If one company did it they'd lose all their good managers. If all companies did it then all the engineering managers with IC experience would stay in IC roles, and the managers you'd end up with would be much much worse.
Probably more IC's that stick to what they're doing. The point of a manager receiving higher pay is that they (generally) have the same experience as most IC's, but can be a productivity multiplier thanks to people skills.
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Your machiavellian take holds water, in my opinion.
If managers were paid less than (or just as much as) their directs, what would change?
If one company did it they'd lose all their good managers. If all companies did it then all the engineering managers with IC experience would stay in IC roles, and the managers you'd end up with would be much much worse.
Probably more IC's that stick to what they're doing. The point of a manager receiving higher pay is that they (generally) have the same experience as most IC's, but can be a productivity multiplier thanks to people skills.