Millennial Money

Published: Thursday, 14 May 2009 | 11:19 AM ET

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Of all the possible things that Congress and the Obama administration could waste their time fiddling with, why did they have to pick executive pay?

I'm not someone who believes that limiting or "restructuring" compensation for executives will do any real harm. My problem is that it's an almost entirely symbolic and irrelevant issue.

Nothing they "accomplish" on this front will matter. In the process, though, they will upset a lot of libertarian types, and get all the class warriors focused on an issue that has nothing to do with their day-to-day lives. To paraphrase Talleyrand, it's worse than a crime, it's a mistake.

Whenever our policy-makers start dealing with compensation, it's always a huge distraction. For some reason, everybody has a strong opinion on this one, despite the fact that it only applies to a tiny fragment of the population.

The administration says it wants to try and restructure executive compensation to prevent banks from taking on excessive risk. Sure, there's a lot of room for improvement in the current system. But aren't there also like a trillion more effective ways to regulate risk? Perhaps they could try some methods that don't involve getting people riled up about supposed questions of principle?

I don't care if the government ultimately ends up instituting some kind of de facto pay cap for banking executives. The idea that these companies won't be able to retain talent has lost a most of its intellectual heft over the last couple of years. It seems to me the banks could do a lot better without all of that "talent." Besides, it's not like there are other industries or other countries where the pay would be better. What are our banking executives going to do, move to Europe? I thought that was practically a four letter word for these fat cats.

And at the end of the day, the entire argument against limiting executive pay is based on economics, which ought to be the single most discredited discipline out there, one that's made no progress in the last 70 odd years. But now that the administration and its allies in Congress have hit the execution compensation nerve, you just know we're going to have to hear endless arguments about the wonders of the free market and the need to remain competitive.

Our legislators should really stick to what they're good at and go back to testing baseball players for steroids. As for the administration, I thought they were smarter than this. Unlike Congress, I know Obama and his team have the ability to learn and they don't seem to care so much about grandstanding. I would cross my fingers in the hope that they'll get over this quickly, but I'm too busy sticking them in my ears so I won't have to listen to anyone argue about fairness or equality.

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