Comments on: Golden Parachutes & The Case For Old Money http://www.infiniteinjury.org/blog/2008/09/29/golden-parachutes-the-case-for-old-money/ Good Analysis, Bad Grammar Tue, 27 Jul 2010 11:11:02 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: dc http://www.infiniteinjury.org/blog/2008/09/29/golden-parachutes-the-case-for-old-money/comment-page-1/#comment-1242 dc Tue, 30 Sep 2008 06:37:43 +0000 http://www.infiniteinjury.org/blog/?p=454#comment-1242 <p>If you haven't yet, you should read Nassim Nicholas Taleb's books, notably Fooled By Randomness.</p> <p>You're correct that there is no good reason for society to try and restrict the pay of executives in general. They can get away with it, it makes for great conversation over shrimp cocktails at the yacht club, and no one seems that much worse off in the long run. (To the extent that their profession is about inventing money out of thin air, it's not like they're sweatshop owners or anything. Let them have their fun.)</p> <p>The tipping point comes when, after a decade of their bad judgement has essentially destroyed the American economy as we know it, the public as a whole has to bail them out. The market is not going to make them pay for the damage they've done. If the mess is on our hands now (and even if Congress never explicitly gives them a dime, the situation is large enough that it is our mess for the foreseeable future) then so is the fate of these executives, and it's time for heads to roll.</p> <p>A look to Taleb might remind us that, just as 90% of these executives coasted to success on pure odds and so arguably didn't deserve their massive bonuses, now that the situation has hit the fan (as it were), the punishment for the reckless and indefensible actions of the corporations under their command should be as indiscriminate.</p> <p>They can't have it both ways. Either their ridiculous pay is a reward for steering the great ship of the American economy through calm waters, in which case their drunken sojourn into an iceberg of their own design speaks directly against their deserving another breath of free air, or they are hapless goons at the whims of forces they will never understand or control. Either way, the party is over and they should be grateful for whatever clemency the people deign to allow them.</p> <p>In a saner society they'd be tarred and feathered. Today, there should be extensive investigation, public trials, massive fines, and liberal jail time. If your industry is so big that the health of the nation (and a large part of the globe) depends on it, then you assume commensurate responsibility for the machinations of that industry. You might say: you takes your money, and you takes your chances.</p> <p>Maybe that's rabid populism. I think it's just common sense.</p> If you haven’t yet, you should read Nassim Nicholas Taleb’s books, notably Fooled By Randomness.

You’re correct that there is no good reason for society to try and restrict the pay of executives in general. They can get away with it, it makes for great conversation over shrimp cocktails at the yacht club, and no one seems that much worse off in the long run. (To the extent that their profession is about inventing money out of thin air, it’s not like they’re sweatshop owners or anything. Let them have their fun.)

The tipping point comes when, after a decade of their bad judgement has essentially destroyed the American economy as we know it, the public as a whole has to bail them out. The market is not going to make them pay for the damage they’ve done. If the mess is on our hands now (and even if Congress never explicitly gives them a dime, the situation is large enough that it is our mess for the foreseeable future) then so is the fate of these executives, and it’s time for heads to roll.

A look to Taleb might remind us that, just as 90% of these executives coasted to success on pure odds and so arguably didn’t deserve their massive bonuses, now that the situation has hit the fan (as it were), the punishment for the reckless and indefensible actions of the corporations under their command should be as indiscriminate.

They can’t have it both ways. Either their ridiculous pay is a reward for steering the great ship of the American economy through calm waters, in which case their drunken sojourn into an iceberg of their own design speaks directly against their deserving another breath of free air, or they are hapless goons at the whims of forces they will never understand or control. Either way, the party is over and they should be grateful for whatever clemency the people deign to allow them.

In a saner society they’d be tarred and feathered. Today, there should be extensive investigation, public trials, massive fines, and liberal jail time. If your industry is so big that the health of the nation (and a large part of the globe) depends on it, then you assume commensurate responsibility for the machinations of that industry. You might say: you takes your money, and you takes your chances.

Maybe that’s rabid populism. I think it’s just common sense.

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