Why government should run businesses
October 22, 2009
Imagine a future where Major League Baseball is in trouble. Three of the top teams are about to fail, but the new president is a huge baseball fan and decides to offer a bank-style bailout to the Yankees, Red Sox and Rangers. The teams are able to stay solvent and the season is able to continue. The government hopes to get its money back if the teams do well enough to attract fans and new investors. Along the way Congress decides that any team that is using federal dollars should have a salary cap of say $200,000. This is below the union contract, but the rules don’t apply to Congress. Do you think the Yankees will be able to keep their best players? Will the fans keep showing up? Will investors be interested? The easy answer is NO. The government will decimate each team rendering them completely worthless.
This is what the government is doing at the banks that owe us (taxpayers) billions of dollars. Annual salaries are being cut by 90% over last year, with total comp dropping by about 50%. I think the folks responsible for the mess we are in should be terminated and we should hire the best and brightest (and pay them handsomely) to fix these companies. I don’t know any CEO worth his salt who would sign a SOX compliance statement for $200K – not a single one.
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This was all handled so wrong from the get-go. Bankruptcy courts and federal trustees are set up to handle this, not our damn congress.
This is one of the few things I was so disappointed in President Bush for. AIG…
But, once this bad spiral has started, and our tax dollars are going to CEO’s indirectly, I am for curbing salaries. The execs can make the money on the back end, like real entrepreneurs through the increase in value of the company through the stock price.
Comment by David Mosby — October 22, 2009 @ 11:00 am