Exec Pay

A woman my wife knows saw an article about our government floating plans to limit executive pay. Not just pay at failed and bailed institutions, but curbing the excesses of executive pay across the board. She was incensed, to put it mildly. Such an act could only come from a president hell-bent on taking the country down the path of Socialism, with dire consequences.

She, of course, didn’t outline what the dire outcome might be, or even how this act could lead to it. And, unfortunately, I’m not in a position to ask her. But it occurred to me that I am in a position to ask myself: Why am I not concerned about such a proposal?

I read the article. From what I can gather, the limits would basically come in the form of new regulations, (thus bypassing the legislative process), overseen by the Federal Reserve. There is a fair amount of populist anger aimed at high paid execs who don’t appear to have the country or the economy in mind while making their decisions, so many will likely applaud such a move.

Doing it this way, with the Fed regulating the execs, doesn’t seem like a good plan from a protect the public standpoint, but it is a good plan from the executive standpoint. Oh, sure, their enormous salaries (er, compensation packages) will get nipped for a while, but let’s not be naive. The Fed hasn’t taken regulation seriously before. The Federal staff is composed mostly of men and women who exited the high ranks of executive leadership; they will have no desire to really clip the wings of their peers. A few years down the road, when the population has forgotten its rage, the regulations will be quietly softened, and it will be business as usual.

So, I am concerned. Not because this will take us down some evil road, but because it just misses the mark. It’s a nice cover against the angry public, and lessens our will to legislatively pass something more meaningful and lasting.