Are We All Socialists Now?
When the Obama administration imposed limts on executive pay last year at companies the government had bailed out, many believed government's advertising -- just an attempt to protect the taxpayer from having to pay exorbitant salaries.
Little did we know (but should have known) that government was aiming to set a new standard for compensation across corporate America.
But now the truth emerges.
The government now wants to go well beyond companies it bailed out, but, in addition, wants to control what it deems is "risky behavior" in any business, regardless whether the taxpayer has a dog in the hunt.
Recent news of $1 billion paydays for a few hedge fund managers was just the populist boost the Administration needed to put Geithner in front of Congress demanding changes in corporate compensation and the not-so-implicit threat by Pay Czar Feinberg who restructured compensation practices at firms receiving exceptional federal assistance and set the amount paid to top executives at those companies. Feinberg in recent Congressional testimony said, "I think Wall Street and other companies would be well advised to follow the prescriptions I've laid out." And, he added, "true executive compensation reform" requires other steps, including far-reaching changes in how corporations are governed and how financial firms are regulated.
It is these "other steps," a euphemism for government control of corporate compensation, that is troubling. Indeed, the setting of compensation by government may be the poster child of socialistic practices.
For me, it is the shareholders, not the government, that has a vested interest in weighing in on executive compensation decisions. If I invest in a hedge fund and am willing to have my money leveraged and lost easily and quickly, that's my business. If, by chance, the hedge fund manager makes me rich, I don't care what he makes as long as it is in accordance with the deal we agreed upon -- one in which the government had no role because it had no investment.
Little did we know (but should have known) that government was aiming to set a new standard for compensation across corporate America.
But now the truth emerges.
The government now wants to go well beyond companies it bailed out, but, in addition, wants to control what it deems is "risky behavior" in any business, regardless whether the taxpayer has a dog in the hunt.
Recent news of $1 billion paydays for a few hedge fund managers was just the populist boost the Administration needed to put Geithner in front of Congress demanding changes in corporate compensation and the not-so-implicit threat by Pay Czar Feinberg who restructured compensation practices at firms receiving exceptional federal assistance and set the amount paid to top executives at those companies. Feinberg in recent Congressional testimony said, "I think Wall Street and other companies would be well advised to follow the prescriptions I've laid out." And, he added, "true executive compensation reform" requires other steps, including far-reaching changes in how corporations are governed and how financial firms are regulated.
It is these "other steps," a euphemism for government control of corporate compensation, that is troubling. Indeed, the setting of compensation by government may be the poster child of socialistic practices.
For me, it is the shareholders, not the government, that has a vested interest in weighing in on executive compensation decisions. If I invest in a hedge fund and am willing to have my money leveraged and lost easily and quickly, that's my business. If, by chance, the hedge fund manager makes me rich, I don't care what he makes as long as it is in accordance with the deal we agreed upon -- one in which the government had no role because it had no investment.
posted by Jim Karger at 3:47 PM
1 Comments:
Jim:
During my many years in politics, a post election phrase has been often heard. "What can we do to stop, prevent,delay or other similiar words." My response, "What did you do to help elect those who agreed with your views? Their response, "I voted."
To quote VP Biden, "BFD".
I then ask, "did you contribute to a candidate, did you get out and solicit votes, did you even put out a yard sign?" Well, no is the general response.
Then my next response, "Shut up! You have gotten what you deserve."
Those now screaming the loudest did little or nothing to help elect pro-business / pro-liberty candidates. And they still don't get it. They are looking for someone else to pull their butts out of the fire.
Ron
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