Executive Compensation

So much debate, so little time. Should the government regulate executive compensation? I'll ignore, for now, whether such regulation is realizable (for all kinds of reasons), consistent with the American vision, and popularly supported. Instead, I conducted a thought experiment to determine whether there would be ANY condition under which it would be appropriate to regulate executive compensation. The answer is unequivocally yes: if executive compensation so undermined, so endangered, so threatened the common good and/or the welfare of the nation that it was a clear and present danger, then it should be regulated just as any other danger would be (including economic concerns), e.g., sale of methamphetamines, child labor, disposal of radioactive waste, indentured servitude, export of weapons technology, etc.

If that is the case, then the real concern is not the size of executive compensation packages per se. (The flip side of Jesus' "the poor you will always have with you" is that the oligarchs you will also always have with you). What seems much more problematic is that compensation mechanisms may have been a proximate cause of the financial crisis and the "great recession," and indeed may be at the root of a great many other economic pressures that are not in the public interest. There is, in fact, a great deal of compelling evidence for this. Many compensation schemes we have heard about handsomely, obscenely, rewarded executives and others for precisely those actions and decisions that precipitated, is precipitating the ongoing disaster: short term metrics at the expense of long term prospects, extreme leveraging of positions, IBGYBG attitudes, hedging against one's own positions, abandoning prior obligations to employees and retirees, cronyism, cowing regulators and buying legislators, ignoring blatant conflicts of interest. If it walks like a clear and present danger and quacks like a clear and present danger...