My question is why? Why have a salary cap? Why would society need to stop people voluntarily trading?
If someone pays someone else an “eye popping salary” this is voluntary trade, why do we feel that we have to jump in and regulate a “maximium value” for this trade? There are two reasons for asking this question:
- It makes us realise that capping salaries just because they seem too big isn’t a “fair” thing to do.
- It might make us see where an actual market failure exists – which is turn might illustrate an issue we should look at regulating.