> If negotiation played no role, the practical outcome is that wages would stagnate as employers would engage in some version of a cartel, which would be worse for the people at the bottom of the bell curve as well.

You mean, the thing that repeatedly happens under the existing system, despite negotiation?

For example, https://www.cnet.com/news/google-adobe-apple-intel-settle-wa...

Exactly that thing. If you believe it wouldn't be a lot worse with no negotiation I'd like to hear your reasoning.

Negotiation is entirely irrelevant. Why should a 2-5x variance in individual compensation factor into whether or not companies form a cartel to suppress all salaries?

Because there needs to be a trickle to start the flood. All companies are incentivised to co-ordinate prices to some degree, it's the desire to fill a particular role quickly or poach a particular superstar that causes companies to break from whatever happens to be the"industry standard", and those variances become factors in future negotiations. If there was never any variance in individual pay there'd be no pressure to adjust salaries at all, barring collective action. Which has its own negative externalities.

Cartels are weak because every individual member and every non-member is motivated to break them. That particular one was broken by Facebook.