Freitag, Januar 15, 2010

Par For The Course...

This is fairly clear how President Obama sees the world, or, more exactly, how he sees people earning high levels of money because they are skilled and in demand in the market place (as opposed to being politically connected, which is the proper way in Chicago Politics).

Fundamentally, and this is increasingly a constant when President Obama looks at any sort of industrial policy dealing with sectors that have high wage costs, he wants to control wages.

In the health sector, his policies are clearly aimed, in the name of "getting costs under control," of ensuring that this also means clear and definite controls over what people are paid.

You see, in the Obama world, the only people worth paying lots of money for are ... political operatives in the system.

He wants doctors, nurses and other specialists' salaries to be capped and controlled. Can't have doctors out there making hundreds of thousands of dollars off the poor, helpless patients that so desperately need health care! It wouldn't be fair!

He wants bank employees, basically, to be reduced to the level of bank tellers and clerks making a modest living, not the financial specialists who routinely create value out of getting supply and demand together for mutual benefit...

When anyone starts talking about someone not being worth their wages, unless that person is the one paying those wages, then it's the rhetoric of envy.

What happens next? Probably caps on professional athlete's salaries for the same reason.

The real problem that President Obama's plan is that he is punishing people for having made poor decisions without even contemplating why they made those decisions.

Banks don't operate in a vacuum: they work within a system whose parameters are laws governing their behavior. They react to incentives and disincentives within the market place, and as banks help demand meet supply. It really is that simple.

What drove the banks to make these wrong decisions wasn't greed (banks usually avoid decisions where they can lose serious money unless the returns are high enough and they are willing to take on the risk) but rather because the government, through the laws of the land and economic policy, pushed them to do so. Sure, no one held a gun to their head and said: "Make loans to people who can't afford them". They didn't have to, since exactly this behavior was government policy.

I can't repeat this enough, because apparently no one is recognizing this: without subprime loans, there would be no subprime crisis. That is where the blame lies.

Instead, they are acting like bosses who punish subordinates because they did exactly what they were told, but what they were told to do turned out to be a really stupid idea.

Par for the course, par for the course. This administration is increasingly turning out to be so fundamentally ignorant of how the world really works that the damage that can be done is enormous.

Punishing those who did as they were told for the failures of the policy is also appallingly bad form.

Again, par for the course...

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