With a taxpayer bailout of financial firms in the hundreds of billions of dollars looming, limiting the compensation of Wall Street executives may seem like a good idea.
It’s not.
The government should keep its nose out of executive compensation.
That position may come as a shock to some readers who have taken the time to respond to previous columns and believe, erroneously, that I’m a communist-socialist-pinko — or, just as depraved to some, a liberal.
On the other hand, my red-state friends, I’m not one of those knee-jerk right-wingers who believe that anything done in the name of free markets is God’s plan. CEO kleptocracy is not capitalism.
Just as the right makes a valid point when it rails against teachers’ unions and unionized civil servants who hold the public hostage, the left has an equally valid point that executive pay is outrageous, particularly since CEOs have such a heavy hand in determining their own cornucopia of compensation, which is rarely related to performance.
So why not cap the executive pay geyser? Especially now, when the nation’s lawmakers are contemplating a bailout of Wall Street, wouldn’t it make sense to punish the greedy SOBs who got us into this mess?
That would feel great and the CEOs who behaved so egregiously deserve to be excoriated, but government pay caps would lead us down a terrible path.
Imagine a society run like the Czechoslovakian Department of Motor Vehicles circa 1953. That’s what you get when the government sets pay limits.
Think about who would be setting the limits. Are the congressional boobs who approve bridges to nowhere the ones you want making decisions about compensation?
Once the government gets a taste of regulating executive pay, rest assured they will expand their power and regulate other forms of compensation. Slowly but surely, we slide down the slippery slope to government regulation of all our pay.
What’s the answer?
I believe in public humiliation. It’s worked to cut down on smoking. We haven’t outlawed the habit, just worked hard to change its image from something cool to something disgusting.
Similarly, we should work hard to demystify CEOs. They’re not magicians or gods and they alone don’t determine a company’s success.
Let’s smash the pedestals and wake up to the fact that as shareholders, through our 401(k) plans, we own the companies that employ CEOs.
They’re employees like us, not kings, and certainly not the entrepreneurs who created the businesses in the first place.
Fortune and Forbes may have to find new subject matter if we end the cult of the CEO, but it would be great for the rest of us who know the real work and much of the substantive thinking in corporate America is done outside the C-level offices.
Let’s change the climate so that a CEO making 500 times the compensation of an average employee would shamed rather than criminalized.
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