American Economy in the Red

Assigned Reading: White House Set to Appoint a Pay Czar
(FROM: The Wall Street Journal)

It’s 1:30 a.m. and, for once, I’m actually writing this from my home office instead of at a laptop somewhere in the house. Therefore . . . hold on a second . . . I can reach my copy of The Communist Manifesto.

Of course, there’s the standard fare about how salary caps will inevitably chase away top talent and stifle any motivation for success. Yes, it’s just another step taken by this president and his administration to rein in American exceptionalism, but there’s more to it than just the standard, growth-stifling arguments.

The Obama administration’s planned appointment of an official tasked with ensuring that entities which were forced to take bailout funds abide by pay caps reinforces a fact already reinforced by the administration’s refusal to accept repayment of bailout money from companies in a position to do so — this has never been about fostering recovery and success, this has been about control from the beginning.

Just as South Carolina Gov. Mark Sanford and Alaska Gov. Sarah Palin have been arguing about their vehement opposition to accepting federal stimulus funds, anything that comes from Washington comes with strings attached.

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Comments

  1. Hugh says:

    Jeff:

    Obama is a destroyer! It is a planned effort. If Obama wants a kingdom his kingdom will not be worth much. When Pravda reproves America for her economic condition and other sins, we are in a sad plight. It takes a Communist to recognize another Communist.

  2. Linda says:

    In the midst of all that's going on, I just wanted to congratulate my fellow bloggers.

    Congratulations. You are the proud supplier of a [vacation] trip to Paris for bho, mo, their two children and his mother-in-law. I applaud you for your generosity. I’m amazed at your frugalness in this time of national financial crisis that you were able to squirrel away enough money for this more-than-generous and kind gift.

  3. Rix says:

    The idea of imposing any limitations on private companies is vile and abhorrent to all that is capitalism, you'll have no argument from me here. However, I have to raise my voice in dissent on two issues.

    1) Unlike countless other occasions, I have some solidarity with Obama's goals, if not the methods. Banks' greed caused immeasurable harm to America during the last decade; they just cannot be allowed to continue operating as a CEO-feeding pump any longer.

    2) A compensation cap is just another regulation placed on top hundreds other federal regulations American businesses suffer from. How many incompetent Blacks and Latinos were hired and promoted thanks to FEA? How many apartment complexes deteriorated into slums because of FHA? I didn't see you, Jeff, object to these – or maybe "politically correct" regulation is somehow better than "anti-capitalist" one?

  4. Linda says:

    Rix: Please look up the CRA (Community Redevelopment Act) passed by Carter, and its reinforcement by Clinton. It will explaint he coercion placed on the banks to make risky loans.

  5. JEFF SCHREIBER says:

    Linda — not to be a pain, but it's the Community Reinvestment Act (reinvestment being a socialist term), and I've written about it more times here than I can remember, including one piece this fall which showed how, by the late 1990s, the Clinton administration was praised for taking the CRA to new heights.

  6. Gail B says:

    From the linked story:

    "Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department…."

    Somebody should suggest that Feinberg shift his focus from "ensuring that entities which were forced to take bailout funds abide by pay caps" (from your comment, Jeff) to overseeing the Treasury Department!

    In Section 9 – Limits on Congress: No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law, and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

    You may remember this video–proof that nobody dealing with money in Obama(?)'s regime is competent:

    http://www.youtube.com/watch?v=cJqM2tFOxLQ&feature=channel."

  7. Rix says:

    Linda, I am well familiar with the abomination from hell that you refer to as CRA. However, no amount of political (and, considering modern technique of community organizing, possibly even physical) arm twisting banks endured can explain multimillion bonuses, luxurious benefits and platinum parachutes that CEOs generously availed themselves to with no connection or regard whatsoever to their business performance. While stock market climbed up steadily, people considered it a "due reward"; it took a financial crisis to start the outrage over such self-rewarding.

    One thing has to be understood: wealth is produced by investors, not bankers who are nothing but monopolistic, well connected middleman.

  8. tm says:

    We have more crowned czars now then the ussr had -
    An unprecedented power grab to extend the power and control of the Executive Branch. (to avoid the senate confirmation proceedings)
    Anybody going to say it? ….I will "DICTATOR".

