Government to limit executive pay

President Obama is saying that companies that accept government bailout money can pay executives no more than $500,000 a year.

I too am irked by C.E.O.s of failing companies making so much money, especially when it comes in the form of bonuses. The heads of companies that perform so terribly do not deserve the rewards that should go only to success. But still, I recoil at the thought that state power is now mandating how much private companies are allowed to pay their employees.

This will become a major disincentive for companies to ask for a bailout. That would be for the better. But still, it is apparent that the government is not just concerned about injecting money into the economy to solve its problems; rather, it is using this economic crisis as a means of increasing its power. For its money, the government is achieving both ownership and control of the private sector. This is socialism.

Meanwhile, look at the unintended consequences of these government attempts to rule the free market. This executive compensation diktat is causing panic in New York City, where lots of executives make more than that in the city with an astronomically high cost of living. Such pay restrictions could mean a brain drain from America’s leading companies, as well as one of America’s leading cities.

What other unintended consequences could the stimulus plan lead to?

UPDATE: This article gives more details, along with the startling news that plans are underway in Congress to limit executive pay in ALL companies, even those that do not take bailout money!

Broader executive compensation rules could already be on the way. House Financial Services Chairman Barney Frank (D-Mass.) said a consensus in Congress is building to give the Federal Reserve the authority to police threats to the financial system, including by limiting compensation awarded to corporate executives for excessively risky behavior.

Such restrictions would apply to all firms, not just those that accept government rescue funds, Frank said, and could include a requirement that senior executives lose money when they make a bad business decision instead of simply gaining money when their bets pay off.

Stimulus bill stymied in the Senate

Senate Lacks Votes to Pass Stimulus –

Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy.

That’s a welcome surprise. I’m sure the Democrats won’t kill it, but maybe it could be made a little less noxious.

Special economic meltdown edition

Today and this weekend, we will contemplate our bad economy and the efforts to fix it. OK, that’s a rather depressing topic, if you will excuse the D-word, so let’s try also to find the lighter side.

Character-building Depression Tips

We often talk about our parents and grandparents who went through the Great Depression, how to this day they scrimp and save, never throw anything away, and can delay their gratification. We also hail this “Greatest Generation” for their strong character, which was cultivated through economic hardship and the sacrifice of war.

In reality, our economic woes are far from the magnitude of the Great Depression. Still, why shouldn’t we take the occasion to build our character by being thrifty, doing without, and managing creatively?

We have been eating things we’ve had in our freezer. We haven’t gone to the grocery store all week. And we’ve found treats we had forgotten we had. A big, delicious hunk of pork shoulder I barbecued; a bag of tater tots; jalapeno poppers from our New Year’s Eve revelry. My wonderful wife just brought me a bowl of ice cream from a carton she found, the ice cream topped with leftover pie cherries. Yum! Fun!

What tips can you offer for a character-building, money-saving neo-Depression activity? Recipes for making a pound of hamburger feed six people? Cheap alternatives to expensive habits? You can be either serious or whimsical.

HT: Jackie

Spend! Spend! Spend!

Notice that the advice we get for how to deal with the economic troubles is to cut back, get thrifty, and economize. But then we are told in the same newspaper that for the economy to get better, consumers have to start spending.

The normal way businesses have got us to spend is advertising. Could it be that we have become so super-saturated with advertising that we have become resistant to its attempts to manipulate us and so are refusing to obey it anymore? Should the bailout bill give more dollars to consumer research to develop more effective means of advertising?

We also have always spent to replace products that have worn out. Like cars. With the first cars I owned, I felt lucky to coax them to 100,000 miles before they fell apart. Lately, my cars have lasted twice as long. Is the problem with the auto industry that their products have become too good? Should the bailout bill mandate that GM make cars of lesser quality?

We also spend to buy things we need. Do we already have everything?

What can be done to increase consumer spending?

Would someone defend the bailout?

House Democrats have passed a $800 billion bailout on a party line vote, but, outside of Congress and the President, it’s hard to find even Democrats who actually like the bill. Could someone explain why, even theoretically, this particular bill is a good idea and would straighten out the economy?

In fact, I am finding great agreement on the right and the left that we should not be bailing out the banks and corporations on the scale that we are. Perhaps we are indeed seeing an age of bipartisanship and people coming together into a new unity and national consensus. It’s just not happening in our government.

I know there is the call that we need to do “something,” but that is not an argument for this particular bill. How exactly would this “something” solve our problems? Please, someone, explain.