I’ve been involved in various informal discussions about the Occupy Wall Street movement and one point that I have heard raised on several occasions is that we need to have an economic system in which some people have far greater income and wealth than others. Folks often add that this also means that the government should not raise taxes on the wealthy. The gist of the reasoning seems to be that without the potential to make such money and acquire such wealth (and keep it), people will not have any motivation to work, create businesses, innovate, invent and so on.
As far as working goes, that is obviously not true. Most folks know that they have no chance of having CEO level income and wealth (or even above average income and wealth) and yet they work anyway. One excellent motivation is, of course, need. True, most folks would like to have such income and wealth, but that certainly is not their primary motivation to punch the clock. To ascribe that motivation to most folks would be to also ascribe to them a seemingly unrelenting self-deception or ignorance. In my own case, I know that I will never have vast wealth or income as a professor and yet I still continue to work. If it became a law that no one could have a personal income greater than $1 million per year (and no, I am not suggesting this), I’d still go to work. The odds are you would too. For the tiny percentage of folks who have a realistic shot at the CEO level of wealth and income, it could be reasonable to attribute to them this sort of motivation. But, they would certainly still work even if they knew that doing so would merely ensure that they could buy food and stuff.
Of course, the really wealthy do not become wealthy by punching a clock. They get that way via other means (and not just inheritance). They might create a business, invent, innovate or market some rare talent (such as acting, athletic, or singing prowess). So, one might argue, while a limit on mega-wealth might not cause people to stop working, it would surely stop people from creating businesses, innovating and so on.
However, this does not seem to be the case. After all, people invent and innovate for reasons other than money. To use the example of Steve Jobs, the folks who knew him well always claim that he was not in it for the money and the same is often said about other innovators. This does make sense-after all, they set out to innovate and it happened to make them wealthy. There are also many other examples, such as Tim Berners-Lee, of people who innovate for reasons other than becoming wealthy. As a final example, consider all the folks who develop open source software-they are clearly not doing that to become wealthy. As such, people would still create things like technology and software even if they could not, for some reason, become super wealthy doing so.
As far as creating and performing go, people obviously do those things even when they do not expect a huge financial reward. Most writers and artists do what they do for the love of what they do (or maybe out of vanity), rather than for the hope of being super wealthy. Athletes who know they will never be a Michael Jordan or Tiger Woods get out there and give it all-knowing they will never be in a commercial selling underwear or Gatorade. In my own case, I know that there is not much money to be made in running and I know that even if there was, I certainly would not be making it (I’m “all-conference” good, not “Olympic good”). Yet, I run six days a week and race as hard as I can. I know that there are thousands of people doing the same.
Now, it might be objected that people will not do these things without getting something out of it. In reply, my obvious answer is that I agree. No rational being would do something if it knew that doing so resulted in no value whatsoever. However, what counts as value is not limited merely to money. As I have argued above, people are clearly motivated by factors other than money and even when it comes to money the main motivation seems to be to have enough for a good life, rather than merely accumulating vast wealth for its own sake.
Obviously there are people who regard accumulating vast wealth as an important goal. There is, on the face of it, nothing inherently wrong with that goal or achieving it. However, when this accumulation comes at the expense of others and causes great harm (such as how some folks profited while the world economy was brought to its metaphorical knees), then there is a problem. I am fine with competition and reward based on merit. To use an obvious analogy, I think that the person who wins the race fairly and on her merits should get the biggest trophy. However, if the person “wins” via foul means and in doing so hurts the other runners, then they should be punished rather than receiving the biggest trophy. I also know that people will still do their best even when there is no trophy at all.