Could See This Coming!
posted at 4:28 am on October 23, 2009 by Dafydd ab Hugh
In the companion piece to this post, Couldn’t See That Coming!, we noted that the United States Department of the Treasury, run by tax evader Timothy Geithner, has decided to institute wage controls at those companies that accepted large amounts of TARP money; TARP is the Troubled Asset Relief Program… that is, the Wall Street (and Motown) bailout.
We ended that post with the by now familiar bleat (which I shamelessly stole from Patterico, though I added the adverb, which Patterico began copying — God, how incestuous the two of us are!) the pathetic bleat of “What could possibly go wrong?” Now, with a tip of the hat to Rich “Mullings” Galen, we learn exactly what can possibly go wrong:
At Treasury, President Obama’s pay czar, Kenneth Feinberg, announced sharp cuts in pay for 175 top executives at seven big banks and automakers that received hundreds of billions of dollars in federal bailout money during the financial crisis. The new structures reduced the cash salary paid to some executives by 90 percent and tied more compensation to long-term stock awards….
At the Federal Reserve, Chairman Ben S. Bernanke proposed a broader but less proscribed plan to restrict pay at banks. The aim is to prevent them from rewarding employees for actions that could endanger the firms’ long-term financial health. Unlike Feinberg’s more limited plan, the Fed’s guidance would cover all banks it regulates — even those that never received a bailout — as well as U.S. subsidiaries of foreign companies.
But hey, it’s not like the federal government is, like, you know, taking over the private sector; they’re not actually setting wages for all banks — they merely get the final say on what those wages will be:
However, the Fed’s proposed rules have wiggle room: The guidelines would let banks set their own compensation but give the Fed veto power over pay practices that it determines could threaten the safety and soundness of a bank. They would extend the regulators’ reach into pay practices affecting tens of thousands of bank employees, from senior executives to traders of complex securities.
Thank goodness the government of Barack H. Obama dodged the temptation to allow the Party — sorry, I mean the State — to own all industries; that would be Marxism (which would presumably thrill Anita Dunce). Instead, the banks and industries will all be privately owned — but the owners will take orders directly from the Party.
Such an arrangement is not Marxism; it’s fascism, as classically defined. But with the Obamacle, it’s liberal fascism, fascism with a smiley face.
Galen takes us by the hand and leads us to the threatened land:
Putting aside defense firms — which exist on government funds — there are thousands and thousands of companies which get local, county, state or federal contracts. Does every executive of each of those companies fall under the same rule?
Should the Governor of Missouri decide how much the owner of the company which provides the janitorial services in the State House in Jefferson City can earn because he takes State money? Or, the executives of airlines on which government employees fly?
We have marched down this road before, with the wage and price controls imposed by Richard Nixon in 1971, ostensibly for only 90 days but in reality for nearly three years. The dreadful policy was finally abandoned as a colossal failure in April, 1974, just before Nixon’s impeachment hearings began. This brief squib from the Econ Review is a succinct summary of the catastrophic Nixonian policy that Barack Obama seems determined to replay:
August 15, 1971. In a move widely applauded by the public and a fair number of (but by no means all) economists, President Nixon imposed wage and price controls. The 90 day freeze was unprecedented in peacetime, but such drastic measures were thought necessary. Inflation had been raging, exceeding 6% briefly in 1970 and persisting above 4% in 1971. By the prevailing historical standards, such inflation rates were thought to be completely intolerable.
The 90 day freeze turned into nearly 1,000 days of measures known as Phases One, Two, Three, and Four. The initial attempt to dampen inflation by calming inflationary expectations was a monumental failure….
While there were skeptics in August, 1971, there were a great many who thought “temporary” wage and price controls could cure inflation. By 1974, this notion was thoroughly discredited, and attention gradually turned toward a monetary approach to inflation.
Funnily enough, ObamaCare is also a reenactment of Nixon’s own attempt to take over health care. For these two policies and many others (such as his “enemies list” and frequent attempts to control the press), I insist that Richard Nixon — like Lyndon Johnson, Franklin Roosevelt, and Woodrow Wilson — was also a liberal fascist. Barack Obama clings to the coattails of a well-established (albeit perverse and unAmerican) tradition.
Obama has a different, meaner purpose for wage controls than trying to beat down inflation; at least Nixon thought (wrongly) that his plan would benefit the country. By contrast, Obama wants to dictate the compensation packages of bank officers far above his pay grade for two equally discreditable reasons:
- He simply believes in his own omniscience and generally wants to command every aspect of the American economy and culture;
- He is a vindictive SOB and wants to punish those who made so much more money than he, even though he is the one with “the Vision of the anointed.” How dare they!
Nixon’s motive for liberal fascism was public; Obama’s is deeply and disturbingly personal.
But the effect will be the same: the collapse of those companies “blessed” by the invisible foot of government, swiftly followed by the collapse of confidence in the ability of the federal government to do anything right.
To quote that infamous right winger, Pete Seeger*, who turned 90 this year:
When will they ever learn?
When will they ever learn?
* For the irony impaired, Seeger is a Communist folk singer, pardon the redundancy. The quoted line is the chorus from what is likely Seeger’s best-known pacifist song, “Where Have All the Flowers Gone?”
Cross-posted on Big Lizards…
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