  9. Linda says:

    Jeff, you're ABSOLUTELY right. Sorry for the error. It's hard to stay sane with all this abcray going on. I know that you've written about it, but sometimes it just takes reinforcing before it sinks in, I guess. Once again, thanks for correcting my error. I am not above admitting when I make them.

  10. vcw39 says:

    Our leftist Congress and former Democrat Presidents are to blame for the financial crisis. When some of the Republicans cried out they were rebuffed so they quit trying. So the bankers made money. That's what they are supposed to do. As for extreme bonuses, that is the way companies work. The boss gets his rewards for leading.
    Too bad that our founders didn't consider that the leeches in our existing government would raise their pay without consent of the people, continue with 'their' form of government, and forget the people who voted for them except at voting time. There should have been caps on their pay, perks, and terms.
    I, myself, still believe that when Obama's grandmother said she was there in the Kenyan hospital when he was born, she is telling the truth, 'cause grandma's don't lie about things like that.

  11. TGS says:

    Jeff,

    The appointment of the 'Czar' position, of which I think the current Administration is at 21 or 22 such individuals, is it Constitutional? Not that this 'bunch' is going to let an antiquated document like that stand in the way of "progress"…but if all these mandates passed on by the properly 'affiliated' Czar are ignored and challenged in the court system, is it possible that these "positions" could be dissolved?

    I mean think about it, these are positions my Federal Representation has no ability to approve / disapprove any of these individuals, yet they are mandating policy based on what they surmise…I think I could make a case against the legality of these issues.

    Keep up the good work.

  12. Anonymous says:

    "Rix said"

    Not to put too fine a point on it, and although the system won't work without investment, actually, wealth has only one source; the combination of human labor and raw materials in an activity which we call "production". Everything else is secondary, tertiary, whatever, in the economic system.

    That's why we are in such deep trouble; outside of agriculture and mining, our means of production at the primary level have moved somewhere else in the world where both of these components are less expensive than here.

    Ultimately, the only course back to economic stability is to lower the overall – or at least avereage – standard of living to match that of the primary producers. If the auto companies/unions had been willing to do this voluntarily, they wouldn't be in such a mess.

    Old Bob

  13. suek says:

    >>Banks' greed caused immeasurable harm to America during the last decade; they just cannot be allowed to continue operating as a CEO-feeding pump any longer.>>

    RIX…

    I've been following this blog trying to figure out the economic stuff (haven't yet, but I'm still trying):
    http://market-ticker.denninger.net/

    He's pretty readable. He doesn't have tags, though. Only archives. If you put in "prosecution" in the search bar (upper right hand corner), you'll pull up some 100 posts. According to him, there's been a great deal of out and out breaking of laws that are in place, but no one is prosecuting them. Laws don't do much good if nobody upholds them and sees that they're followed…
    Quite an eye-opener as I've been going along. Though I still don't really understand the ins and outs of the mess…

  14. Rix says:

    Old Bob said:
    > Not to put too fine a point on it, and although the system won't work
    > without investment, actually, wealth has only one source; the
    > combination of human labor and raw materials in an activity which we
    > call "production".

    The law of added value (formulated by none other but Karl Marx, by the way) is only true in closed economies, just like energy laws are only true in closed systems. High entrepreneurial activity and the role of dollar as the world's leading currency were two factors allowing America to defy that law by "attracting" added value from other countries, similar to an air conditioner unit cooling the room by heating the street. One of those factors is already diminished, the other will soon follow thanks to the Usurper's efforts.

  15. Anonymous says:

    In reference to Rix's comment, I guess I was thinking in terms of "causal closure", with, as far as wealth creation is concerned, human labor and raw materials as the "uncaused causes" from which all other "causes" (production, investment, trade, etc, etc, sping forth.

    I refer to them as "uncaused causes" in this process because those components either already exist in the environment or are self-reporducing.

    Old Bob

  16. Gail B says:

    I wonder how many of the Czars will look into how many times the Treasury Department has broken the law?!

    http://www.pbs.org/moyers/journal/blog/2009/04/william_k_black_on_the_prompt.html

    and

    http://www.huffingtonpost.com/2009/05/15/holder-justice-department_n_203848.html

    Just thought I'd ask!

  17. Anna Leigh says:

    Our Supreme Court justices silently sit by twiddling their thumbs while watching our elected officials trash the Constitution. Who/what prevents them from saying, "ENOUGH"?

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