Chris Butler_

Not the Tax Clawback I Had in Mind

After I saw "I think a good tax clawback..." I stopped reading. Using the tax code as a political hammer is now and will forever be bad policy and bad precedent. Remember, the very politicians who voted for the clawback were the ones who wanted AIG to stick around in the first place. I didn't. I wanted the market to punish them - as in force a bankruptcy. But, AIG, we were told, was too important to let die. The world's fate hung in the balance. If true, AIG executives should get a raise. They've now got exponentially more responsibility, taking care of the entire planet and all. I've just purchased a bumper sticker that says "I (heart) AIG executives". I'd like to clawback all Congressional pay for the past 15 years and give it to AIG as a token of my appreciation for making my planet safe for finance again.

Why Capping Pay Is Likely to Work

First, Felix keeps confusing the notion of "anyone with a pulse" willing to work for $500,000 versus "talendted executives" willing to work for $500,000. Which point are you trying to make?

Yes, you will be able to find housewives, homeless people and 5th graders to be the CEO of a large, multi-national bank. But, no, experienced, talented executives will *not* choose that job if they're offered considerably more to work for any other industry or non-capped bank. What's a poor government to do in that case? Cap all pay everywhere?

Further Felix, define "work" when you say "Why Capping Pay Is Likely to Work." That's such an ambiguous title when precision is necessary. Work for who? Clients of the bank, the taxpayers, Congress, or the "Re-Elect Obama 2012 Campaign"?


Further, commenter Chris B notes that "If someone thinks they're too good to work for $500k, that in itself demonstrates an attitude of arrogance and hubris. How can we expect individuals with a messianic complex to make good decisions? The evidence says they don't." Are you high? Seriously. Are you stoned? Just for argument let's just go ahead and assume your bong-induced comment that good decision-making and arrogance are mutually exclusive.

You seriously want to assert that anyone shunning a $500,000 compensation package is hubristic? Good for you, sensei. It sounds to me like *you've* got the messianic complex. You know the exact nature of the problem and its precise cure-all, don't you, my msnmoney-quoting freind? Even though markets are complex multi-variable systems, capable of evolution and adaptation, you've been so endowed with wisdom to have placed your divine finger on what ails us. Thank God (for your presence in the midst of our ignorance)!

Go ahead Chris B (previous poster, not to be confused with me - Chris Butler) - tell free agents in the NFL that they're all arrogant. In fact, every professional athlete in the big three sports here in America are arrogant. They are all so hubristic to think they can make more for another team. And then they go out and confirm their arrogance by getting it. It seems that GMs are willing to pay more for more perceived talent. That same thinking is flawed in banking, apparently.

OK, so you say entertainers don't count. Fine. Heart surgeons? Egotistical b*st*rds! Who do they think they are earning more than half a million! Hell, I've heard a few of them actually killed patients! Sure, they perform a few menial tasks like curing the terminally ill, but they actually think they're deserving of hefty compensation packages! For killing people, no less! They must all think they're God or something.

Enough sarcasm. If you can't see that such an important policy intervention into the private sector would have unintended consequences (perhaps both good and bad), then in my opinion, you either cannot see at all, or refuse to. Either way, you'd be better off just admitting what you already know - people make mistakes. Investment and commercial banks made huge mistakes and had the governmnet let it go, the free market would have punished them severely. And yes, the real economy would have been punished. I dare say, however, we would have learned a hard lesson, adapted, and moved on.