“This 40 X Rule would mean that a 25¢ package of gum will now cost $25!” some may object. No, the 40X Rule is merely a way to ensure that profits generated by a company are distributed equitably. Presumably, each employee in a given company contributes to the creation of that company’s profit. A given company or corporation makes a finite profit each year. Why should some individuals within that organization earn 400 or even 4,000 times more than other individuals in the same organization?
The 40 X Rule would be an incentive for private institutions to increase their efficiencies so that everyone in that organization can earn more. The 40 X Rule is, in essence, based on the supply-side economic theory that “a rising tide lifts all boats.”
The bald facts of the increasing disparity in wealth between the top 1% of the richest Americans and the rest of the “99%” demonstrate that, without restraints, the free market in fact does not function equitably. This is, of course, hardly a new revelation, and governmental intervention in how businesses function has a long history going back to the first calls for a 10-Hour Workday in the 1830s and 1840s. With the creation of the FDA, child-labor laws, minimum wage laws, and environmental protection regulations, the Federal government has often promoted the general welfare of the nation by imposing restrictions on the free market.
Thus, to label the 40 X Rule as socialist is incorrect. The 40 X Rule belongs to the progressive tradition in our nation and should be seen in the same part of the political spectrum as is the imposition of minimum wage or the 40-Hour Workweek.
To label the 40 X Rule as communist usurpation of private property is also incorrect. To tax the wealthy is a much balder, and ultimately inefficient, form of redistribution of wealth. The goal of the 40 X Rule is merely to alter the way that compensations function at corporations where certain individuals are earning 400 times or more what the lowest paid makes.
The fact that the 40 Hour Workweek took over 100 years to become Federal law does not bode well for how long it may take actually to have a 40 X Rule. Obviously, the potential for loopholes whereby companies could bypass a poorly constructed 40 X Rule makes the actual crafting of the language paramount to having this law result in a significantly more equitable distribution of salary.
A 40 X Rule, of course, does not address the issue of inherited wealth.