Friday, October 14, 2011

Further thoughts on Dr. Warren

On Wednesday, I wrote about why I thought Dr. Warren's ideas are wrong.

This morning, I had a further thought. An epiphany, if you will.

Now, again, this is probably rather naive and simple-sighted of me, but the irony of the situation amuses me to now end.

In part of the 2009 interview with Dr. Warren that I did not quote, she said:
HINOJOSA: So, how is it possible? We were all upset about these big bonuses and all this executive pay. And it’s right back—this is like deja vu all over again.
WARREN: Yeah. This one, I have to say, truly amazes me, that these folks who are supposed to be the smartest folks in the room, believe that they can take taxpayer money and save their businesses from complete destruction, and still continue to reward themselves as if—they had earned it all. It’s as if they don’t understand the world changed when you had to take money from the taxpayers to stay alive.
HINOJOSA: But did the world really change for them?
WARREN: Well, evidently not. And—I think what that means is that we really have to change this one now, again, by statute. I’m sorry, I—I was really a believer. “The market will heal itself, everything will correct here,” at least on executive pay. Because no one would be so foolish as to think, “I’ll take taxpayer money and then, while people are unemployed, I will lard my—myself with—with pay.”
For her, one of the most egregious actions was that executives continued to get big paychecks, and that bonuses were paid out, even though these companies received TARP and other bailout funds.

But what were the companies supposed to do? As I recall, they were contractually obligated to pay out those bonuses. Yes, most of the executives and traders returned them, or donated them to charity, due to public pressure and shaming, but the companies had no choice in the matter. Had the not paid those bonuses, they would have been subjected to employee lawsuits, which would have cost them even more money.

I mentioned irony earlier, and here's where I find it. Dr. Warren wants to control executive compensation for companies that received federal funds, and thinks that the bonuses shouldn't have been paid. There is already a free-market process in place for that. It's called bankruptcy. Had those banks been allowed to go into bankruptcy, the courts could have voided the employment contracts, thus eliminating the employee bonuses. The courts could have restructured the compensation packages for all of the employees involved. Any expenditures require the approval of the appointed trustee (if there is one) and the court.

However, that's not good enough for the socialist and progressive members of our society. Free-market corrections aren't "social justice", whatever that means. Instead, the answer is always more government, more regulations, and more control.

We see where that has pushed this country.

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