The wrong way on executive pay
Executive pay has lately been a source of outrage of both the Left and Right of American politics – not to mention the millions of people who have suffered during this economic downturn only to see many of the executives who were particularly responsible for it (and their companies bailed-out despite it) receive multi-million dollar bonuses.
President Obama is going to regulate executive pay. I love that Obama is doing this because, if you haven’t been paying attention, bank executives are given huge bonuses based on profits obtained by taking enormous risks – risks that threaten (and recently nearly destroyed) the American economy when they fail. I’m glad steps are being taken to discourage such risky behavior, but I have serious misgivings on how it’s being done.
Put-basically, banks will soon need write up their plans for how their top execs will be compensated, and then submit these plans to the Obama administration, which will then either approve or veto those plans based on how healthy they think they are for the economy.
Now, no doubt, this sounds like a good plan when you know that it’s the Obama administration that will be doing the approving or vetoing, correct? But what happens in 3 or 7 years when there is no more Obama administration? What if the next administration or the one after that is a Republican administration? What then?
The Bush administration was, ever and without fail, so pro-business that it was (clearly, based on our current economic situation) to the detriment of all the regular people living in this country. There is a long and well documented history of the lengths Bush went to in making sure the government always protected the interests of big business over and above all else. They started out being sneaky about it and, later, didn’t even bother to try and hide it.
And you can be sure that the next Republican administration will be even more pro-business (and, perhaps even sneakier about boosting business sectors of their choosing) given the perception so widely-held by the conservatives that Obama has “socialist” and anti-business tendencies.
Executive pay needs to be regulated, but it should be done through congressional legislation; something that’s permanent and doesn’t change with the tides or the habitants of the White House.
