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.

What's wrong with Elizabeth Warren?

Rod Dreher, formerly of the editorial board at the Dallas Morning News and the Templeton Foundation, and now with The American Conservative, asks "Remind Me Why I’m Supposed to Hate Elizabeth Warren, Because I’m Not Seeing It".


As part of his evidence, he refers to a PBS interview conducted in 2009.


To me, the critical portion of the interview that he quotes is this:

WARREN: We’ve gotta change the executive compensation structure. And it’s straight across the board.

HINOJOSA: For every single company across the board?

WARREN: You—you bet.

HINOJOSA: But when you look at Goldman Sachs, for example, they did pay back the Tarp money. So, what responsibility do we have, what authority do we have to go in and say, “You need to check out your executive pay and lower it”?

WARREN: They paid back the Tarp money, but they’re still operating with government guarantees. They still are counting on the taxpayer to back stop them. And I believe that gives the taxpayer a seat at the table in decision making over executive compensation. It’s our money. The key has to be that congress needs to rewrite all of the rules on executive compensation. And we need a special set of rules for any company that’s relying on any kind of taxpayer back stop.

HINOJOSA: And the hands are gonna go up and say, “Oh, my god, they’re controlling executive pay. This is—we’re going down the tubes in America.”

WARREN: They’re saying, “You might cut us off from our taxpayer subsidies.” And, you know, that just breaks my heart.

HINOJOSA: Okay. But—but if they’re saying, “Look this is capitalism.”

WARREN: No, this is not capitalism. That’s the whole point. This is socialism. This is the part where they’re using taxpayer guarantees and taxpayer support in order to eek out some kind of private gain. And this is just wrong.

I have no problems with being beholden to government requirements when you suck at the government teat. That's part of playing the game. If you run your company into the ground, and the government bails you out, guess what? The government gets to define at least some of the rules of the game. That's all well and good.

Unfortunately, that's not precisely what happened with TARP and the other government bailouts. The government knew that taking federal stimulus or bailout dollars could be perceived as a negative. So, they essentially forced some financial institutions that didn't need a bailout into the program, just to level the playing field, as it were. That way, no one major financial institution could say "Bank with us, we didn't take any federal money", thus adversely affecting those that did.

Not that any company would do that, would they?



Further, there were occasions when banks attempted to repay their bailout loans early, in order to get out from under the strictures of TARP, and the government told them no, they couldn't repay early.

So, for Dr. Warren to claim that a company operating under government guarantees is subject to exceptional government control is a bit of a chimera. It's not good enough that they still owe the government money, now their business model is backed by "guarantees." Do tariffs count as guarantees? What about price controls? What about startup loans similar to those provided to Solyndra (and I wouldn't have too many problems with loans bringing along leg irons, but that's another post for another day).

My issue with Dr. Warren is that she out-and-out supports a socialist agenda. Sure, for now she's trying to specifically tailor that agenda. But when has a tailored agenda remained form-fitting? How long before it becomes nothing more than a tent to cover up a multitude of sins? What are the conservative/libertarian complaints about Cain's 9-9-9 plan? The same concept applies here.

Further, let's fast-forward to 2011. Dr. Warren has been making the rounds again with her "God bless" polemic:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there -- good for you.

But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory.

Now look. You built a factory and it turned into something terrific or a great idea -- God bless! Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

 So now, it's not good enough that you have accepted direct government aid in the form of a loan or a payout. You have not just stood on the shoulders of giants a la Sir Isaac Newton. No, your entire success has been bootstrapped by a governmental support network that built your roads, educated your workers and protected your assets.

Guess what? In Dr. Warren's world, I would bet real money that this constitutes "operating with government guarantees", and your company is now subject to wage controls subject to the whim of the government.

Yes, this a bit of a slippery slope argument. However, as Thomas Jefferson reminds us "[t]he natural progress of things is for liberty to yield and government to gain ground."

Looking at her interview in 2009, and her statements here in 2011, I see nothing in her positions that would preserve the liberty of commerce without yielding ground to increased governmental control.

And that, my dear readers, is what's wrong with Dr. Elizabeth Warren.