On The Edge Of The Slippery Slope

So now, BO intends to limit executive pay to $500,000 for those who work at companies who received bailout money.  Barney Frank wants to limit executive compensation for all companies, whether they took bailout money or not.

“Mr. Frank said the compensation restrictions would apply to all
financial institutions and might be extended to include all U.S.
companies.”

I am as disgusted as anybody by the extremely poor judgement and callousness shown by these execs who took bailout money and then promptly went on retreats to expensive spas, gave out multi-million dollar bonuses, and in general, behaved like a bunch of spoiled trust-fund brats.  With our money.

It is disgusting and frustrating and makes most of us feel enraged.  We want to discipline these guys, see them punished, grounded, and smacked around a little.  We want to “take away their money”, take the control away from them as they obviously aren’t using it wisely.

But………………………

Stay with me here.

Liberty is not easy.  It is hard.  “With great freedom comes great responsibility.”  By definition, in a free country we are not always going to approve of or agree with the actions of our fellow free citizens.  Many times we will be enraged by their actions.  But this is part of the price of living in a free country.  Is it OK to control the liberty of these people whose actions we don’t approve of and slide just a little bit down that slippery slope towards a less-free society?  Or is it part of my responsibility as a free citizen to take a deep breath, shake my head, feel angry about it, but be thankful that I live in a country where there is “liberty for all,” even if some don’t seem to know how to do the right thing.

You see, if I want my liberty, then I must want it for all of us.  And if I advocate for the free market system then I can’t have it both ways, and support our president inserting himself into private business decisions, such as executive pay.  I am either for capitalism and liberty or I’m not.  I don’t see any middle ground.  I can’t be for my own liberty and the American dream of success without limits and at the same time want to limit someone else’s freedom and put restrictions on the laws of capitalism.

These CEO’s were wrong to spend so lavishly.  I say this from a business viewpoint, that it is fiscally unwise to spend your operating capital on extravagance and large salaries that aren’t justified by the degree of success of the company.  If you are doing so poorly that you require millions or billions of dollars from the government just to keep operating, then you aren’t conducting business very well, and no one in the company should be receiving a huge salary.  In a free market, a company operating like this would fail, for in a free market there would be no “bailout” money.  It would be sad and unfortunate and devasting to many people to lose jobs, but in capitalism there are no guarantees.  You succeed by doing good business, making money, and using that money wisely.

I do not want the government setting pay caps for people working in the private sector.

Let me explain what my thinking is here.  If, as Obama says, because a company took bailout money then he–Obama–has the right to set their pay, then it’s certainly possible that there may in the future be other rules and limits set for some of the rest of us.

Let’s take nationalized health care, for example.  Lots of people want it, and think that will be the end of one of their big problems.  With nationalized healthcare, we will all be taking “bailout” money, so to speak.  We will all be receiving something from the government in the form of health care, or insurance for health care.  I like “free” stuff as well as the next person but this healthcare will not be “free.”  There will be limits, restrictions, and rules set, and really, if we are going to accept this “free” healthcare then we must expect these regulations.  We must expect that someone else will then be in charge of certain aspects of our lives.  Obama, or those in charge of healthcare with Obama’s approval, will likely set rules regarding how much a person can weigh and be eligible; whether people can smoke and be eligible; whether people can drink alcohol, and if so, how much, what kind, and what time of the day.

Probably about now you’re thinking, well yeah, there should be those kind of rules.  If you aren’t overweight, don’t smoke, don’t drink or abuse alcohol, you would think these rules reasonable.  But what about a rule saying that you must exercise a certain amount each week, and be prepared to provide proof of that.  Or, a restriction on the types of foods you eat.  Almost certainly there will be some age limitations on certain procedures and treatments and those you love who are older than 70, 75, maybe 80 or so, will not qualify for that heart bypass surgery.

I feel like I’ve rambled around on this, but if I can sum it all up, I’ll just say this.  If we think it’s a good idea for the president of the USA to begin setting limits on how much money business execs can make, then we also have to think it’s a good idea for him to set limits on our own activities and practices later down the road when we are getting our own handout from government, in the form of nationalized healthcare.

As for me, I don’t want nationalized healthcare any more than I want Obama being the boss of the whole market system.  I would rather have the frustrations that go along with freedom, and take care of myself, than have the government regulate everything.  Because, if they can regulate one thing, like execs’ pay, they can regulate anything.

And they will.

Tagged as: Barney Frank, capitalism, Executive compensation, executive pay limits, free market, nationalized healthcare, Salary