Looks Like We're All Communists Now

Question: Why is Kenneth Feinberg (and his like in other countries) referred to as a "pay czar"? Surely "pay kommisar" is more accurate, both literally and historically?

In any event, the G20 reiterated its desire to reshape the compensation structure of the banking industry over the weekend. And while Macro Man has no wish to dispute that banking pay practices have been suboptimal over the years, he is left to wonder whether or not the current vogue for the top-down allocation of resources isn't the first step on a very slippery slope.

Sure, some bankers get paid too much....but then again, so do some movie stars. And if we start to claw back, ex-post, contractual payouts rendered on a good-faith basis in real time, what does that say about the rule of law? If we do it with bankers, why not do it with sports "stars", particularly those playing in publicly-funded stadia? Hell, why constrain clawbacks to pay? Macro Man has little doubt that there have been a few occasions when the public would like to "claw back" its election of a particular candidate after a couple of years' performance in office.

While it's not exactly new news, the world is becoming frighteningly Orwellian, seemingly by the week. Given the cronyism and fondness for dirigism in the corridors of power, it looks like we're all Communists now. Perhaps this explains the market's attraction to China this morning; after all, the Chinese have plenty of practice in the arbitrary abrogation of contracts and the central allocation of resources....and they're literal Communists to boot!

In any event, Macro Man's Bloomberg chat manager is alight with commentary on renewed interest in the CNY, which appears to be making impressive gains against the USD, as seen below.

It's impressive, of course, until you bother to look at the scale on the chart. Put into a slightly longer-term context, the recent breakdown literally doesn't register.

But hey, why let the facts get in the way of a good story? And if we're all Communists now, what other currency would we want to own but the most centrally-directed of all, the renminbi?

Just remember, folks: Poverty is prosperity. Insolvency is adequacy. Regulation is freedom.

Comments

[LKofEnglish:]

Show trials, too. If this were a real commie nation would be the capitalists on trial and hang 'em, too. We could call it, "incentivizing."

Sep 07 01:19 PM

[Nick36:]

The problem with comparing highly paid bankers to sports and movie stars is that the government doesn't subsidize and bailout sports and movie stars. Whereas the bankers depend on the government to keep their huge salaries and bonuses flowing. If it wasn't for government subsidies, a lot of these highly paid bankers would be unemployed now. And the remaining bankers wouldn't be so highly paid now.

When a whole sector of the economy becomes dependent on government subsidies and guarantees. Then many taxpayers who are paying for all of this naturally demand some accountability. It doesn't make sense for taxpayers who get paid $50,000 per year to subsidize the salaries and bonuses of bankers who get paid millions of dollars per year. Such government subsidies for multi-millionaires looks like huge government corruption to many taxpayers. Because for all intents and purposes these bankers have become government employees.

Sep 07 01:53 PM

[TheSnail:]

Macroman, you communist, pinko sympathizer.....

I too am worried that Russell Crowes next movie will bring down the Australian economy.

And using his money to lobby the government for tax credits for his makeup expenses, and to pay his hair and makeup personnel minimum wage is shameful.

Seriously, if your point is that high CEO pay is symptom not the problem, then I can understand this article.

But articles about solving the problems we face are of much more interest to me.

Sep 07 02:50 PM

[CLH:]

Two wrongs does not make a right. Subsidies and control of profits.

Sep 07 02:54 PM

[socrateazz:]

Don't you know communistic leaders do not really act in a commuistic way! They lead with the appearance of communism, but they are acting in their own self interests. Have you seen a communist leader actually try to live the life they expect others to follow? The fact is they reward the least effective while punishing the most effective thus evening things out. But the effective quit producing and those who do not produce have little incentive to produce. After the next generation is brainwashed in to the system, What can you expect from those who learned the less you do, You are rewarded just the same. I am sure the system is fixed toward idiotcy because if you think, you are a threat. The leadership of China actually pushes more free market trade than the leadership in the US! Which is more communistic? I think the US is at this point! Am I wrong?

Sep 07 06:24 PM

[Baboon:]

Chairman Mao?

On Sep 07 11:42 AM Jiang Nan wrote:

> Greed is the common enemy.

Sep 07 07:07 PM

[Baboon:]

But that's the government's fault, right? Not the bankers. The government is incapable of running competitive banking business alongside the private banks. So they had to bail the banks out.


On Sep 07 01:53 PM Nick36 wrote:

> The problem with comparing highly paid bankers to sports and movie
> stars is that the government doesn't subsidize and bailout sports
> and movie stars.

Sep 07 07:13 PM

[Hot Richard:]

Yes, but Michael Moore says capitalism is evil. His new movie must be free to anyone who wants to see it.

I don't care about jail time for anyone in Congress. I just want to short this pile they created until God gets a Hot Richard complex.

Sep 07 07:22 PM

[DRich:]

MOVIE STARS PAY GOES UP & DOWN BASED ON BOX OFFICE PERFORMANCE .... BANKERS NOT SO MUCH!

Sep 07 08:15 PM

[nova:]

Movie stars are paid for their performance but bankers' pay and compensations have nothing to do with their job performance.

The real problem with bankers is that they steal too much. This legalized thievery must be stopped ASAP. The thieves must go to jail and their loot must be confiscated.

Sep 07 10:11 PM

[THofler:]

The movie studios HAVE in fact gotten huge city and state subsidies (tax breaks) from the likes of NYC and Michigan. Also, their lobbyists would have those politicos believe that these subsidies are essential to keep them running. And since these state and local governments are now receiving massive federal subsidies, I guess you could call those studio subsidies federal, once removed.

