This thread has really got me thinking.

I was teaching English in Slovakia to some young professionals from the petroleum industry in 1992. We were talking about wages in their post-communist country.

A bus driver was making about 6,000 crowns a month. A petroleum geologist was making 10,000 crowns a month. This is a multiplier of about 1.7. In Canada at that time, the multiplier would have been about 3.

In Slovakia, a committee of some kind decided on that multiplier. In Canada, it was the free market.

We could argue for a long time on whether 1.7 or 3.0 is better, making good claims for both cases. But with the free market, people make their own decisions when pursuing and staying in a career or occupation. And as Adam Smith's invisible hand does its magic, it will come to a natural multiplier between two different occupations.

For Canadian occupations that pay $150,000 or less, I would say the free market does a reasonable job of compensating talent and effort and sacrifice and responsibility appropriately.

But above $150,000, things start becoming fuzzy. I'm not seeing the correlation any more. I believe the professional/business classes have created a culture that deems their occupations more valuable than what the free market wants to pay. In other words, they have tilted the field to their advantage.

Many people in high management positions will not forsake their career because they are not getting paid enough. They love being CEOs. If we offered them $250,000 a year instead of $750,000, they would not say: "Sorry, I'm going back to a line job for $50,000 and a lot less hassle. I really need that $750,000 to stay as CEO." No they would not say that. The CEOs of the 1950s and 1960s did not walk off the job with their much lower pay. Above $150,00, the free market has been distorted.

So to answer your question, I say: "Let the free market decide, with people and firms making their own decions." I just don't see how any committee can resolve the question "What is a worker worth?"

If a worker's cooperative decides for a much flatter pay hierachy, it should have the freedom to do so. But we should not be surprised it has trouble filling certain positions with competent people. And we should not be surprised (as you have suggested in a previous post) that some competent people will prefer to work in a worker cooperative environment with less pay. Workers and firms will make their own decisions; the invisible hand will eventually figure things out.

But no committee deeming salaries.