For me, this is an eerie and poignant moment in the economic crisis -- President Obama is about to demand that executive compensation on Wall Street be limited to $500,000 per person. No, I don't have any friends on Wall Street who would be affected. But this is another"Atlas Shrugged moment" of the kind that Steve Moore beautifully described in a Wall Street Journal article (only video available to all).
Wall Street may have had its collective head in the sand and it certainly reaped where it did not sow, but far worse than Wall Street's evils is for the government to dictate what can and cannot be paid in compensation.
Okay, the government already does that with the minimum wage, and the government obtained power over Wall Street because it "rescued" some of those companies. (In some cases, Henry Paulson forced them to submit, in a scene reminiscent of, oh, say, Henry VIII forcing Thomas More to cede power. Thomas More didn't, and he was murdered.)
Even liberals despise the term "dictator" but they are apparently happy when their government is a dictator.
It's funny -- I remember reading long ago a shocked reaction to John F. Kennedy's successful effort to "persuade" steel companies to hold down their prices. I was a liberal back then (and very young!) and I couldn't understand the negative reaction, as if this was some kind of precursor to greater government power. Of course, we have seen that greater government power, from Nixon's wage-and-price controls to today's unprecedented interventions.
Intervention is just a part of the scene now (even though, I just read, Nixon said in his autobiography that wage-and-price controls were a mistake). We learn, but we learn too late. And the learning today is at the kindergarten level.
Mark Brady - 2/16/2009
Agreed. But what's the long answer? :)
Jane S. Shaw - 2/15/2009
Mark: The short answer to the rephrased question is: the government shouldn't have bailed out the banks!
Mark Brady - 2/15/2009
"No individual was capable of predicting the financial crisis. But the bankers of the world of yesteryear were paid as if they were capable of predicting a financial crisis."
Go here to read Christopher Caldwell's interesting take on the topic.
Mark Brady - 2/8/2009
Let me rephrase my question. If it's neither wrong nor inefficient to insist that people cannot earn money on the side while drawing government unemployment benefits, why is it wrong and/or inefficient to insist that banks cannot pay individual employees more than $500,000 p.a. while those banks participate in the government bailout?
Jane S. Shaw - 2/7/2009
We're already living with a system of unemployment benefits -- I'm challenging the addition of more and more government involvement. Should we have unemployment benefits? A safety net, yes, but a limited one. The periodic expansion of unemployment benefits tends to extend a recession; many people don't get serious about looking for work until the benefits end. (Human nature.)
Mark Brady - 2/6/2009
"Mark, your point is a good one. But I would reject government controls every time, even with the bailout."
Jane, would you reject government controls with regard to the provision of government unemployment benefits? After all, these controls certainly deter people from participating in the market economy?
Jane S. Shaw - 2/6/2009
Mark, your point is a good one. But I would reject government controls every time, even with the bailout.
Something similar came up with higher education in the past couple of years. Colleges are accredited by what is, pure and simple, a cartel, the regional accrediting bodies. The Department of Education decided that colleges need assessments of learning outcomes and tried to get the accrediting agencies to insert such assessments into their rules.
I opposed that because the intrusion was not appropriate -- even though, conceivably, it could have been an improvementand even though the accreditors are the gatekeepers for federal funds for thousands (actually, probably millions) of students. But I still think that intervention is wrong. Maybe it's just a gut feeling, but more government involvement is always wrong.
Mark Brady - 2/4/2009
"Wall Street may have had its collective head in the sand and it certainly reaped where it did not sow, but far worse than Wall Street's evils is for the government to dictate what can and cannot be paid in compensation."
I'm not clear that's a valid comparison to make. What about comparing a government bailout together with a limit on executive compensation and a government bailout without such a limit?
The limits on executive compensation may conceivably deter some would-be beneficiaries from taking government largesse, and that is surely a beneficial consequence to be considered when evaluating Obama's proposal. Now we may agree that the proposal would cause more harm than good but that is an empirical question.
William Marina - 2/4/2009
Well, "Yes," Jane, except that the Wall St. "Folken" were the ones who jumped on the Gov't Bandwagon. Did they imagine they would not, in the long run, pay a price for these goodies?
Rand's <i.Atlas Shrugged</i> never holds together, even at the plot level. Galt never delivers on the "Engine" to "stop the World." We are left to believe that a guy who takes hundreds of pages to convince his girl friend that he is correct (as did Roark in a previous novel) somehow convinces many top-flight people to "drop out." But, that is no problem for the State! Do you imagine Obama will have any problem finding someone to replace the former Sen. from S. Dakota who dropped out for tax reasons, or any other bureaucrat, Wall St. mogul, or Corp. CEO ?
In the effort to really find that "Engine," decentralist innovators have about perfected a machine to create electricity that will kill the centralization/taxation that has characterized the electricity industry, creating items like Enron, since JP Morgan tried to monopolize that kind of energy over a century ago. Free Electricity was the dream of men like Tesla, who I suspect was Rand's model for Galt, just as Sullivan was for Roark. The result of Gov't centralization (Spengler's definition of Empire) has been the Nuke fiasco, the TVA & other dams, and the present "ash" from many such projects. This will even obviate the recent gains in solar panels which are also quite impressive. Even windmills on a small scale hold some promise, while the accidents of the huge wind turbines never make the Media.
Decentralized sustainable, appropriate technologies, not of the Al Gore centralized type, are now developing at a rate that will allow many of us no longer to "render unto Caesar, so much as to tell him "to shove it!"
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