Corporations bow to Federal power
The Federal government has now grown so powerful that
some in this nation are taking its slightest wish to be a command.
The announcement on Monday by a group of major American corporation,
including Hewlett-Packard, AT&T, Tyco and others, that they will
be adopting new executive compensation guidelines is a sign of this.
The corporations have said that they will develop new rules regarding
the compensation of top executives based on a report from the
Conference Board that was also announced on Monday. Some will
maintain that this is nothing new, that businesses have many times
tried to get out in front of possible new regulations by adopting
some sort of voluntary self-regulatory scheme on their own. While
that is true, it's never been a good sign, but this move is much more
significant. To my knowledge American corporations have never
subscribed to the idea that the State has any power in the area of
setting the compensation that corporate employees, particularly those
at the upper end of management, may receive. To my way of thinking
this is yet another example of the expansion of the powers of the
Federal government far beyond anything allowed by the Constitution or
envisioned by the nation's Founding Fathers.
The companies are making this move in an obvious
attempt to head off yet more regulation by the anti-business Obama
regime. President Obama has repeatedly stated that he believes that
corporate executives' pay is too high and is not properly linked to
the actual performance of the executives or the companies. According
to the new guidelines executive pay is to be more transparently
linked to performance and the compensation packages are to be “more
affordable”, eliminate “golden parachutes”, and be subject to
more oversight by company boards of directors. None of these things
can be measured objectively: one man's excessive pay is another's
reasonable reward for effort made and results obtained. Likewise,
the amount of gold in one's parachute is a matter of interpretation,
not solid fact. That means that any regulations based on these ideas
will be open to interpretation and companies will be left to wonder
if they've overstepped the limits until they're reprimanded by some
Washington-based bureaucrat. About the only thing missing is a
requirement that the executives bow daily in the direction of
Washington and give thanks to President Obama that they have a job.
Given this administration's propensity for exacting arbitrary ex post
facto punishments for corporations and executives which it thinks
have crossed the boundary of what is “reasonable” (just look at
the recently announced prosecution of Bank of America for fulfilling
the contractual requirements that it inherited when it took over
Merrill Lynch – at the State's insistence it should be noted see:
http://www.ncbusinesslitigationreport.com/2009/04/articles/fiduciary-duty/threats-and-secret-promises-bank-of-americas-merger-with-merrill-lynch/).
How long will it be before executive pay is held in escrow until
the State determines whether or not it is “excessive”?
This is the sort of corporate kowtowing that
demonstrates how tight the link is between regulation by the State
and corporate well-being. Left unsaid in this announcement is the
realization that the socialists in Washington have it within their
power to simply regulate executive pay in any manner they may wish.
The fact that such regulations would be unconstitutional no longer
even comes up for discussion. It's as though American businesses
have lost their backbone. A generation ago the very idea that the
Federal government has the power to place limits on how much money
the top employees in a business may make would have been considered
laughable. Furthermore, businesses of yesteryear, faced with such an
extension of the power of the State would have stood up for their
rights and filed suit in court to prevent any such regulations from
being put into effect. How the mighty have fallen.
Some will argue that the new rules (a version of which
are already in effect for any financial institution that submitted to
the State's blackmail and accepted TARP money) aren't any different
than other Federal rules that corporations already abide by. What
they overlook is that the State has never before (except during WWII
and a short time during the Nixon years) set limits on how much money
a person is able to earn in the course of legal employment. What is
more troubling in some ways, than the restrictions themselves, is the
general reaction by the public that “those scoundrels had it coming
to them”. The Obama regime is deliberately making this change as a
populist act of class warfare. And Americans are falling for it
because they fail to realize two things: there is considerable
mobility between classes in the U.S. and those who are in the lower
ranks of earners today generally move up the ladder to higher paying
jobs in the future; and once the State is allowed to regulate
compensation in one area or for one class the precedent will be used
to gradually lower the limit at which such regulation kicks in.
President Obama has already defined $250 thousand dollars as the
amount of income which delimits the “wealthy” from everyone else.
By using class envy to drive his new regulations President Obama is
deliberately pandering to one of the worst emotions of man: envy.
This emotion has been considered to be a sin by many as it makes it
all too easy to justify shackling those of whom one is envious.
President Obama has been at pains to point out that racism has no
place in American society and he is to be applauded for that.
However, he is deliberately acting to substitute class-envy for
racism so as to set the stage for ever more onerous burdens to be
placed on the supposed “wealthy” of this nation. Not only is the
President introducing a darker, more vindictive tone into the debate
over compensation, but he is also greatly extending the
extra-constitutional reach of the Federal government. This is yet
another example of how little constitutional limitations on Federal
power matter to this man whom we are told is a “constitutional law
expert”. Once again the powers that be are able to act as they
please because they know that the vast majority of the American
populace has no idea what is actually written in the Constitution.
Because of this ignorance the Obama regime is able to more-or-less
make up the rules as it goes along and change the interpretation of
existing rules to fit its conception of how things should work.
There are many Americans who think that strict limits
should be placed on executive pay. They cite supposed gaps between
performance and compensation, a lack of oversight of pay packages by
corporate boards of directors, and how “unfair” it is that some
executives make millions of dollars a year while other employees work
for far less. According to the thinking of such people all of these
“problems” are best addressed by extending the power of the State
over business activities. What they overlook is that the
corporations themselves do not seem to view the situation with alarm
– something which would be happening if any of these businesses
felt endangered by the levels of executive compensation they are
dispensing.
It is entirely possible for boards of directors to
discuss in great detail the amount of money to be paid to a member of
upper management and reduce the amount if they feel that it is out of
line with the benefits that they anticipate the new employee will
bring to the company. The pay scales of upper management in American
businesses are high because the amounts of money which these people
can make for their employers is also high. It is not unreasonable to
pay a manager who brings in $700 million dollars of new business or
introduces similar operational savings to the bottom line of a
company $300 million. From the standpoint of the company they've
gotten a bargain and it should not be anyone else's view which
prevails in the setting of the wage – outsiders are not privy to
all of the information available to a corporate board, nor are they
affected by the amount of compensation given out. Once again
Americans are falling victim to the liberal credo that outside third
parties know what is the best course of action for other to take.
Once again the State is usurping power which rightfully belongs to
others. And once again Americans are being suckered into giving up
yet more liberty – this time by the promise that they'll get to
watch as greedy corporate executives “get theirs”. In the end
the only certainty is that the Federal government will have further
expanded its powers at the expense of the American public.