Paul

Ibrahim

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February 9, 2009

An Attack on Failed Executives, Led by the Biggest One of All

The national twilight zone Americans collectively entered in September is rapidly becoming a perpetual reality. First, politicians convinced themselves with relative ease that it was acceptable to spend over a trillion dollars on bailouts for firms that were “too big to fail.” Then President Bush and congressional Democrats joined forces to support a bailout of failed automakers and the oppressive United Auto Workers instead of allowing them to naturally undergo Chapter 11 reorganization, designed precisely for their circumstances.

It suddenly became normal for the federal government to subjectively aid corporations of their choice, and by logical extension, it became tolerable for politicians to interfere in the businesses’ business. It was fascinating to witness Sen. Chris Dodd, for example, asking for the resignation of a corporate CEO who was apparently not performing up to Dodd’s standards. Dodd, himself a nearly 35-year institution in Congress, was personally a primary force behind the failures of Fannie Mae and Freddie Mac, and was part of a government that had run up a $10 trillion debt he is punting off to a younger generation. Is he, or any other big government politician, really in a position to demand the resignation of anyone before himself?

The hypocrisy, unfortunately, does not end there. It has ascended through the bloodstream of the government beast to reach its very head – President Barack Obama. Obama launched a crusade last week against chief executives in the private sector for earning large salaries. He explained, “What gets people upset – and rightfully so – are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”

First, it is important to note that people are most certainly upset by anyone being rewarded for failure with hard-earned taxpayer money. But the anger should not be aimed at the recipients of subsidies as much as it should be launched at the government that enables arbitrary, economically wasteful and politically motivated transfers.

Why would anyone be surprised that recipients of government cash are going to spend it as they wish? People naturally pursue self-interest, which is precisely the reason that it should never be the government’s role to feed these interests. The entire controversy about bailout funds going toward executive income would have been swiftly resolved by the government not doling out any such funds in the first place. The corporations would then be on their own – as they absolutely should be – and they can spend their money freely as determined by their shareholders, directors and management.

But it is not that easy. Obama’s and politicians’ ire is not merely directed at executives receiving federal funds. It applies to all high-income executives, even if their salaries were determined by market forces that are more accurate and efficient than any politician will ever be. The target is too alluring and the political payoff too attractive to let the opportunity pass. The resulting distraction is necessary for a big government agenda. How better to shield against American anger at government abundantly rewarding failed corporations, state governments and Democratic projects than by fabricating artificial anger against golf-playing, jet-flying, fine-dining executives who appear to be rewarded for failure?

The hypocrisy is everywhere. At least when executives fly private jets, they are sustaining a profitable industry that creates jobs and wealth. But when Joe Biden rides Amtrak (which hasn’t turned a profit in nearly 40 years) every day for decades, he is benefiting from a financially failing and economically wasteful service he and his friends continue to subsidize with taxpayer money.

And if these politicians are going to attack CEOs for making too much money, why not demand that the United Auto Workers, who earn drastically more than their counterparts working for automakers in the south, take pay cuts too? After all, they are a major reason GM and Chrysler “had” to be bailed out.

And why are politicians supporting family CEOs – homeowners, that is – who failed to fulfill their mortgage obligations, while they seek to punish corporate CEOs?

Well, it’s not that arbitrary after all. One group is a bigger voting block than the other.

The actions of Obama and the Democrats are economically wasteful and will stimulate nothing but government growth and their partisan constituencies. But for Obama, it is necessary to sacrifice CEOs as a distraction. It is necessary to distract from the fact that several of his nominees, including Tim Geithner, Tom Daschle and Nancy Killefer have been drowning in ethical questions that he willingly overlooked except when they became too politically burdensome to bear.

It is necessary for Obama to distract from the fact that he has already broken a number of campaign promises, by nominating, for instance, lobbyists for high-ranking roles in his administration. It is necessary to distract from the fact that the “stimulus” package he is about to sign is actually a massive Democratic wish list of pork that has been accumulating since President Bush took office. It is necessary to distract from the fact that the financial bailout he supported, and still does, has flatly failed. It is necessary to distract from the fact he is massively expanding the budget deficit and the national debt to a degree that cannot even be approached by any corporate executive.

In short, Obama needs an unjustified attack on other executives to distract from his own failures as an executive. He must do so in order to achieve the change he believes in – whatever that is.

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