Here’s a fascinating story from the Wall Street Journal: “Securities Firms Tackle Pay Issue; Limits on Compensation Are Considered to Head Off a Public Outcry.”
Well, yes. By all means, let’s “head off a public outcry.” How about doing the right thing and living up to the free market rhetoric? The opening paragraphs say it all:
In a sign that Wall Street is waking up to the political tempest over billions of dollars in year-end bonuses likely to be paid out at securities firms lining up for government infusions, top executives are in discussions to possibly cap their own compensation, according to people familiar with the situation.
While the discussions remain fluid and many details still must be agreed to, the talks underscore an emerging consensus among some of the securities industry’s most powerful executives that the escalating pay controversy is creating yet another public-relations mess for Wall Street. (emphasis added)
Now, I don’t want to go all Johnny Edwards on you. I’m not a populist. People who earn a lot of money should be able to keep it without having to apologize for not making the minimum wage. Assuming, of course, they made money for their customers and a profit for their companies. That’s not exactly what has happened recently, though, is it?
Yes, when the market was riding high, greed seemed to be the order of the day. But if your boat is rising, you don’t especially care if Mr. Wall Street’s yacht has a new helicopter pad. Or at least you shouldn’t. The fundamental premise? The free market, which many Republicans love to cite when defending Wall Street executives. The market says these execs are worth every nickel they get.
That was then. This is now. We are in a downturn, a meltdown of the financial services market. Wall Street has lost a third of its on-paper value since a year ago. Why on God’s green earth should a Wall Street executive whose firm has lost millions if not billions be rewarded? Shouldn’t they be punished?
The free market says, “Oh my yes.” Fire them; have them pay back past bonuses. That’s what a free market should do. But apparently the market is only “free” until it starts to contract, until it starts to lose money. Then the government must step in.
Well, my friends, you take the G-man’s dollar, you lose your freedom. No bonuses. I’d suggest that executives at firms being taken over by the G or even being bailed out by the G limit executive salaries and bonuses to those paid government executives.
Unfair? Not a free market? Well, too bad about keeping that third home in Aspen and sending the kiddies to Choate. Take the king’s pence, dance to the king’s tune. And let’s not hear any more whining about a “free market” that rewards success but does not punish failure.