DAVID BROOKS
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Get a Clue, Washington: You Can't Do Everything
Effort to restructure exec pay smacks of arrogance
By Rob Quinn
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Posted Oct 27, 09 5:10 AM CDT
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(Newser)
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Clamping down on arrogant, risk-taking execs with an overconfident attempt to overhaul private sector pay structures shows that the arrogance has migrated to the Obama administration, writes David Brooks. The government is trying to micro-manage compensation packages at a wide variety of firms when pay regulation should be done, humbly, by addressing the imbalance in power between executives and shareholders, Brooks writes in the New York Times. "Over the past year, the bonfire of overconfidence has shifted to Washington."
Previous efforts at clamping down on CEO pay have backfired, and the government's proposals have already sent execs fleeing from top firms, Brooks warns. "These rules probably won’t even have a big effect on executive wealth. They’ll just drive compensation into back channels and risk-taking into unseen parts of the market." The government seems to be acting with "no awareness of the limits of its knowledge," Brooks writes. That goes for not only restructuring executive pay, but rebuilding GM, and overhauling health care, too, he concludes.