Executive pay and stagnation

In contrast to some libertarians and conservatives, I think people who complain about executive pay may be onto something. Compensation for some of these top guys is really out of line, especially those who don't add to the value of their companies but rather subtract it. Nardelli almost ruined Home Depot so they hire him at Chrysler? What were they thinking?

I do think these things run in cycles, however, and the market (or people in companies making decisions through a market process) is even now correcting some of the excesses. As this Register editorial notes, average CEO compensation fell 25% between 2007 and 2008. It's probably the only comment on the current situation that notes the Adolf Berle pegged part of the problem in the 1930s, noting that managers at publicly-held companies have incentives to operate in their own interests rather than the interests of shareholders. The former chairman of Avis, Robert Townsend, Mr. "We Try Harder," author of "Up the Organization," nailed it about 40 years ago.

None of this means I'm remotely sympathetic to government efforts to control executive compensation. The government certainly has the power at companies that have taken bailouts. Otherwise, the only thing worse than boards stacked with CEO cronies setting CEO pay would be having the government set it.

I don't think Obama is a socialist; he's not a systematic enough thinker for that. He's more like a European-style social democrat with a deep distrust of ecopnomic freedom (people might misuse it!) and inordinate faith in government to get it right.