Thursday, February 5, 2009

Executive Pay Caps

I've only heard one person (and he was a relative nobody) say that Obama's proposal to cap executive pay or companies that take TARP money is socialism. First off I disagree: it's fascism. Socialism is an economic system where the government owns the means of production. Fascism is an economic system where the government controls corporations (or, at the very least, gives corporations special favors in exchange for going along with the government).

Having said that, though, Obama isn't moving us toward fascism by setting executive pay caps. When Bush bought huge stakes in private companies in exchange for guarantees on how they would run their business he moved us pretty much all the way to fascism with respect to the financial industry. (Odd that after 7 years of stupid accusations that Bush's involvement in Iraq or warrantless monitoring of international cell phone calls with suspected terrorists made him a fascist, he finally went and did something actually fascist, but nobody called him on it.) Once we've moved to intervene in the markets and determine who the winners and losers are (and how our chosen winners will behave) we're not operating under capitalism anymore.

Given that we're going to be fascist, I'd rather not give huge bonuses to the heads of failing companies the government has decided are going to be corporate winners, so I'm all for Obama's action. (I would, of course, be more for stopping the insanity and letting companies who can't produce a successful business model fail, but that's not on the table.)

Update: PowerLine has an analogous post, which points out that TARP isn't the only federally controlled corporation out there. I think his suggestion is great. I would also guess that the head of FannieMae/FreddieMac are probably getting more than $500k in salary plus bonuses.

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