Jeff has asked me to keep an eye out for talented conservative voices to contribute here at America’s Right. And while the University of California, Berkeley would never be the top of my “Best Places to Find Conservative Writers” list, you know that a conservative studying at Berkeley has got to be tough. And MS is tough. Here is her first piece for America’s Right, in which she turns her skeptical gaze on one of those strictly “advisory” czars: The Pay Czar. — Robert
I don’t really like the “czar” term. It seems dramatic. Then again, I was under the impression that the “czars” were simply advisers to the President, without power of their own for action. That was my own ignorance, I suppose.
I didn’t hear anything about Kenneth Feinberg, the “Pay Czar,” until I read it in the context of the battle between the White House and Fox News Channel. But a cursory search lead to this:
According to The New York Times:
Kenneth R. Feinberg was appointed by the Obama administration on June 10, 2009, as compensation overseer with broad discretion to set the pay for 175 top executives at seven of the nation’s largest companies, which have received hundreds of billions of dollars in federal assistance to survive.
The government bails out these companies … and then runs them, yeah? Another problem with bailing them out in the first place.
Mr. Feinberg’s plan, announced in October 2009, will cut total compensation by about 50 percent for 25 top earners at seven companies that received exceptional help. The companies affected are Citigroup, Bank of America, American International Group, General Motors, Chrysler and the financing arms of the two automakers.
Here’s the interesting thing: when I read about someone making millions of dollars, I assume that whoever is forking over millions of dollars to that someone has decided that someone is worth it, for whatever reason. I’m sure that’s not always the case, but I don’t believe a company looking to make a profit will spend that kind of money unless it is believed that it will work out to the company’s benefit.
Obviously there are other lines of thought. According to Joe Nocera, also of The New York Times:
The truth is, Wall Street simply pays its people too much money. No other segment of industry pays out 50 percent of its revenue in bonuses, only Wall Street. In no other segment do so many people get rich for doing so little for the broader society.
I’ve been reading Ayn Rand’s Atlas Shrugged recently, so I found this quote deliciously fitting. Nocera goes on to ponder what on earth these people do to deserve so much money. I found that fitting too. He’s damning them for their salaries without even knowing why they get paid. Good job, buddy.
People seem to assume that no one could possibly earn millions of dollars in pay. They don’t truly deserve the money, so it isn’t problematic to slash their bonuses and make them give back salaries they’ve already received. Apparently Feinberg isn’t that aggressive. As ABC explained:
Illustrating his general hesitancy to use clawbacks, Feinberg did not ask those employees to return any pay they received from January through October this year.
This is not the case for the Bank of America chief executive:
Bank of America Chief Executive Ken Lewis, who has announced he will leave the company by the end of the year, will receive no more pay for 2009 and will have more than $1 million of his prior pay clawed back, according to a deal Feinberg struck.
Wrong. The whole train of thought is off. Regardless of how the general public feels about what someone ought to get paid, there are actual reasons beyond “they’re greedy bastards” for these salaries.
Let’s pretend for a moment that these millionaires are exceptionally good at their jobs. Note that they are working for companies which are clearly struggling already. If you slash their bonuses and pay, it will be much, much easier for other companies to offer them better deals.
Consequently, what do you suppose they will do? What would you do, if one company offered you substantially more money to do your job while another required you to give parts of your salary back? How will it go for these struggling companies as people they need get better offers elsewhere? It’s not hard to imagine the next step. The ABC article continues:
Bank of America Corp said on Thursday that Feinberg’s rulings would put it at a disadvantage as it competes with firms not under the pay czar’s thumb. The bank said its employees were already being poached by rivals.
Who could have predicted that? Probably not Joe Nocera.
MS is a conservative undergraduate at the University of California, Berkeley. No, seriously. Berkeley. She has been writing for America’s Right since October 2009.