The Pay Czar Rules: It's Eventual Impact On You

Special master pay czar Kenneth R. Feinberg is about to rule on executive pay at Citigroup, Bank of America, General Motors, Chrysler and AIG. He is going to call for major pay cuts at these firms, according to leaks. (Although, it seems some of the top execs will get sizable stock positions, with middle management really screwed.)

Bob Murphy's comment highlights the major danger in all this:

Regardless of the legal niceties, this is a very bad development. Now the unruly masses get a taste of seeing the noble DC crusaders pushing back against the corporate fat cats. Hip hip hooray! People not profits!

The masses aren't likely to notice the legal niceties of these being bailout firms. It's smash the bad guys, to them.

It makes future demands for pay cuts at other firms, that had nothing to do with receiving bailout money, much easier for the egalitarian Obama Administration to push on later down the road. And it makes overall government meddling by, as Murphy puts it, "The noble DC crusaders" that much easier.

As for the characters at these firms that will be facing the cuts, the real problem started with the bailouts that should have never occurred in the first place. If a firm can't stand on it's own financial balance sheet, then true bankruptcy (not the phony gvt bankruptcies of GM and Chrysler) makes a hell of a lot more sense then the government propping up firms that can't survive on their own. But, it's all political now.

Every new crack the government slips into, the more inefficient the economy becomes, the more money directed to propping up politically favored losing schemes and the lower the standard of living for us all.

Don't be concerned about the Pay Czar cuts to these executives, be concerned about the precedent it is setting for further meddling . With the pay czar meddling resulting in cheers from the masses, more and more meddling, rest assured, will be on the way, and a march toward a lower and lower standard of living with it, for you and me.

Pay cuts for you and me won't be needed, there will just be less around for all of us to buy.