Notes From Babel

Business as Usual…Or Not?

with 2 comments

I have mixed feelings on whether companies who take bailout money should now be held to a different standard. Wells Fargo has now been forced, through political pressure, to cancel a corporate retreat. My first reaction is that any company who takes corporate money should be more frugal and responsible. But on second thought — whose standard of frugality and responsibility should we employ? Corporations are not supposed to be run the same way government is — and thank God for that. Indeed, the fact that government is so hamstrung by its democratic nature is supposed to result in fewer meddling in economic affairs. Unfortunately, tenacity got the better of us there.

Wells Fargo’s tradition of holding retreats was one way that it cultivated better performance from its most valued employees. In other words, these kinds of decisions to boost morale and productivity are how successful companies are more efficient and effective than, say, government workers.

Corporations who took government money should be ashamed of themselves, and I will do what I can to withdraw my support from them. But we should refuse to begin acting as though they are answerable to us in the same way our elected officials are. This side-effect of the bailout will more surely lead to socialism if we don’t.

UPDATE: Obama Plans to Cap Executive Pay for Government-Assisted Financial Institutions. In other words, so long, Citigroup, hello Federal Department of Citigroup.

Written by Tim Kowal

February 4, 2009 at 2:57 am

Posted in Economics, Politics

2 Responses

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  1. Where does President Obama derive the authority to cap executive salaries? Is there a latent TARP provision I’m unaware of that empowers the President to do this? I hope the Cult of Personality isn’t preventing people from asking questions.

    This has the obvious potential to deplete and dissuade management talent from the firms that need it most, but what I find especially odious is that a number of the larger institutions did not even want TARP money, but former Secretary Paulson essentially forced them to accept it to minimize the aspersions cast upon the more needy firms.

    And no, I’m not excited about the Federal Department of Citigroup, or FDOC for short.

    Ryan T. Darby

    February 4, 2009 at 8:21 pm

  2. You said it, my friend. This is how regimes change. They don’t hit you over the head. They make it look like you asked for it. When people said that an Obama administration would threaten America with socialism, his supporters just said “Oh, pshaw.” I fear we don’t have long to wait to prove our case.

    Tim Kowal

    February 6, 2009 at 12:11 am

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