(This picture is relevant to a lot of my post. It sums up my points fairly well.)A Government appointed pay Czar will be determining how much executives at companies that receive bailout money are paid. The government forced some of these banks to receive bailout money; thus, leading to the government controlling these industries. "The Obama administration says excessive executive compensation must be better managed to prevent the sort of risk-taking that jeopardizes the economy." "Treasury Secretary Timothy Geithner said on Wednesday the Obama administration wants Congress to pass new laws giving securities regulators power to force companies to let shareholders have more say in setting executive pay." This means President Obama also wants to control executive pay for "all" publicly traded companies. This is taking control of these businesses out of the hands of the businesses and putting the control in the hands of the masses. Who will be controlling the masses by stoking wealth envy? This is a new era for America with this level of government control over the economy. Ronald Reagan once said, "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" This level of government involvement in the economy will be with us for a long time even if the conservatives gain back control of the government. Unless people demand action.
The government is using wealth envy as a smoke screen and an excuse to gain more control over the economy and our lives. The government is pandering to the worse in human nature and using it for its own purposes-- gaining more control.
This will create a "brain drain" that will drive out talent in these businesses. This will lead to lead to poor management of businesses; thus helping to contribute to the poor performance and downfall of these businesses and creating a vacuum. The government will step in and fill the vacuum. Ultimately this will lead to more government control of the economy. This sounds like what I read in _Atlas Shrugged_.
Another point to illustrate that the government is gaining more control of America, and another indicator of where America is heading.
Good post. We all think that the pay levels of executives is ridiculous. Just like the pay professional athletes make. Who in their right mind would pay it? But, a person should be free to negotiate whatever kind of deal he can get, and get that deal in a binding contract. If the business thinks he is a worthy investment, well, it's the business's decision. It's possibe that the idea of putting more decision making power in the stockholders' hands is not too bad an idea in theory. But, when the chief stockholder is the federal government, who can run a damn thing right, and who's interests are often counter to normal investors, then it is scary.
ReplyDeleteRegardless, Adam Smith's Invisible Hand will always punish and reward as is deserved. Executives are already trying to get their company's out of Bailout money in an effort to avoid the inevitable mediocrity that government will force on them. Even here the Invisible Hand will work, as it finally did in the Socialist Workers' paradise of the Soviet Union.
FYI, lots of stuff happening around here right now, and through next weekend, so I expect posting to be light from the Robinson posters including myself for a while.
I apologize for the poorly spell-checked post above. Among my many errors I obviously meant to write "who can't run a damn thing right" not "can run a damn thing right"!
ReplyDeleteHopefully the brain drain will run from bailout companies to non bailout within the US and not abroad. At the point that CEO's and competent managers leave for other countries than this country will truly be a sinking ship.
ReplyDeleteI don't know if allowing shareholders the ability to determine CEO pay is a good thing. Maybe only if they own a very large portion of the business. I think most large shareholders do have a seat on most companies boards. What CEO would want to work for a company that would give the power of determining his pay to millions of people that might not be all that familiar with the business? The opposite of the invisible hand is the big foot print that government leaves behind when it gets involved in the economy. (I can't remember who coined that term.) It took a long time and a great lost of human life and a great amount human misery for the indivisible hand to finally work in Soviet Russia.
ReplyDeleteIf the government can get control of most of the economy, the whole economy will be run into the ground. With health care reform likely to happen, the government will now be controlling the Auto, Banking, health care industry and, though controlling CEO pay, most of the whole economy. These industries included most of the economy.
I finished reading the _Road Ahead..._ and most of the socialist plans have been mostly implemented through the Democratic party. What has happened to the Auto, Banking, and soon to be Health Care industry is exactly what was described in the book over 60 years ago--like reading today's news articles.
From what I understand from the articles I read and linked to above the government wants to control the CEO pay for non bailout companies too. All publicly traded companies. So if there were a brain drain it would be draining out of the country as a whole, I would think.
Socialist plans or politicians who want big government and all other people who's interest are tied to bigger government. Their plans have come to pass. I realize that the word socialist and communist and fascist turn people off. They hear the word and it flips a switch in their brain that tells them to tune out. Most people don't want to hear it. It makes them uncomfortable or they just think it is some crazy theory. But anyways, it is what it is not matter what name one chooses to ascribe to it.
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