Erik Larson

Feb 4, 2009

Capping Salaries is Capitalism

Conservatives may be squawking lately about Pres. Obama imposing executive salary caps at 500K a year when their firms have accepted bailout tax payer money, but it’s a great incentive for the private sector to avoid the turn left towards socialism. It’s not Adam Smith, but it’s surely a pointer towards the market economy, not away from it.

Why? It’s logical, that’s why. If your firm has a business model that does not require bailouts, then by all means, pay your executives what the market will allow. Fat cats are the by-product of wide open, entrepreneurial, anyone-can-be-anything societies. Bill Gates. It makes sense. On the other hand, if you need government to operate, you should expect now to be governed . We can hardly accept businesses wanting subsidies for failure and free market principles for salaries. That’s not capitalism.

And so, I applaud the salary caps. It’s a nod towards capitalism.