Subjectivity vs. Objectivity
(First of all, thanks to a loyal reader who, last night, was "shaming" me into getting back into writing on my blog)
The Obama administration has now announced that they intend to limit the compensation for a host of bank officers, including some who did not take any loans (TARP) from the federal government.
The Obama team justifies this move, as they see bank officials as having "excessive" compensation. Do you see the slippery slope here? I don't care if bankers are making $500,000 per year or $500,000,000 per year. The rules of a free market system will quickly determine if the executive is worth the compensation. (If he's not, stock prices will tumble and the executive and/or the board will likely be ousted)
But the Obama administration sees the world through "government controlled" glasses. More alarmingly, they feel they (rather than the free market) have the zen-like awareness to make a host of subjective determinations. They've now decided that $500,000 is the most that any banking executive should make.
What is a bank officer really worth? DON"T BE FOOLED! This is exactly what the Obama administration wants you to think about.
The real question (and the one the team Obama wants to avoid) is "why is this any business of the government?".
Sure, some banks acted atrociously. And their shareholders and executives have paid a steep price in their falling stock valuation.
But it's decided by a free market system.
If Obama is opposed to excessive compensation, then he should be applying that ideal - ACROSS THE BOARD. If we are going to get subjective - then let's get subjective. Based on performance, there are several NFL and MLB players who are vastly overpaid. Shouldn't we cap what a baseball player can get, if he can't hit above .300? And the latest Michael Moore film wasn't that captivating - shouldn't he be punished? ...............................OF COURSE NOT!
If pay is excessive (and I don't believe it is), then trim it with a higher tax rate (which I also don't believe in). Because this applies across the board - and across all earners. But to make subjective calls like Obama is currently doing, on an industry by industry basis, moves us that much closer to the tactics of that great economic whiz - Hugo Chavez!
That's the problem with subjective decisions. It's all about who's making the call.
The Obama administration has now announced that they intend to limit the compensation for a host of bank officers, including some who did not take any loans (TARP) from the federal government.
The Obama team justifies this move, as they see bank officials as having "excessive" compensation. Do you see the slippery slope here? I don't care if bankers are making $500,000 per year or $500,000,000 per year. The rules of a free market system will quickly determine if the executive is worth the compensation. (If he's not, stock prices will tumble and the executive and/or the board will likely be ousted)
But the Obama administration sees the world through "government controlled" glasses. More alarmingly, they feel they (rather than the free market) have the zen-like awareness to make a host of subjective determinations. They've now decided that $500,000 is the most that any banking executive should make.
What is a bank officer really worth? DON"T BE FOOLED! This is exactly what the Obama administration wants you to think about.
The real question (and the one the team Obama wants to avoid) is "why is this any business of the government?".
Sure, some banks acted atrociously. And their shareholders and executives have paid a steep price in their falling stock valuation.
But it's decided by a free market system.
If Obama is opposed to excessive compensation, then he should be applying that ideal - ACROSS THE BOARD. If we are going to get subjective - then let's get subjective. Based on performance, there are several NFL and MLB players who are vastly overpaid. Shouldn't we cap what a baseball player can get, if he can't hit above .300? And the latest Michael Moore film wasn't that captivating - shouldn't he be punished? ...............................OF COURSE NOT!
If pay is excessive (and I don't believe it is), then trim it with a higher tax rate (which I also don't believe in). Because this applies across the board - and across all earners. But to make subjective calls like Obama is currently doing, on an industry by industry basis, moves us that much closer to the tactics of that great economic whiz - Hugo Chavez!
That's the problem with subjective decisions. It's all about who's making the call.
Bob, I always enjoy your commentary. The government invtervention in pay is a level of boldness that few who voted for obama care about or even slightly understand. Last nite I was listening to a summary of all the taxes (hospitals, medical devices, etc) imbedded in the likely version of the health bill coming forward. The base of taxable goods and services is huge and we only hear about parts of the newly taxable items. Can you imagine the new administrative costs being created in order to write the tax laws, implement, track and enforce all these new taxes. We'll never hear about these "behind the curtain costs", but they are huge! Same is true for the cost of being the "Pay Police". Have a great weekend!
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In 2008, Barack and Michelle Obama earned $2.66 m ...mostly from book royalties. Writing political books must have more value to our society than the work, risk, research, and strategic thinking that is involved in creating and running businesses.
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We should apply the same concept with congress. If you run up a deficit then "WE THE PEOPLE" will take back 90% of your pay plus kick backs. Also, you forfeit your retirement to "WE THE PEOPLE".
Don't get me wrong, those who managed the business should be responsible for the outcome. Somebody should have lost there job. Instead, we are talking about how they are getting huge pay and bonuses.
OH! When Obama is no longer the President, do we investigate his decisions?
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I love the concept of tying the pay of our congress to their fiscal success. I'd be happy to pay a huge bonus to leadership that creates a profit...or even breaks even.
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Yes, some MLB players are being paid a sum (monthly) which would be equivalent to my annual salary. I know they play good, but when I think of all the homeless that we have, I cringe at the thought of how much they are earning (the athletes, not the homeless, haha).
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I would also like something added of course, but in fact it is said almost everything.
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