In many countries, a small fraction of people are awarded large sums of money. That is why some people claim that this approach is beneficial for the country, while others argue that governmental intervention is necessary to establish a clear line for high salaries. I believe that both views can be synthesized for a more nuanced approach.
High incomes drive innovation. Innovative and highly talented people can be more easily hired with the promise of enormous salaries for positions where their unique ideas can push beyond the boundaries to make the world a better place. Another reason might be that high salaries foster meritocracy. When people witness how generously competence is rewarded in society, many will become motivated to climb the ladder of competence faster, leading to a society filled with talented minds.
However, unchecked salaries disrupt social stability. When astronomical salaries are revealed by the media, people often react negatively, leading to strikes, demonstrations, and riots, which destabilize the social structure. There is also the issue of corruption. Where there is money, power emerges, which often has a corrupting effect on some people. One example of this is the intrusion of major American corporations in presidential elections, where they funnel a great amount of money into the media to manipulate public opinion in favor of a candidate who might serve their interests.
These discussions suggest that if we endorse the liberal view on high salaries, we may guarantee creativity and opportunities for competence to grow in society. The problem is that this view overlooks its consequences in relation to social cohesion and power struggles. Therefore, the aim should be to strike a balance between the two camps through transparency in pay and taxation on high incomes, so that we can benefit from a liberal market.
