of GNU/Linux. If Steve Jobns and Bill Gates were to just up and quit because they couldn't become a multi billionaire then we'd have those resources going to Linux instead. Which is distributed for free. So much for marginal compensation.

Then there's the final problem of the theory of marginal compensation and its attempts to justify income inequality: if income inequality keeps rising indefinitely, then the 1% will find that nobody else can buy their products or services anymore. Then who will compensate them at all?