Is government to deceide how much pay?

[MS Fowler]

Seems like the Obama administration is moving toward setting pay rates.
Where is government given that responsibility?

It appears that the administration is working to make the public angry about executive pay as a way to be able to control it. Unions and Acorn-type groups are doing bus tours of the AIG execs. What is the purpose of that other than to encourage jealousy and rage?
I can think of another popularly elected administration that encouraged this kind of anger, rage, and hate. That did not work out too well.

Seems to me that the legal way to have attacked the problems at AIG, GM, and Chrysler would have been to advise them to declare chapter 11. That would have allowed them to void existing contracts and renegotiate better deals with their execs and unions. They would not have gone out if business under chapter 11, but they would have been given protection and time to reorganize.
Declaring that bankruptcy is "off the table" removes all incentives for creditors to settle. Why should they take 50 cents on the dollar when the government might give them 80 cents, or even the full dollar?\So now we have the prospect of the government deciding what is the appropriate compensation. Michelle Malkin wonders, in a recent commentary, will the productive class simply have a Galt moment, simply walk away? (Galt is the protagonist in Atlas Shrugged)

Capitalism is not dead (yet). but this government is doing its best to kill it.

I even heard one democrat Senator declare that she didn't care if their recently passed bill to tax AIG execs at 90% was constitutional or not--they had to do something!
That is scary--at least for anyone who believes in a constitutionally limited government. If they can do this ( pass laws that enact retroactive taxes om a specific group), what is to stop them from doing anything they dream up?
Is totalitarianism coming, or is it already here?

[Matt L]

The owner should be able to decide pay rates. That's now us.

Whether chapter 11 would have been a better solution is a question that we will never answer.

[Skippy]

The companies that are now on the bailout dole need to do what the government wants or they go off the dole. The mistake was bailing them out in the first place. I emailed all three of my congresscritters when this bailout business first started. I believe two out of three voted the way I wanted. The other one was Harry Reid so we know what he did.

[MS Fowler]

Originally Posted by Matt L

The owner should be able to decide pay rates. That's now us.

Whether chapter 11 would have been a better solution is a question that we will never answer.

Does the "owner" have the right to violate contracts previously agreed to?

[Matt L]

Originally Posted by MS Fowler

Does the "owner" have the right to violate contracts previously agreed to?

Good question. The UAW renegotiated their contract, why not these guys?

[aklim]

Originally Posted by Matt L

Good question. The UAW renegotiated their contract, why not these guys?

Problem with the govt is that it is NOT a negotiation. It is a "This is the way it is." thing.

Now, if you want to talk ownership, fair enough. We can talk ownership. Why did you, the owner, let it come to this? You should have said earlier on, "If you want a loan, these are the terms.". You should not have waited and then change the terms of the loan. If so, this can mean only 2 things. Either you did not properly evaluate the liabilities or you waited till something broke then you used it to make yourself look good. In this case, I suspect both.

I think Dynalow said it best here.

Congress to AIG : "Sorry fellas, we tried to slip one past the taxpayers and hand you bonuses in the last bailout bill. But, , we had no idea this would cause the fury it did. So, now, like the chicken scrabble cowards we all are, we're throwing you under the bus. All in the name of capitalism and fair play ..and saving our own soft white arses."

[POS]

I didn't vote for the idiot; as a business owner, this is just one more stupid idea that his administration (and himself) have come up with.

[aklim]

Originally Posted by POS

this is just one more stupid idea that his administration (and himself) have come up with.

I disagree with you on that. It is a brilliant idea designed to say "See, we are on the ball and we care. Vote for use next time.".In my mind, I want to know why you didn't come up with this BEFORE you handed over the money. Either you were asleep at the wheel or you are trying to milk this for all it is worth.

[tankdriver]

Originally Posted by Matt L

Good question. The UAW renegotiated their contract, why not these guys?

The UAW was asked to renegotiate because the company wasn't making any money. These financial companies lost money. Totally different.

[Pooka]

This is as simple as public relations. During some past national crisis the heads of companies would declare the country comes first and then announce they were cutting their own pay to $1 a year. They would then ask the other leaders in their company to do the same. In fact, I think the head of GM just did this.

Please note that none of these people starved to death as most had millions in the bank when they did this. Also, none of them gave up any perks or benifits which, if you are the head of something like a major oil company, are pretty sweet.

The companies that did this got lots of free publicity and in many cases the buying public responded in a good way.

During World War 2 some companies even went so far as to advertise that people should not buy their products until after the war. They knew the war would end someday so they kept their brand before the public even though they had nothing to sell.

In a crisis perception is not everything, but it counts for a lot. But can you see a CEO coming out and saying today, "It is true! We do make too much!"

We need business people that will throw politics out the window and tell the American people, "The recovery starts right here, right now!", and then tell the reporters to write whatever the hell they want because they will be too busy working to read it.

I am not sure how much good this would do overall, but it would shift the focus off how much CEO's get paid.

[kerry]

Problem is that the 'owners' have very little say in executive compensation as I understand it. Corporations are run by a managerial class which determines it's own pay rate. There's always pressure to keep the pay of the working class of a company at a minimal level but very little or no pressure to keep managerial compensation at a comparable level. There's always some general sense in the air that unions are pushing up worker pay above competitive levels but very little scuttlebutt about managers raising their own pay.
Mondaragon cooperatives deal with the problem by having set 'pay rates' based on multiples of the lowest pay rate and the whole corporation having a vote when those multiples are changed.
If I was a shareholder in something like AIG, I'd want managerial salaries set at some multiple of lowest paid worker salaries with any change in those multiples being approved by shareholders.

[aklim]

Originally Posted by Pooka

This is as simple as public relations.

Simpler if you look at it as a diversion. Congress has very quickly passed bills on it simply to cover up the fact that they handed over billions BEFORE checking on the liabilities of the company they were giving it to. Now that the whistle is blown, why, they have to scramble to cover up the fact that they were asleep and the wheel so we have the outrage, etc, etc. Where do you see the outrage at the fact they handed money over without checking carefully?

[EricSilver]

Originally Posted by MS Fowler

Does the "owner" have the right to violate contracts previously agreed to?

If the owner's bailout money makes it possible for those contracts to even remain in force, then yes.

The rules changed the moment they accepted taxpayer money.

[kerry]

Originally Posted by MS Fowler

Does the "owner" have the right to violate contracts previously agreed to?

As I mentioned in another thread, even if the contract is binding, it would be better for the politicians who approved the bailout money and the managers at AIG to break the contract and have the manager's who are seeking their bonus take AIG to court. How many of those million dollar bonus managers, especially those formerly employed by AIG, would press the lawsuit?

[aklim]

Originally Posted by EricSilver

If the owner's bailout money makes it possible for those contracts to even remain in force, then yes.

The rules changed the moment they accepted taxpayer money.

How does that change anything? What has one contract signed in the past got to do with the present? Isn't that like saying that just because my financial situation changed, I can break my contract with you?

What you are saying is that you can arbitrarily change a contract. So if a company is in dire straits and sold itself to me, are you saying that I, the new owner and savior of the company, can tell you to go fawk yourself with that contract the previous owner of the company signed with you? This should have been something discussed BEFORE money changed hands. So, if I am the bank that owns your house since your previous bank sold the loan to me, can I change the terms and have you pay more interest?