The Corner

A Different Kind of Moral Hazard

Look I think the idea that we have a pay czar in this country to be flatly, hilariously, crazy. It’s also more than a little scary given how some in Congress seem to think this is just a first step toward regulating all pay. But isn’t there an upside in this?

If the government is going to make life unpleasent for recipients of bailouts, won’t this encourage the big banks to get out from under Uncle Sam’s thumb all the quicker? Won’t this make businesses all the more reluctant to ever get in bed with government like this again? I’m no populist but I can’t muster much sympathy for the Wall Street guys who got themselves in this mess.

Update: Readers are raising lots of reasonable objections and concerns. For instance:

There are a lot of people who work for private or public-held companies on government contracts. Will the pay czar be able to tell Boeing, Lockheed, etc. that their execs make too much and that executive pay must be cut in order to maintain their contracts?

Yeah, I’m concerned about that sort of thing too. I’m just hoping that the backlash against this will generate healthy antibodies. It may not happen.

Update II: That’s the spirit! From a reader:

Jonah,

I would compare your feelings about the pay czar to my feelings about a lynch mob coming to “take care of” a nasty, murdering, child molester in the local lock-up.  It won’t be any less than he deserves.  But, I still have to go out and tell the mob to go home and let justice happen in the proper fashion.