Executive pay regulators…
Regulate any excessive compensation in this economy—
We’re damn good too.
But you can’t be some geek off Wall Street,
You’ve got to have public appeal if you know what I mean,
Earn America’s keep.

These are the words President Obama now passes to Washington attorney Kenneth Feinberg, the newly appointed “Pay Czar”. Feinberg is tasked with overseeing the approval of major expenses for banks, automakers, and insurers that were provided funds under the Treasury’s Troubled Asset Relief Program (TARP). In addition, Feinberg will be granted power to set compensation restrictions for the seven firms that received “exceptional” government assistance: AIG, Bank of America, Citigroup, Chrysler, Chrysler Financial, General Motors, and GMAC. With the power to review and regulate compensation for the top 100 salaried employees at all seven firms, Feinberg has been afforded a great deal of clout. But is it too much?

While the GOP has issued the standard “DO NOT WANT” statement in response, non-partisan consultants like Susan O’Donnell see benefits of further regulation, but also have concerns. O’Donnell, the managing director of the Pearl Meyer & Partners compensation consultancy firm, stated:

Should [Feinberg] oversee, supervise, and control compensation at these companies? Sure. Should he actually be designing programs and setting individual pay levels? That’s concerning.

If Feinberg is granted too much power over these companies, instituting pay caps and developing guidelines for how companies should determine compensation, it would be counterproductive. It’s essential that these companies learn to stand on their own, and if we seek to preserve the American business model, government needs to keep its nose out of business.

On the other side of the equation, while debatable, it’s quite possible that the firms Feinberg has power over wouldn’t still be in business if it were not for government intervention. Every American taxpayer now has some stake in these businesses; isn’t it right that we have an advocate ensuring our investment doesn’t go to waste on outrageous compensation?

While more Americans are agreeable with federal regulation of those businesses that received TARP funds, there is significant opposition to the broader resolution that was proposed in Congress this week. The Obama administration moved forward with a proposal that would seek to curb excessive corporate pay for all public companies, not just the financial firms and banks that had a direct role in the financial crisis. A public company is defined as a company owned by the state or controlled by the government. Thus, any company that received government money during the recession could be defined as a public company.

Ridiculous salaries at failing companies are inappropriate, few would argue against that. However, the recession has had an adverse effect on several businesses that would have remained solvent under normal economic conditions. Thus, is it right for the government to have the power to regulate compensation for those businesses? If we take a look at this notion on a larger scale, consider if Iceland receives a $6 billion bailout from the IMF, should the IMF be able to regulate their President’s annual compensation?

The minute problems that businesses had were compounded ten fold when the recession started to take hold. For those that didn’t receive “exceptional compensation”, it doesn’t seem right to takeover their businesses. The loans will be repaid once the economy turns around, and under normal conditions, businesses will be allowed to succeed or fail without dire repercussions to public livelihood. The government should ensure its investments are secure, but overall, should keep its nose out of business.

America was founded on the principle that individual effort translates into success. People like Bill Gates, Steve Jobs, and Eric Schmidt deserve whatever ridiculous salaries their companies provide.

The idea that individual effort is the determining factor in future success is the fundamental principle behind the U.S. capitalistic government. If the government intervenes in business, then the U.S. is doing more than knocking on the doorstep of socialism, as it has been for generations. While most political pundits (in particular those representing the GOP) will burst into a frothing rage when the words “U.S.” and “socialism” are used in conjunction, the truth is, socialism has existed in the U.S. for decades. What do we think “social” security is?

The U.S. needs some amount of socialist practices to ensure the livelihood of its people. We’re too humanitarian by nature to allow the free market to cast those less fortunate to the wolves. However, there is a line, and the government crossing over into the dealings of businesses is smudging it. For now, public companies are mending, but in the grand scheme of free market economics, survival of the fittest must once again become the standard.

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