As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Monday, August 17, 2009

Wait Until The Masters Of The Universe Hear About This

Interesting if true:

Kenneth Feinberg, the Obama administration's pay czar, said on Sunday he has broad and "binding" authority over executive compensation, including the ability to "claw back" money already paid, and he is weighing how and whether to use that power.

Feinberg told Reuters that Citigroup Inc (C.N) included the contract of energy trader Andrew Hall in submissions due Friday by seven major companies still locked in the federal government's TARP Program.

Feinberg said he hasn't looked at Hall's contract, which reports have said could pay him as much as $100 million this year.

"Whether I have jurisdiction to decide his compensation or not, we will take a look and decide over the next few weeks," Feinberg said after speaking at a public forum in Martha's Vineyard, Massachusetts, part of a newsmaker series hosted by the Martha's Vineyard Times newspaper.

I agree that we have to do something about the problem of rampant income inequality, which is an epidemic that, if unchecked, will absolutely destroy the greater economy. But I'm not sure I find claw-backs like this to be the best method, especially when we've seen banks react to rules on bonuses by turning them into salary. Rather, the best way for government to encourage greater equality is not through after-the-fact takings, which can be scammed anyway, but through large marginal tax rates at the high end. This created massive productivity and prosperity in the 50s and 60s. Doing it through claw-backs feeds this notion that Democrats are illegally taking money out of the pockets of the wealth creators. Why not stop the hoop-jumping and just tax heavily at the top end? Also, you could make banking a much more staid and boring business through regulation and leave the ability to make lots of money to the risk-takers whose risk will actually create middle class jobs.

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