CNBC reported on Obama’s Pay Czar earlier this week: Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the annual salaries of their 25 best-paid executives by an average of about 90 percent from last year. As the Heritage Foundation has explained before, wage controls don’t work . Policy based on envy and disdain rather than sound economics will do nothing to aid a recovery.
Policies premised more on class-warfare than sound economics, are not going to get us out of this recession. They may actually delay recovery. A case in point: the executive pay guidelines released by Treasury today. Though the new rules seem to apply, at this point, to only the few corporations that have received “exceptional assistance,” such as AIG and Fannie Mae, they are clearly a template for more broadly applicable rules. It is worthwhile, then, to consider how they undermine incentives for performance and economic growth. One particularly populist and …