Sep 07 11:45 PM

[BxCapricorn:]

It's fun to watch people care about other people's incomes. Wasn't it fun to watch Russia laughing at our communistic ways, as they embraced capitalism last year, and bragged about their commodity trades and currency surpluses? Our silly American banks...Natasha get me a Vodka. Then their economy got blown to bits. Everyone's so smart, but no one knows what to do. Everyone's an expert, but no one makes money trading.

Sep 08 12:14 AM

[j-dub:]

Will a rant like Yellowhoard`s fall on deaf ears?
Will a just desire like this go unheard?
Or will we, as a people, say we are mad as hell and we are not going take it anymore?
Will you write to your congressman?
Will you vote in 2010 for those that scream the same rant and yearn the same desire?

I am far away from the USA and will be for a while.
I hope that Americans are starting to figure out that we have been and will continue to be getting screwed by the elite. The strength will be in numbers at that point.

On Sep 07 12:39 PM yellowhoard wrote:

> The government has given tens of billions to Citicorp.
>
> Rubin raked in a hundred million from Citi. I want it back.
>
> Rohm Emmanuel raked in millions with Fannie Mae. I want it back.
>
>
> Jeffrey Immelt ar GE has been bailed out big time by the government.
> Fire him and claw back his salary.
>
> How many politicians were paid off with sweet multi million dollar
> jobs by companies that are now being bailed out?
>
> I want my money back and butts in jail.

Sep 08 01:01 AM

[fishluvrain:]

I have to agree. Skyrocketing pay, bonuses, perks have made a mockery of fair compensation. It doesn't matter if it is Banks, Brokerage, Insurance, Sports, Entertainment, Retail, Wholesale, anything. If that high wage earner disappears another one is waiting in the wings to take his/her place. Agreed sometimes even if planned for, time may be required. That happens with everyone and everything. Rarely does a company fail when its star loses its shine. Rather the fallen torch is retrieved and raised again. I think of the present Banker Bonus debate. How many fees do we pay on our accounts, how many restrictions have we been faced with. Maybe the banker types deserve the money. Just like the performance of a ball player deserves the salary increase to justify the increase in parking, tickets, food, beverages. Entertainment virtually the same. Manufacturing and Service, thanks for moving off shore to provide us with lower priced goods. Now that we are out of employment opportunities you should concentrate on outsourcing sales. The disparity of wages from the pinnacle elite to the average person has become excessively disgusting.

Sep 08 05:22 AM

[H. Court Young:]

Communism is just a symptom of the greed that is exhibited around the world. Capitalism is feeding on itself.

Excessive greed is rampant. This is fascinating as the dollar falls to new lows. How many baskets of currency will we need to buy a loaf of bread?

Sep 08 09:06 AM

[ArtfulDodger:]

Friends, you think the cronyism is bad now? Wait until our wonderful government passes Cap & Trade where they'll be picking favorites all over the energy sector to pump funds into through subsidies and other breaks and dumping non-favorites by cutting them off.

Remember that Al Gore has said this legislation is more about "world governance" than the environment. So you environmentalists need not get your snouts open because I'm telling it.

Macro man's point should be well-taken, however, regarding the government deciding salaries. If the movie or sports industries do something one particular Administration or the other dislikes, and they're demonized by means of the Bully Pulpit and its fawning 4th Estate, then the public would just as quickly demand "claw backs" from them, too.

If the government can step into one sector and demand it, then why not another?

Where are the boundaries? The Constitution has been toss to the winds. You tell me: What is to stop this government we have today from doing anything it wishes?

Good article and good points, overall. Thank you Macro Man.

Sep 08 10:38 AM

[Tao Man:]

Obama Mao!

Sep 08 08:07 PM

[Moon Kil Woong:]

The government's bout with massive intervention in the financial markets started under Bush Jr. and Republicans. Obama and Democrats just put a giant dollup of whipped cream on the government free money fest. They are snipping away at your money and giving it to their crony friends even while it sits in your pocket.

As the sign on the X-Files says, "Trust No One".

Sep 08 10:01 PM

[Dirtnap:]

I think what Michael Moore is getting at is that capitalism, as implemented in the Western world, is essentially oligarchical corruption. Adam Smith is rolling in his grave right now with us calling this a capitalist system. Chinese communism also has very little communism left it it.

All the economic systems are homogenizing in this global world, and they all are starting to look a little too close to feudalism for my liking.


On Sep 07 07:22 PM Hot Richard wrote:

> Yes, but Michael Moore says capitalism is evil. His new movie must
> be free to anyone who wants to see it.
>
> I don't care about jail time for anyone in Congress. I just want
> to short this pile they created until God gets a Hot Richard complex.

Sep 09 01:43 AM

[Peter Medved:]

On Sep 09 01:43 AM Dirtnap wrote:

Chinese communism also has very little communism left it it. All the economic systems are homogenizing in this global world, and
they all are starting to look a little too close to feudalism for my liking.

Exactly, very good argument.

I wonder how many commenters here have lived under or have experienced communism ? My guess is none. Also, it came in very different forms, some of it benevolent in its own ways.
In my country, older people are still nostalgic for the older ways, as under Communism, everyone had a job (no matter how bad or boring), people were amply fed (although diet was monotonous) & we did not have crime issues with dugs, prostitution etc.

But hey, free market capitalism is good no ? I am for free market, but it does also have undersides, there are have & have nots in every society, right now for many the latter outnumber the former.

Sep 11 02:03 PM