Saturday, February 07, 2009

Slippery Slope: Salary Caps

One of the reasons private schools have for generations resisted any government money was because there are always strings attached. Government strings almost always diminish the quality of the product. When private enterprises start feeding off the government tit there will be sour milk.

This week President Obama called for a cap on executive pay for financial institutions that received TARP money. Hard to argue since it would be near impossible to somehow separate the government dollar from the earned dollar. The average middle class citizen struggling to get by with a lousy 1% raise this year would be hard pressed to worry about a $500,000 cap on the CEO of the big bank in town.

This is another reason it's such a bad precedent to infuse the government into the private sector at every level. I suspect this is part of the slow and methodical plan of the socialists. But that's a subject for another day. Let's talk about the average person's aversion/envy of executive pay in the workplace.

I really get a kick out the sports guys who decry the CEO pay but fully understand the star jock's need to get the salary contract in relation to the talent they bring to field of play. The indignation over an executive getting a multi-million dollar salary is based on the premise that there is no such thing as executive talent. Tell that to Apple Computer shareholders or those of Dell or GE. Of course there is talent in the game of business.

If we start to believe as a society that the people who run and manage businesses don't "deserve" to be compensated very well because the janitor and the hourly laborer are so poorly paid we have entered a dangerous slippery slope. Not everyone can run a large corporate enterprise. Most everyone can clean a toilet.

What makes people mad is things like Golden Parachutes and huge bonuses paid to those who have run a business into the ground. This kind of indignation is understandable and justified. In a publicly traded business it is the job of the board of directors to stop this. Shareholders can voice their disapproval by selling their stock. When government is involved with this process the company is eventually going to have trouble attracting the talent they need to prosper again.

Funny that we don't hear the same breathless outrage over lawyers pay. So much of the value of our economy is going into the pockets of lawyers and law firms that produce almost nothing. I say almost because obviously there is value in the legal advice and protection. But some these guys are getting $1000 an hour. Is that fair? What about the janitor that empties their trash cans? Surely he is worth $500 an hour.

Then there's actors who love to hate businessmen while taking millions of dollars per movie - even for the bombs. Should we limit their salaries too? You say - but they're not taking government money. I beg to differ. Cities and towns all over this country bend over backwards to get movies and TV series filmed in their locales.

I'm just saying we don't want the government dictating what we private citizens can earn. Frankly as long as we pay "our fair share" of the taxes the rest is none of Obama's business.



CW

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