Herman E. Daly: Steady-State Economics

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PLOWBOY: That's still unfair to poor parents.

DALY: But such unfairness stems from the fact that poor people are poor. The way to help them is to help them not be impoverished anymore! That's where my second suggested policy comes in: the idea of a minimum and maximum limit to wealth and income.

In effect, such a system would allow the market to freely distribute income . . . but only within limits. And in setting the boundaries, we'd have to avoid two opposite mistakes: the error of having completely unlimited inequality—poverty and extreme wealth somewhat like what we have now—and the injustice of imposing a flat kind of equality that would keep everyone at exactly the same level of income no matter what.

I think either extreme is dangerous. Instead, I suggest we set up a system with a limited range of inequality. After all, people who tackle jobs that are more difficult or unpleasant than other jobs deserve higher financial rewards and incentives for their work.

Actually, a guaranteed minimum income has a good deal of political support from conservatives and liberals alike . . . because it would allow us to ease away from many of our very detailed, meddlesome welfare programs and distributive devices. The concept of a maximum income, though, is different. People don't like to talk about that. In fact, the upper limit idea is most unpopular with the poor!

PLOWBOY: Why is the idea of a ceiling on riches controversial to anyone except the very wealthy?

DALY: Partly because almost everyone hopes that he or she will eventually strike it rich. More than that, though, people don't see the need for a ceiling. If you believe—even unconsciously—that there're no limits to the total amount of resources and money, then there's no need for an upper income limit. But if there are limits to the total wealth, and if you enforce a minimum income, you're also implicitly establishing the need for a maximum income.

PLOWBOY: And what range would you envision between the upper and lower income levels?

DALY: Plato said that, in his ideal republic, the richest citizen would be four times as wealthy as the poorest. However, I'd think that a factor of 10 would be more adequate to reward all the real differences in work and incentive.

PLOWBOY: What might be a minimum income today?

DALY: I don't know, say something on the order of seven or eight thousand dollars a year . . . with the maximum set at ten times that. All income beyond seventy or eighty thousand dollars a year would then get taxed away at 100%. Of course, most people would not continue earning extra money when they would have to pay it all to the government. So such men and women would ease off from what they were doing, devote their remaining time to leisure activities, and—in the process—open up job opportunities for others. In that way, a maximum Income would help equalize the opportunities for rewarding work and help distribute the wealth.

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