Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=323390743506745
By INVESTOR'S BUSINESS DAILY | Posted Tuesday, March 31, 2009 4:20 PM PT
Regulation: Democrat-controlled Washington has rebranded the war on terror as an "Overseas Contingency Operation." That conflict, a life-and-death struggle, has been replaced with a war on business.
Read More: Business & Regulation
The House Financial Services Committee, under the direction of Democratic Chairman Barney Frank, isn't content with the White House's proposal to cap the pay of executives beyond those whose companies took bailout cash.
It wants to control the pay of every employee of any financial institution that has "received or receives a capital investment" from the federal government under the Emergency Economic Stabilization Act of 2008, last year's $700 billion bailout.
The Pay for Performance Act of 2009 was approved 38-22 by the Financial Services Committee last week with only two Republicans, Reps. Ed Royce of California and Walter Jones of North Carolina, in support. Should the bill get by Congress — the full House is expected to vote on it this week — and receive the president's signature, it will "prohibit unreasonable and excessive compensation and compensation not based on performance standards."
And who decides what is "unreasonable" and "excessive?" The unelected secretary of the Treasury, in this case Timothy Geithner, who has neither inspired confidence nor demonstrated good judgment during a time of economic turmoil.
That is far too much authority to place in one man's hands, and it is grossly inconsistent with representative government. In our system, government officials are servants of the people and the protectors of their rights, not their masters.
Capping pay has a populist appeal. But it has no practical benefits. What are the incentives for the brightest workers, from the lowest management level to the executive offices, to fix their companies if there is little or no monetary reward for doing so?
Yes, saving a business from bankruptcy or from being liquidated are goals worth working for. But those are small consolations compared to the prize of restoring a company's financial health, reputation and market share.
Americans expect to work under conditions that will reward their achievements. If they can't find that environment here, they will be tempted to go outside our borders.
That wouldn't stimulate the U.S. economy, but we bet the nations that have for decades lost their most brilliant workers to the U.S. and its mostly free market would be happy to get those people back, as well as a good portion of American brainpower looking to escape the iron hand of the U.S. Treasury secretary.
Too many in Washington, driven by wealth envy and their dream of dismantling our capitalist system, have been waiting for a chance to reorder America. With the economy still struggling, they have that opportunity now and they will milk it as radically and as tirelessly as they are able. Supervising pay is merely one of the first waves of change.
What they will produce, if left alone, will not be the leader of global commerce, but an ossified economy run by policymakers and bureaucrats who will make decisions based on politics.
The market process that promotes freedom and has provided the foundation for nearly all human advancement will be regarded as a cruel and archaic notion, favored only by retrogrades who want to turn back the clock.
Capitalism, though, is forward-looking, unlike the war on business, which will yield a world in which we all have to make do with less. Except for, of course, the grand planners behind the reordering. They'll always live by another set of rules.
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