Posted on 02/05/2009 6:35:52 AM PST by shortstop
It’s ironic that on the same day the president set a $500,000 cap on executive pay, his campaign manager signed a book contract for more than $1 million.
Actually, it’s more than ironic.
It’s hypocritical.
When a president who – in 2007, the last year he was truly employed – made $4.2 million in a year, says that others are greedy for getting more than $500,000, it’s a pretty good example of “do as I say, not as I do.”
Barack Obama’s pick for secretary of Health and Human Services – Tom Daschle – had to step down because he had unpaid tax on free car service that totaled $128,000. If that was the tax on it, how much was it worth? When you have an unpaid tax bill – for your limousine and chauffer – that’s three times the national median income, you’re not really one of the “common people,” are you?
And it is odd that an administration of millionaires is attacking people for being millionaires.
More importantly, it is stunning that in the United States – a supposed land of liberty, checks and balances, and a free economy – the president can, by simple declaration, set a maximum wage.
It’s a Marxist’s dream come true.
The background, of course, is that the president has been very indignant about what he calls the excesses of corporate executives. They travel in private jets – like he has for the last two years – and they make more than a million dollars a year – like he does – and they get bonuses for their jobs – like his wife did at her last job.
And they’re wrong.
The worst part, he says, is that the executives of banks and companies taking money from the government are sometimes getting bonuses. To stop that, he has put a cap on their compensation. Unless it’s some stock option or deferred payment that’s put off until every dime of government money is paid back, no big boss at any of those companies can make more than $500,000 a year.
Which makes a lot of people happy.
But it shouldn’t.
Because of its practical impact, and its theoretical implications.
Let’s take the last part first.
Karl Marx taught that those who make little should envy those who make much. Much of current American politics is based on that principle, that we should hate the rich – which is anybody who has more than we do – and we should believe that they have what they have because they stole it from us.
That’s why CEOs are the current villains of American society. Instead of being admired or congratulated on their success, they are vilified and held up as boogie men, the scapegoats of our economic angst.
So the president caps their salary.
No executive order, no resolution from Congress, no bill passed and signed into law – nothing whatsoever that can be challenged by due process – just the word of the president. “Thus saith the Lord” had been trumpeted across the land and the cap is set.
Which sets a precedent that any wage can be capped. The free market has been decapitated.
And everybody is glad.
Because it is immoral for anyone to make that much money in times like these.
Which ought to be big news to the NBA and the NFL, and to all the Hollywood blowhards who bankrolled this president’s campaign.
In America, wages are supposed to be determined by what the market will bear. Typically, those who administer multi-billion-dollar companies are paid handsomely. Not many people know how to do it, and it takes years to develop the ability.
Doctors make huge amounts of money, architects make huge amounts of money. Both those professions take years and years to acquire. Business owners whose companies are successful make a lot of money. Inventors of useful and marketable items make a lot of money.
But now American business has a wage ceiling. And the various bailouts – passed or planned – will spread into so many areas of the economy that this cap almost becomes nationwide. In one fell swoop, the president has capped the salaries – and consequently limited the impact – of a group of people who mostly didn’t vote for him.
That’s some nasty payback.
And it is going to have some nasty consequences. Right when American needs experienced business people and bankers to help it dig out of a potentially monumental mess, the president has decided to punish them. He has also created a situation that will push some of them to foreign companies. If American companies have a wage cap, and a foreign business or bank comes offering more, what is an executive going to do?
And why would a skilled banker or businessperson push to get to the top of their profession when it contained a wage cap? Most Washington lawyers make more than $500,000 a year, most former-politician lobbyists make more than $500,000 a year, so why would a very talented person want to stay in the corporate world?
And finally, given that the largest portion of New York's state income tax comes from Wall Street salaries, the attack on bonuses and the cap on wages kills a revenue stream for a state that is teetering on the far side of bankruptcy.
At the same time the president is pushing a $900 billion package of pork for his Democrat colleagues and constituents – a bonanza of liberal special-interest money that will feather Democrat nests for years into the future – he is feigning indignation at people who are making just about the average of his cabinet members’ pre-government salaries.
This isn’t change, it is demagoguery.
Last week he attacked Wall Street bonuses, though he clearly must know that those are merely commissions, a conventional part of compensation for lower-level brokerage employees. This week he attacked banker salaries, knowing that almost all CEOs who have asked for public money have already lowered or eliminated their salaries and ended all perks.,p>
It’s grandstanding.
And it’s a dangerous precedent.
Because the last major country to have a salary cap was the Soviet Union.
Ding-ding-ding! We have a winner.
I understand the outrage, but there is a better Free Market solution.
Fire the CEOs as a condition of a bailout.
Then hire competent new ones at market rates, whatever those might be.
_______________________________________
So, any student borrowing from the FEDS to pay tuition can expect that one day big-brother will dictate what must be studied?
Any American receiving Social Security can expect that one day big-brother will dictate where he must live?
“Some animals are more equal than others”
Animal Farm
See post #15 in which Bawney Fwank and Geithner have proposed extending the salary cap to all companies, including those who did not take your bailout money.
Your pay is next to be capped.
Can we just fire bad CEOs instead of repealing the Free Market in toto?
Yup.
Don’t be on the Feederal dole if you don’t want to give up some of your freedom.
So the corporations and their officers have NO culpability?
WRONG!!!!
You should be ^far less^ comfortable with Obama’s use of fascist economics.
Presumably, he can eliminate all stock dividends for “shareholders”, in the name of government directed recovery.
