Arnold Kling  

Power over Pay

The Third Iron Law... How Did For a New Liberty

The Obama Administration wants it.

Wall Street pay has long been a hot-button issue in Washington, but the public outrage over excessive compensation has erupted in recent weeks.

I interpret the public outrage a bit differently. It seems to me that if the financial firms were allowed to fail, many people would be satisfied with that as punishment. When it comes to satisfying some of our outrage, Washington is part of the problem, not part of the solution.

What strikes me is the unlimited thirst for power among politicians, and the overwhelming support they receive in the media. Every day, it seems, Bernanke and Obama say the need more power. When will it stop?

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CATEGORIES: Political Economy

COMMENTS (13 to date)
H. Green writes:

From my man Thomas J.:
The natural progress of things is for liberty to yield and government to gain ground.

Troy Camplin writes:

Stop? It will never stop until they get all the power. That's the point. Regulate in such a way that you create problems that will result in the call for regulations. Bail out businesses so that you can have whipping boys to justify more regulations. Or, as has been the case recently, partial nationalization of firms. No politician is going to stop in the grab for more power until and unless stopped. I wish it were SCOTUS that would stop these people, but I have no faith in them doing anything of the sort. Our judges long ago gave up on protecting us using rule of law. The Constitution is a quaint document from long ago that doesn't matter to anyone anymore. Especially those in government and the courts.

Carl The EconGuy writes:

TJ was only partly right, H. Green. Political greed indeed knows no bounds. Obama and his henchmen are greedier than all of Wall Street added up.

But it can't last. We're seeing the inflation stage of a liberal-activism speculative bubble. It'll burst. And then individual liberty will rise again, because it is indestructible at its core. TJ's ushakeable faith in liberty will be proved right, in the end.

ardyan writes:

When will it stop? Gee, with this guy in office, I'd say in eight years. Unless, of course, he pulls a Hugo Chavez on us (knock on wood).

dWj writes:

Boy, I sure am glad Bush made a priority of expanding the power of the Presidency, aren't you? In another few years we won't have to make any of our decisions for ourselves.

El Presidente writes:


What strikes me is the unlimited thirst for power among politicians[.]

Unlimited thirat or unlimited power? If I wanted to impose my will, I would need more power than you, but just barely. Anything extra would probably be inefficient. I wouldn't need the power to reshape the universe. Perhaps you don't understand their motivation. If you mean to say that there is a thirst for dominant power no matter how much power that ends up being, then I see nothing striking or remarkable about that. It's called governing.

When will it stop?

When the government has power sufficient to bend or break the will of people who would abuse public institutions and their fellow citizens with impunity for personal profit, and not before. Who should have more power, the regulator or the regulatee? That's a pretty easy question to answer, I think.

The contributors to this blog have criticized the expansion of credit many times. It was, in effect, counterfeiting because it was an extension of credit (the power to purchase) in bad faith. When criminal gangs counterfeit money or engage in money laundering we don't just sit back and say, "We're gonna have to let the market sort it out. Sooner or later another gang will kill them for control of their territory and that will solve the problem." Government has few exclusive functions, such as a monopoly on the use of force and control of the currency. If government does not jealously guard these powers, it becomes feckless. I would like government to reestablish its authority over the money supply so that people will get back to focusing on being productive in other areas instead of spending so much time and effort trying to cheat each other.

Cato The Younger writes:

Any overhaul is likely to be tied to the Obama administration’s broader efforts to curb systemic risks to the economy.

Cato The Younger writes:

And so what, if it is called governing? We placed bounds on the legitimate scope of "governing" within our Constitution in the Bill of Rights; to be governed on private functions, from compensation to appropriate food for consumption to restrictions to whom we give charity is to become something akin to slaves. And those who support that aggrandizement of power are fit to be slaves, like Aristotle wrote. Obama is becoming a veritable Caesar.

Shakes The Clown writes:

Amen! When will it ever stop?

We used to have a Constitution.

J Cortez writes:

It will stop when economic reality makes the political class stop.

Currently there is $11 trillion in debt, a future $50-70 trillion social security/medicare/medicaid/entitlement problem, an upcoming universal "health care" mess, hundreds of billions of dollars a year spent on 750-800 military bases in about 145 different countries, in addition to wars in Iraq, Afghanistan and Pakistan that will cost many trillions by the time they're over.

It is impossible to run the size and scope of programs like these without consequences. Factoring in all of the entitlement programs, the amount of debt is epic. So much that I don't think it's possible to pay. The government will either default or get the Fed to print money, both choices have disasterous effects.

All of this is going to come to a head at some point.

guthrie writes:

Thank you Arnold!

It's people's sense of 'fairness' that feels 'violated' with all this talk of private jets and bonuses... all this outrage would definitely be assuaged if these firms simply folded or filed for bankruptcy. Spot on!

El Presidente writes:

Cato the Younger,

"We placed bounds on the legitimate scope of "governing" within our Constitution in the Bill of Rights"

We certainly do, so please tell me what part of the amended Constitution our President has violated. I am interested in holding him accountable.

"Obama is becoming a veritable Caesar."

Hyperbole that lowers the quality of discussion.

Shakes The Clown,

"We used to have a Constitution"

We still do. Some of us work with it every day. It's a neat little document. If you lost your copy, you can find it here:

Dr. T writes:

"What strikes me is the unlimited thirst for power among politicians, and the overwhelming support they receive in the media.... When will it stop?"

The overwhelming support from the media will stop when the government starts exercising control of and power over the media. After that the media will provide forced support for the politicians.

The unlimited thirst for power among politicians will never stop until we overthrow our government (which won't happen until long after we become a completely socialistic/fascistic state like the former USSR).

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