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no cap- why care what's spent?

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Old 03-20-2010, 02:12 PM   #2
SirClintonPortis
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Re: no cap- why care what's spent?
I can think of two reasons.

1. The laborers are given a disincentive to put in the maximum amount of effort. According to the consumption-leisure model, when wages get REALLY HIGH, laborers will choose to work less and spend more time with leisure.

2. Risk of getting burned if the cap comes back
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