Wednesday, February 4, 2009

The first rung of the slippery slope has collapsed

Some people -- mainly republicans -- worry that all the bailouts and recovery plans have this country headed in a more European or even Chinese style socialistic government. I wonder if the first step has already collapsed.

I heard today that Obama has set a new mandate that any business receiving government money must not have it's top administrators receiving anything more than $500,000. He said "we must not reward incompetence."

He said we need to encourage responsibility and accountability. I actually agree with Obama here. If you are a company administrator running your business so bad that you need government assistance to keep running, then your bosses are not doing their job. They should not be rewarded with $1.5 million compensation packages.

I've always petitioned that I thought these businesses should not have received government assistance in he first place, I see no problem with loan to be paid back.

However, I also see the other side of this. You have businesses who are paying these massive wages and bonuses not without a reason. In major league baseball where the Yankees offered Mark Teixeira $25 million a year to play ball for the Yankees not because they want to part with all that money, but because that's a sound business practice if you want the top people for the job.

But, also as in baseball, if Mark Teixeira does not produce the stats needed to make the Yankees a productive organization, he will be canned and not rewarded with a new million dollar contract.

So, that said, if we are going to fall into a socialistic system where the government is going to get involved in rewarding failed businesses, the government is going to want a say in how they run their businesses. And, thus, the $500,000 cap makes sense.

In a sense, the first step in the slippery slope toward a more socialistic government has collapsed. What do you think?

3 comments:

commoncents said...

Interesting post here - keep up the great work!

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Anthony Palmer, Ph.D. said...

Rick,

Once the companies that received the bailout money pay the government back, they can pay their executives whatever they want. Seems fair to me. The companies were under no obligation to accept this money, but since they did, it would seem fair for them to have to follow the conditions set by the lender.

Rick Frea said...

Anthony: I agree. Chrysler was provided a loan in 1980 and it worked out pretty well. But that was a lot different than the current situation, and the gov. didn't tell Chrysler how to spend that money. You make an excellent point.