For crying out loud! Why is it that conservatives are so easily distracted by issues like this rather than focusing on the real target which is killing this socialist “stimulus” package.
This only applies to companies that took taxpayer money for a bailout. Bitch about the government regs that in part brought this about but the gov regs were not the only reason these companies got into trouble; the execs running things deserve a fair part of the blame as well. The companies that are not running with our money are free to pay their CEOs anything they want.
Whining about this puts conservatives in the position of supporting the use of tax dollars to obviously maintain the lifestyles and perks of company execs. The money is supposed to help save the companies not save the execs lifestyles of the rich and famous. Yes Virginia, if they took our money then they signed on to regulation; but they are treating it like a gift from Santa. If they are successful in bringing the company out of trouble and paying back the taxpayer then the boards and shareholders can lavish whatever salaries they want on them.
This is a side issue and almost a non-issue. I could almost believe that BO Plenty’s advisors pushed announcing this knowing that conservatives would impulsively react, blow it out of proportion and pull attention away from the issue of killing the stimulus package. Give it a rest and get focused on what really matters.
I didn’t say that.
Bubbles can be created from thin air, but this one wasn’t.
Companies and their executives are culpable, but they are #5 on my list. Government Agencies, Liberal impulses and lawyers set up the bulk of the infrastructure of the bubble.
I’ll repeat in the next post my full analysis.
Then we should take this opportunity to thank all of the welfare bum bank execs who ran screaming to Congress to beg to get on the dole. They foisted us into this.
The CEOs affected by this brought it on themselves when they agreed to take money from the government. But when they start decreeing it for businesses that don’t take the handouts, it’s going to hit the fan.
1) The Fed (Greenspan) loosened money supply tremendously after 9/11/2001. That was a good idea, since the “grease” of money was needed to keep the financial machinery moving in the money center of New York, a target of the attacks.
2) The Fed continued to dump money into the system well into 2003 (and up to 2005 IIRD), long after it was needed. The WSJ screamed from the rooftops about excess money supply.
3) Real Interest Rates (Cost of Money Interest less Inflation) were negative for several years. This was the Fed’s way of BEGGING people to take the money: “It’s better than free, we’re paying you to take our money!”. Many did.
4) That excess money had to go somewhere. Housing looked like a good bet. Many people put their excess money into housing.
5) Congress, in the person of Bawney Fwank, whose gay lover was a key Director at the appropriately named Fannnie, wanted looser morals / restriction around Fannie. He (and most other Congresscritters and Bush too) wanted everyone to own a home. Even people who couldn’t afford them. So they passed laws making sure Fannie could blow it out the back door.
6) Wall Street invented some really nifty financial vehicles that nobody really understood, but they allowed tremendous amounts of money to be bet on the future direction of housing prices. These financial vehicles appeared to be low risk; they had Fannies name associated with them. Everyone got rich hawking these things (CDOs, etc.)
7) Lots of people thought they could get rich quick by investing in alternative asset classes, including Hedge Funds. Hedgies agreed to take their money, and put the proceeds into those nifty new Financial Vehicles like CDOs, which had always gone up and not down. Everyone’s a winner!
8) ACORN assisted by one Barack Obama sued banks over “red lining,” which was defined as the effect of maintaining good lending practices. When you have conservative lending practices, you tend to lend to good earners who can pay you back. They tend to be in the suburbs. Those non-earners in the city tend not to get loans. This looks like racism, since the relative non-earners are people of color in the city. ACORN won a bunch of lawsuits by screaming “racism,” and banks quickly learned to loan anyone money, whether they could repay or not. The just quickly packaged up those loans and sold them to the Wall Street Hedgies so they wouldn’t be holding the bag when the sh*t hit the fan.
Eventually, housing prices stopped going up (the music stopped), and everyone looked for the economic exits (”where’s my chair?”) There were no chairs. Everyone was expecting the other guy to be holding the actual value, yet nobody had actual value. All that paper was predicated on a bunch of people who couldn’t really pay their mortgages because they were too poor to start with, or had placed their own bets (with big houses they couldn’t afford) that housing prices would rise forever.
Voila! Housing crisis.
they should never have gotten bailout money in the first place,Umm...I said that.
The Marxists enact laws that are ***guaranteed** to make the banking business fail.
Then to “solve” the crisis that they created, the Marxists essentially nationalize the banking business using the mantra of “capitalism failed”.
Have you read what is going on in the state of New York over apartment rents? The same thing!
The Marxists enact all sorts of zoning and environmental laws that make building apartments expensive and hard to build.
The rents rise as a result of an artificial ( government created) shortage.
The Marxists then enact price controls on rents. This makes it even **more** unprofitable to build or own any apartments whatsoever.
Apartments grow even harder to find for any renter. It is impossible for the owners of apartment buildings to make a profit or keep up repairs. Existing apartments are totally abandoned by their owners and allowed to collapse or catch fire.
Our government Marxists seeing that “capitalism failed” then take over the apartment building and apartment renting business, and everyone except the state approved elite get to live in Soviet-style cement block housing.
Sudetenland, please read “Atlas Shrugged” by Ayn Rand. The woman was a visionary, and completely right!
Right.
I think it is PR and grandstanding on the Pres. part
correction: to companies that take future bailout money. Those who already have it are exempted.
It' kind of funny, many of these banks were forced to make the unwise decisions that caused them to be in a position where they could be coerced into taking taxpayer money to survive and have gained control over private enterprise.
Now we can call it welfare and actually support the takeover because it's our money.
Got to give 'em credit, it was a brilliant plan to get the peoples support for fascism
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