William Murchison / March 24, 2009

Big Brother Is Paying You

For President Pelosi and her cohorts, having swatted A.I.G. with that 90 percent bonus tax, it’s on to oversight of executive pay. At least according to the New York Times, which quotes “officials” as saying the White House is weighing a proposal to make companies “tie executive compensation more closely to corporate performance and to take other steps to ensure that competition was aligned with the financial interest of the company.”

The longer the economic whatever-it-is goes on, the deeper the government’s appreciation of its own spectacular wisdom. Why let the marketplace sets wages when Washington knows in such detail who is entitled to what?

To hammer home this obvious point, our leaders in Congress convene a kangaroo court, hale before said court the $1-a-year guy now running A.I.G., and beat him over the head (figuratively, so far), using the word “outrage” a few thousand times, amid appropriate facial gestures tried out, no doubt, that morning in the mirror. When Congress gets in inquisitorial mood, it lets the whole wide world know. We sure came to know last week.

Where does this leave us? Wondering, for one thing, about symmetry. There’s something uneven here. If we’re about to launch a regime of compensation oversight, what about letting the government itself in on the fun? Two can – and certainly should – play at this game.

We’re going to tie corporate executive pay to performance? There’s not the slightest reason to exempt government pay from similar oversight – unless we regard government as so miraculous a contrivance it gets to make the rules for the rest of us. I don’t think so.

Here’s one plan: President Pelosi, in her moonlighting job as House speaker, earns $217,400. It would seem not unreasonable to make at least half that compensation provisional. We pay her $108,700, then, with the remainder measured out as incentive pay per earmark deleted from each House Appropriations bill. I propose, additionally, an A.I.G-style bonus for each increase of 100,000 barrels a day in crude oil reserves from drilling in offshore California.

Here’s another plan: the nominal occupant of the White House, one Barack Obama, is scheduled to earn $400,000 a year. While allowing that amount in light of his duties, such as appearing with Jay Leno, we could grant him $50,000 salary increments for every $500 billion chopped from the federal deficit he deplored so long as George W. Bush was president.

Supervision: it’s grand and glorious if you’re one of the supervisors, privileged to impose your viewpoints on the conduct of affairs, never mind competing factors such as stagnation instead of vitality, timidity instead of confidence, as consequences of “oversight,” Big Government-style.

A big disadvantage of the economic whatever-it-is pertains to the public attention it drains from crucial concerns such as random outbreaks of the political/governmental desire to kick and shove others around – in the name, naturally, of the Greater Good.

Friends, it just doesn’t work. Government, for one thing, can no more know the right way to reward and encourage corporate talent than a butterfly can support an elephant on its wings. The right level of compensation, nearly every time – the exceptions would account only for corrupt behavior – is whatever seems right to the parties chiefly involved.

It’s not a moral question, as so many in the media and on Capitol Hill seem to assert in their expulsions of smoke and flame. If the recipient of a rich pay package blows it, tough for him, and for his company. Yes, it’s hurtful. Yet such are the risks and pitfalls exhibited by life and competitive marketplaces, assuming we take the time to notice.

Better on the whole to risk than to hang back. Better to reward successful risk-taking than penalize it. Are our congresspersons so dull they can’t see or understand something so obvious? Heaven forbid. Bet you could find three, maybe four, on Capitol Hill to whom you might safely entrust the running of a major business enterprise.


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