Spring Break
Capping exec pay hurts nation moreso than big business
Egon Donnarumma
Issue date: 2/27/09 Section: Commentary
Recently, President Barack Obama put forth regulations to cap salaries for executives of firms receiving "exceptional federal assistance" at $500,000. This initiative is a mistake. It is a political move to release some pent-up public anger at Wall Street and will not help pull the financial markets out of the hole they have dug for themselves. Remember, this is business, not personal.
Too often in recent days, the mood has been to punish the big corporations. "Damn them for putting America in such dire straits," we say.
While a large portion of the responsibility for the present economic downturn does fall on the poor business decisions of top execs - though let's not forget the irresponsible borrowing practices by consumers - kicking them while they are down won't help America recover. Though it may be a bitter pill to swallow, having the big corporations succeed is necessary for the rest of us to prosper.
The first step we all have to take is to put the emotions aside, stop the blame game and start taking steps to improve the economy. The hard part with this rests in the problem of government involving itself too much in the economy.
A capitalist economy is based on self-interest. While business decisions may benefit others, all economic motivations are based on profit for the individual.
In contrast to this is a democratic government. A democracy is based on acting on behalf of the people at large. Any actions seen as self-interested by government or politicians are considered immoral and corrupt.
The trouble is both democracy and a free market capitalist system are seen as inalienable rights in the US. This works provided that they each remain in their respective spheres. The conflict between one serving the public good and the other with a focus on self interest makes it very difficult for politicians to fix the economy.Ignoring popular frustrations with the 'greed' of Wall Street, a salary cap for executives could potentially hurt the economy and slow recovery.
Too often in recent days, the mood has been to punish the big corporations. "Damn them for putting America in such dire straits," we say.
While a large portion of the responsibility for the present economic downturn does fall on the poor business decisions of top execs - though let's not forget the irresponsible borrowing practices by consumers - kicking them while they are down won't help America recover. Though it may be a bitter pill to swallow, having the big corporations succeed is necessary for the rest of us to prosper.
The first step we all have to take is to put the emotions aside, stop the blame game and start taking steps to improve the economy. The hard part with this rests in the problem of government involving itself too much in the economy.
A capitalist economy is based on self-interest. While business decisions may benefit others, all economic motivations are based on profit for the individual.
In contrast to this is a democratic government. A democracy is based on acting on behalf of the people at large. Any actions seen as self-interested by government or politicians are considered immoral and corrupt.
The trouble is both democracy and a free market capitalist system are seen as inalienable rights in the US. This works provided that they each remain in their respective spheres. The conflict between one serving the public good and the other with a focus on self interest makes it very difficult for politicians to fix the economy.Ignoring popular frustrations with the 'greed' of Wall Street, a salary cap for executives could potentially hurt the economy and slow recovery.
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Bryan
posted 3/02/09 @ 3:41 AM EST
The presumption that people need to be paid more than $500,000 - or else they won't be motivated to do their jobs - is insane.
In 2002, the CEO of Toyota made $900,000, all told. (Continued…)
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