We welcome President Obama's “basic common sense” announcement of a $500k salary cap for top executives at companies receiving substantial bailout funds. It’s a bit of welcome good news.
And the President's definitely right on the money when he states that the average person isn't at all pleased when executives apply for public money “hat in hand ... even as they paid themselves customary lavish bonuses.” In fact, these “executives being rewarded for failure” is the theme we harped upon last week.
We had to laugh at this apparent government revelation, though: the authorities are finally realizing that there's a consensus among ordinary Americans. According to commentators, seems Joe Average believes he’s bearing a greater financial burden from the disaster than the guys who helped create the mess in the first place.
Well, who would have guessed? It must have taken a genius to figure that one out.
Could it have anything to do with the mega-bailout funds being lobbed into the laps of these executives and their companies? Even as ordinary folk lose their jobs and watch their mortgage payments go into arrears?
After all, Obama's pet stimulus plan is going to cost another $800 billion (perhaps even $1 trillion) -- all of which will go to companies who basically doused themselves in oil while wandering around in the dark … and then lit a match to see what was going on.
Obama also stated that: “A failure to act, and act now, will turn crisis into catastrophe and guarantee a longer recession, a less robust recovery and a more uncertain future.” Hmm, that’s an interesting (if very popular with executives) viewpoint.
But funnily enough, most Austrian economists – these would be the guys that accurately foresaw the current disaster, if you were wondering – they have just the opposite view. They feel that excessive government intervention will only prolong the necessary wringing-out process needed to purge incompetence and mal-investments from the system. They’re probably right, given their historical track record.
We’d venture to suggest that limiting executive compensation is like re-arranging the deck chairs on the Titanic.
