Chris Butler_

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.

Banks: Nationalize, Cleanse and Get It Over With

Number one, why is "stability" in any market so important? Markets are inherently unstable because the components of these markets - human beings - are not inherently in any kind of equilibrium! "Stability" is a pipe dream.

Number two, why is it so important to have a "comprehensive solution" at all? How about this comprehensive solution: bank that should fail, fail? What happens after that, happens. The system will rebuild and we will learn from previous mistakes.

Number three, if we're scared we'll lose trust in our banking system, the question should not be "how do we restore that trust in these poorly run banks?" but, rather, is the current lack of trust warranted? The answer is "yes." People learn, they move on. If they pull their money out of all banks, and all banks fail, perhaps there was a problem with the current banking model. I bet a better model would be borne from this collapse.

Finally, you state that "we risk a loss of confidence among the rank and file" if we don't go full-bore nationalization. I disagree. Complete nationalization of the banking industry would immediately result in a lack of confidence among the rank and file. Look at thow markets reacted from nationalization fears coming out of Europe yesterday.

Bottom line, if you think bureaucrats can run banks better than the free market, why not let these same bureaucrats run everything? The thing about free markets that people don't quite get is that "free" also means "free" to make mistakes. Either we retain the freedom and allow for the all-too-human propensity to err, and accept the pain that some of these mistakes lead to, or we allow our "mistake free" government to try their best to do a better job by usurping freedom and accept their mistakes that were never supposed to happen. How well do think a central planner can anticipate the next move in a complex adaptive system like our economy? We need only look to the success of economic forecasts in the past. Wethermen have better records.

Sorry, I'll take my mistakes with a heavy does of personal freedom, thank you very much.