Monday, September 22, 2008

Executive Salary Caps

It's just been announced that Democrats are proposing to cap executive compensation as part of the bail-out. 

I've been as appalled as anyone by the insane escalation of executive salaries. The vast income disparity has transformed our corpocracy into something more akin to an oligarchy. So I would have favored caps (or, preferably, some subtler mechanism) before this crisis hit. 

But regulatory interference creates distortion (i.e. as companies attempt to cope and work around the regulation, unintended consequences inevitably arise). And, tempting though it is to massively overhaul regulation at this juncture, heaping distortion now on a hobbled business environment will cloud prospects for recovery. 

Regulation set in place at this critical point should be focused on protecting taxpayers' investment and helping the bailout work...period.

Of course, salary caps are something we the masses (i.e. folks who'll be voting in a few weeks) want to see. But in this grave crisis, the Democrats ought to do what's best for the country, rather pander to voters.

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