Bias Against the Successful
by Cerias on Oct.23, 2009, under Elitist Idiots
I read an article yesterday about the Federal Reserve placing limits on the amount of compensation bank executives can receive from their work. It was broken into two parts, first talking about upward limits on bank executives working for companies that received TARP funds, and then upward limits on every other bank. It was an opinion piece, so I went looking for something a little more solid to write this here post on. Unfortunately, the material I’ve found has all been biased in partisan ways and I can’t seem to find anything reliable to point at that gives the numbers I saw for non-TARP bank limits. I found enough to lend credibility to the idea that the Federal Reserve is now capping how much a bank executive can make, but nothing strong enough for me to cite here.
I was upset when I read that article, thinking about how the incentive then would be for those executives to move their operations overseas, most likely to the EU. I got myself all riled up to rail against the idea here. Part of that process involves breaking things down in a way that someone who isn’t absolutely fascinated by finance and economics could understand my point. I try to ask myself questions that I would expect to be asked by readers.
In running down the consequences to this declaration by the Fed, I came up with a long list of reasons those executives would leave… but the TARP-receiving financial firms have been under these limits for some time. Many of their executives have left, yet not a single one of them cited dissatisfaction with their pay. So my entire post lost steam as all the evidence began to contradict my original thesis.
But then there was that phase of predicting questions I expect to be asked. One of those questions was “Why should we care if bank executives can’t make more than, say, $500,000 per year? I’m a poor college kid who doesn’t make two percent of that.” I started thinking about that fact instead.
How willing are we to disregard our beliefs if the group targeted by a policy that runs counter to our ideals doesn’t include us? In general, Americans believe that the government should limit its involvement in the running of private enterprise. Which side of the spectrum you’re on will determine how high that “acceptable” limit goes. Yet I know some people who identify themselves as good solid Libertarians who couldn’t give a two shakes of a rat’s tail less that the Federal Reserve is setting caps on how much bank executives can be paid.
“Why should I care, I’m not them.” It’s a common mantra all of us fall prey to at different times. After all, most of us don’t live in a world where we can comprehend being “limited” to only receiving $500,000 a year. Yet every time I hear that, I hear something else in the back of my head: “First they came for the bankers, and I did not speak out– because I was not a banker.”
Whatever your political leanings, don’t you think that, perhaps, your ideology should be applied across the board, and not only when it benefits yourself?
3 Comments for this entry
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Help Spread the Propaganda
October 23rd, 2009 on 10:59 pm
I’m a socialist… if I were making that much money I would have no problem giving a large amount of it up to help out those who made less than me. Capitalism is discrimination against those in need.
October 26th, 2009 on 4:48 pm
I’m a modified Keynesian capitalist, if we’re labelling. And I have no problem tying executive compensation limits to banks that take certain publicly provided benefits, such as TARP funds. Remember, ALL taxpayers contributed to bailing these banks out, it’s only fair that they have to play by a few rules we set if they choose to take the funds. (That said, doing it retroactively after banks chose to take the funds might raise all sorts of problems I’m not addressing)
More specifically, executive compensation limits might be a particularly good idea because there’s a number of articles I’ve read that show that the extremely high amounts some of these execs have been making isn’t well tied to performance, and is essentially fraud working to loot shareholders (and thus subverting the purpose of publicly traded corporations). If this is true, and I think the point is arguable, than the banks would perform better if they did *not* pay their executives such exorbitant amounts. Why not, if the public is becoming invested into these businesses by bailout funds, should we not interfere with their business practices to make them more profitable?
There are numerous cases in history where government interference into an industry actually made business boom in that sector. (Sort of like how our laws about enforced government secularism actually led to a huge boom in American religiosity, unlike the many European countries with ensconced state religions *and* low religiosity)
November 13th, 2009 on 2:27 pm
Well what he’s arguing here is a little clearer I think with that last quote: “First they came for the bankers, and I did not speak out, because I was not a banker.” If we believe something, then we should hold that standard no matter the subject of it. If I believe innocent until proven guilty in a court of law, then the man I saw kill another man still has his right to a jury of his peers. If I believe in the freedom to express your personal opinions and doctrines and beliefs, then there’s no reason I should then criticize a white supremacist handing out the turner diaries.
The thing that makes it hard for a lot of people in this case I think is what drewflicker said in a way, basically the banks have drawn a lot of negative attention for dishonest practices and whatnot. It seems only natural to then punish them in someway, they’re “Getting what they deserve.” But wouldn’t the high payments also be considered the same. They found a way to work the system, and so the money they got paid, was because they outsmarted the current regulations. It’s hard to say one way or the other, when laid out with that quote though, it almost makes me worry for my rights in the same way as the patriot act, they’re trying to chip away. But then again, I don’t care so much about my right to money as to food, clothes, shelter and expression. I’m dressed and full as I *write* this inside. I’m not a slave and the only thing being assaulted is the ridiculous compensation of dishonest business practices.
Despite a brief rise in indignation, I think I’ll be alright.