Did you read the entire article? The author says jealousy wasn't really a problem after all. The bigger problem were to keep motivation of the highest ranked people, and the mismatch between this system and the rest of the company. I found this very interesting case study.
I wonder if the ranking had anything to do with the lack of motivation. Joel system had managers sitting down with people and talking about their work and what level they deserved. So the employees basically knew what they were doing and what they needed to do to improve.
Whereas in this case the ranking was just related to the respect of your peers. Also, once you become extremely competent in something your skill becomes mostly unconscious. So basically these top employees were told that for reasons they did not fully understand, they deserved to be pay more than everyone else. So while the salary was simple, it probably came across as extremely subjective to those people.
I did read the article. Just because the author says 'jealousy' wasn't the main problem I will not think otherwise. My opinion is that it was. Only masked.
Is there some inconsistency in the article that leads you to believe that it is inaccurate, do you have some other source for information about what happened at NITI, or are you just deliberately ignoring any information that tends to contradict what you already happen to believe?
Humans are this way. We are a jealous and want-it-all-even-if-we-dont-deserve. It's not a problem of salaries or level, it's a human problem.
Said that, I say that Joel's method seems a better to me.