Comments on: Pay Czar or Grim Reaper? http://www.schaefersblog.com/pay-czar-or-grim-reaper/ A Generalist in a World of Specialists Sun, 05 Feb 2012 04:27:38 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Badski http://www.schaefersblog.com/pay-czar-or-grim-reaper/comment-page-1/#comment-17438 Badski Mon, 26 Oct 2009 12:42:34 +0000 http://www.schaefersblog.com/?p=1140#comment-17438 Being an avid Atlas fan, the parallels are quite scary. Honestly, I don't really think that people will leave in droves. The financial industry as whole may not be terrible adept at analyzing risk, but what they are good at is forging new ways of creating wealth. Not only working within constraints (government imposed or otherwise) but creating entirely new markets that must be regulated. Look back ten to twenty years at all the new investment vehicles that have been created. The inherent flaw in government regulation is that it is entirely reactionary. By the time the pay legislation is enacted the industry will already have a dozen new ways to be compensated. My real fear is the precedent that is set by this action. The slippery slope if you will. What is next after the financial industry? Our nation already has one of the most complicated legal and tax structures in the world. Is there any wonder why jobs are shifting to overseas markets? Will this help jobs return? Will this incentivize innovation to create new jobs, markets, industries? I doubt it. I am putting up a post today on getting past the debate on what is right (which can be defined infinitely by the broad spectrum of people out there) and getting onto what works realistically now. Ironically this is one of those issues where many would argue that what is right is what works. Use competition to reward the most worthy individual. I would that it is the government's interventionist policies that enable incompetent financial executives to earn outrageous salaries when their company is failing. Compare the CEO of Lehman to one of his bailed out buddies. Both failed but the bailed out CEO's are the ones who are in the headlines now because they are earning too much. We will see where this goes. Hopefully Atlas Shrugged isn't too prophetic. Being an avid Atlas fan, the parallels are quite scary. Honestly, I don’t really think that people will leave in droves. The financial industry as whole may not be terrible adept at analyzing risk, but what they are good at is forging new ways of creating wealth. Not only working within constraints (government imposed or otherwise) but creating entirely new markets that must be regulated. Look back ten to twenty years at all the new investment vehicles that have been created. The inherent flaw in government regulation is that it is entirely reactionary. By the time the pay legislation is enacted the industry will already have a dozen new ways to be compensated.

My real fear is the precedent that is set by this action. The slippery slope if you will. What is next after the financial industry? Our nation already has one of the most complicated legal and tax structures in the world. Is there any wonder why jobs are shifting to overseas markets? Will this help jobs return? Will this incentivize innovation to create new jobs, markets, industries? I doubt it. I am putting up a post today on getting past the debate on what is right (which can be defined infinitely by the broad spectrum of people out there) and getting onto what works realistically now. Ironically this is one of those issues where many would argue that what is right is what works. Use competition to reward the most worthy individual. I would that it is the government’s interventionist policies that enable incompetent financial executives to earn outrageous salaries when their company is failing. Compare the CEO of Lehman to one of his bailed out buddies. Both failed but the bailed out CEO’s are the ones who are in the headlines now because they are earning too much.

We will see where this goes. Hopefully Atlas Shrugged isn’t too prophetic.

]]> By: Greg Molyneux http://www.schaefersblog.com/pay-czar-or-grim-reaper/comment-page-1/#comment-17436 Greg Molyneux Sun, 25 Oct 2009 18:04:09 +0000 http://www.schaefersblog.com/?p=1140#comment-17436 Jack, I don't think we need to get as granular as that - at least not in this discussion. Cameron highlights a great point, eliminating pay, and ostensibly the incentive to achieve, will be lost on top-level executives who will simply leave for another job that will pay. At such a high level in business you can draw a direct analogy with athletes: the skill level of these folks (athletes and executives) is so off the charts that it will never take long to find someone who will give them money for services that few mortal men can render. The government, as it always does, is merely exacerbating this problem. Jack, I don’t think we need to get as granular as that – at least not in this discussion. Cameron highlights a great point, eliminating pay, and ostensibly the incentive to achieve, will be lost on top-level executives who will simply leave for another job that will pay.

At such a high level in business you can draw a direct analogy with athletes: the skill level of these folks (athletes and executives) is so off the charts that it will never take long to find someone who will give them money for services that few mortal men can render.

The government, as it always does, is merely exacerbating this problem.

]]> By: Man Overboard http://www.schaefersblog.com/pay-czar-or-grim-reaper/comment-page-1/#comment-17435 Man Overboard Sat, 24 Oct 2009 22:13:03 +0000 http://www.schaefersblog.com/?p=1140#comment-17435 People who make six figure salaries are next. Watch how the definition of "rich" just keeps on shrinking! People who make six figure salaries are next. Watch how the definition of “rich” just keeps on shrinking!

]]>