More equal incomes = socialism = poverty for all?

There's a truth behind the idea in the title. But it's not so much the income distribution, but the incentives provided that make an efficient economy. And, taxes are not the only means to influence the income distribution, regulation can do its bit too.

Let's think of football. Clubs willingly pay very high salaries to star players. Does this enhance economic activity by providing a bigger incentive to work? Methinks, not. Rather, the high salaries for the stars draw resources away from salaries for the people needed to make the game run, and also resources away from other worthwhile activities, such as education or investment in renewable energy. It is even questionable whether the players themselves are truely better off.

Which tells me there should be room to adjust the incentives system here through regulation, ie outlaw football player salaries greater than the salary of say the Dutch prime minister. I choose that comparison for a reason, as for public entities and companies that are majority state owned there is precisely such a regulation in the Netherlands.

There are two ways to argue for such regulation, one is belittled as envy by some, and called a desire for social justice by others. The other is to say that far from there always being a trade-off between more equality and economic success, there are in fact situations, where a regulation can achieve both.

Unlike the tax the rich question, which lends itself to partisan arguments we all know too well, about how the party of the right wants to take from the poor to give to the rich, and the party of the left supposedly is out to destroy the economy, intelligent regulation to affect incentives to work, invest and protect the environment and other public goods, is not easily put into a simple yes/no paradigm.

I'll give a few examples of regulation. For employees whose main role is to provide leadership a government imposed ceiling seems to have few drawbacks to me. Their employers benefit, because they have to pay less, and they do not suffer from their employee being enticed to work for the competition through higher salaries. They therefore have to spend more on other things, and with a sufficiently high ceiling, a few hundred thousand Euros, employees will be motivated a plenty to work hard, both by the money, and by the status leaderships roles provide. Don't forget people who have plenty of money still compete to become US president, a role which provides little monetary benefit compared to their 100 million Euro plus fortune.

For entrepreneurs who put their own money at risk for a risky venture, I think the reward of outsized returns is an important motivating component; so here I'd be more careful about regulation that imposes reward ceilings.

For music and literature, I'd restrict copyright severely, and possibly on top of that impose other restrictions, for example, a maximum entrance fee for visiting a concert.