Obama Encourages Corporate Malfeasance

The trainwreck that is the Obama administration continues with his support for caps on executive pay. This bad idea has been tried before, and had the disastrous result of enhancing the power corporations wield over their employees, particularly with upper and middle management. It contributed to many of the instances of corporate malfeasance.

The problem is that the Obama administration is attempting to cap executive compensations at below market rates. Whenever the government does this, people come up with alternate forms of compensation to offer in lieu of the salaries or bonuses that are now illegal. A company may, instead of paying its management a high salary, offer them a lower one and buy them a house. It will buy them health club memberships, or give them no-cost vacations at company-owned resorts. The end result? People who don’t own their homes, but are dependent on their employers for their housing, their memberships, or even their kids’ schooling.

Many corporate scandals progress until someone is brave enough to blow the whistle. When blowing the whistle merely only the loss of a paycheck, people are still reluctant to do it.  A loss of a paycheck and the loss of one’s home, one’s social circle, access to the kids’ schools etc, and the incentive to turn a blind eye to criminal behavior, or even to participate in it is heightened.

One would think that one of the major lessons of the current meltdown would be do decentralize economic power by reducing the competitive advantage handed by the regulatory environment to large, hide-bound companies. Instead, the Obama administration is attempting to tilt the playing field further in their favor. Assuming that he is sincere in attempting to curb malfeasance and dereliction of duty amongs corporate officers, this bill is definitely an own goal.

I thought it would be many decades before we saw an administration as incompetent as that of George Bush. I was wrong; it took no time at all to get one that was even more incompetent.

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.