I am not happy about this recent move by the Obama White House, but I also hardly blame them. Currently the federal government is considering placing salary caps on top bank execs for the banks that have taken federal money in the bailouts. On the one hand I agree that something needed to be done with the crazy pay that is driving the companies into this sort of crisis, but I am not a fan of the government taking this much control in business. I am not surprised this happened as this is just another step towards the Obama Socialist Republic of America. At the same time, if the government is going to try and help things out, and if in fact this is a temporary bailout, then a temporary pay cap is fair and in order.
When the car companies sued the federal government over forced regulations on vehicle emissions regulations after taking the tax payers money to stay afloat I wonder where these companies get the nerve to bite the hand that feeds them? You asked for the government to come in and save you, to fix your problems for you? Yes the feds are taking over your business, but you forfeited your right to operate your business freely when you took the money. Sorry, but I have very little sympathy in this case. Maybe, just maybe, the audacity of my hope is that companies won't ask for money in the future knowing that the government is simply going to come in and tell them how to run their business.
James some times you astound me with your claims to love freedom and then the intellectual/moral justification you give for taking freedoms away from everyone but you. Putting salary caps on executives is the absolute last thing that should be done. Not merely from a freedom stand point but from an economic stand point.
ReplyDeleteThe best description of this is from Neal Boortz which I will copy and past here. http://boortz.com/nealz_nuze/2009/02/is-it-possible-to-really-be-th.html
"IS IT POSSIBLE TO REALLY BE THIS MINDLESSLY STUPID?
Really, that's a serious question. Now I know that some people suffer tragedies related to mental disease and brain injuries .. but beyond physical disasters like these .. just how stupid can a human being be? I'm not talking "ignorant" here. I'm talking brain-dead stupid. I'm talking about Missouri Democrat Senator Claire McCaskill. McCaskill was, by the way, a national co-chair of Obama's presidential campaign.
McCaskill is riding the wealth-envy bandwagon right now. Last week she had some unkind things to say about executives on Wall Street. That's fine. There are certainly some Wall Street executives who have earned some unkind remarks. But McCaskill goes beyond merely pandering to the wealth envy crowd. She has a suggestion. She wants to put a limit on the executive compensation that can be paid by any company that is receiving bailout funds. That limit should be equal to Barack Obama's salary; $400,000 a year.
OK ... let's try to noodle this thing through a bit. Let's say that congress passes a law which caps executive compensation at $400,000 a year for any company receiving bailout funds. Now these companies are in trouble. There have shareholders and employees who are looking to corporate leadership to save their jobs and their investments by turning their companies around and putting them on a path to profitability. The chief executives of these companies are going to have to be experienced and knowledgeable innovators. They will be making decisions that are difficult to the extreme. People with these executive skills are in high demand. There are headhunting firms out there who earn hundreds of thousands of dollars from just one company find just the right person with the right combination of experience and executive talent to lead. People with this talent don't go cheap ... and they certainly don't go for $400,000 a year.
So McCaskill gets her executive compensation limit ... and what happens? Qualified executives run like hell for the companies that aren't receiving bailout money. Why go through the anguish of working under close government control and interference while trying to turn around a company in dire trouble for $400,000 a year, when you can take a job with a company that it doing just fine outside of all of this government interference for three times that much?
McCaskill's brilliant idea is to tell the companies receiving bailout money that they won't be allowed to hire the best executive talent out there. And this woman is a U.S. Senator. God help us all."
I see some flaws in this method of logic M. Galt. First of all this statement is based simply on conjecture or what this writer "thinks" might happen. How many firms are going to want to hire an executive that just tanked a wall street firm or made poor business decisions at the same pay they were getting at AIG? Neal Boortz is assuming that other firms will be begging to pay these guys gobs of money to come ruin a company that isn't needing bailout money.
ReplyDeleteI consider that to be an incomplete and untested opinion, not a solid prediction. Most of what Neal Boortz is predicting outcomes based on a history that doesn't exist.
I don't feel that anyone deserves a bonus for failure. These executives have failed. If we as a people give our tax dollars to pay for someone's salary I want that salary to be based on good performance, not failure.
So what if these executive leave the firm because of low pay? They have a done a terrible job! They should have been fired so if they quit! Great! Less severance to pay!
For the record, I don't think the government should have given out that money to begin with. But if it is to be done, I think it is a lesser evil in capping their salary than it is to allow bonuses for the executives that have lead their company into the failure to begin with.
Clearly no one will pay an executive top dolor for being a failure, that's the job of the free market though and not the government. Do we suppose that these guys are just a bunch of buddies switching locations every year tanking one company after another just for the fun of it? We never hear the follow up story about what happens to these people because the media is more interested in perpetuating the idea that they all suck.
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