The social consequences of unfairness are huge. Once people feel they work in an unfair society they become cynical and lose motivation. I would argue a sense of fairness is the number one ingredient for a successful society.

Until ironically, the wealthy simply leave (because who wants to stay in an a dangerous unstable place, when you can afford to leave), and let place that they set on fire burn to the ground, click their tongues and say, "Who knew this would happen?"

To think of it another way, no one puts all bets on a single investment. You diversify. That's what spreading the wealth does. It diversifies opportunity.

One think to think about, in a lot of areas where only luxury condos are being built, there tend to be pretty limited numbers of condos being built. If you are a developer and you know you will only be allowed to build 50 units, you are going to build the most expensive units you can so you can maximize your gross profit even if the marginal profit rate isn't as good. If you were allowed to build 1000 units, you might choose to build affordable housing that has a better marginal profit since the larger number of units allows you to have a higher gross profit.

At the same time, if you own an lot full of RVs and mobile mobile homes in a rich suburb, you might end up running the numbers and deciding to throw all those people out, and put up some luxury condos, because you can make a lot more money per square foot.

There was a movie while ago where the rich people lived in space in beautiful habitats, had technology that could heal anybody while the rest had to labor on Earth under terrible conditions. Don't remember the name but maybe the move isn't that fictitious.

https://globalperipheries.wordpress.com/2011/06/30/the-favel...

But a version of this is present in America too. With areas without drinkable water, and areas w/o even a working sanitation system.

Elysium is the film.

Of course, he could just copy Petey Thiel and the rest of wretch and move to New Zealand.

https://www.theguardian.com/technology/2017/jan/29/silicon-v...

Since you're being downvoted without any responses, I'll try to add my take. To me, it's not that a manager is getting paid more. It's that he's getting paid 312x more when the average worker in America struggling to afford healthcare, an education for their kids, and probably has to take in two salaries just to make ends meet. That's when income inequality is a problem -- when it's so unequal that one side gets everything, and the other is left to a battle royale.

This assumption comes from evidence in our not-so-distant past. In the 1940s-60s, income was taxed at a much higher rate in the higher brackets (50-80%+ depending on the time); this served a similar function of the executive pay cap in your hypothetical. After the highest earners in a company reached the top brackets, it didn't make much sense for the company to further increase their pay (much of it would be lost to taxes so the ROI wasn't great).

So now you have all this leftover profit that, in 2018, would have went to CEO pay or bonuses. What is there to do with it? Invest in the company of course: give the best performing line-level employees raises, start internal training programs, kickstart moonshot R&D ideas, and so on.

(Unions also helped in ensuring that the rank and file got pay increases commensurate with management's raises)

Don't get me wrong, the highest earners were still very wealthy (and had plenty of yachts/summer homes/other symbols we associate with the 0.1%) and it was common to give them raises every year, but the higher marginal rates really did help in "forcing" profits downward.

"We took all the increased profits, so there's none left for you."

We're seeing increasing profits, increasing wages for high level management, and static wages for most employees.

The second isn't an intrinsic issue itself, but we don't have just the second, we have all three, and _that_ is the problem. If profits and wages were both stagnant, then we would be having a different problem, but that isn't the world we live in. We live in the world where profits are going up, and all of it is going to people other than the workers.

Yeah, it does. Money given to bosses and shareholders is money not available to pay workers.

To be clear, my issue is not that workers shouldn't be paid more, it is that justification for higher worker pay shouldn't be "my boss gets paid more than me."

Edit: I should be a bit more specific. I think in some stages of development, it has and still is succeeding very well (developing nations). In other areas like developed nations, there is a regression to inequality that is occurring that is figuratively and literally headed to destabilizing the world.