Straight Up Socialism

Obama laughed at the suggestion that he was a socialist during the campaign. But the scale of his spending, his intrusion in the private economy, and his disregard for traditional freemarket principles is breathtaking. The latest is a “compensation czar” who will oversee the pay of the many companies the government has subsidized. Pretty soon, I think we’ll all end up on a GS schedule.

This, of course, is the biggest threat of government handouts: in addition to the government picking winners and losers in a way totally inappropriate to a free market system under the rule of law, the principle of independence of private companies and their business decisions is completely undermined. It’s the kind of “help” that smothers the recipient and creates systemwide degradation of the “animal spirits” and cold-hearted market logic on which the whole economy depends.

The latest news reads like something out of Atlas Shrugged:

Administration: Rein in pay across private sector
Obama administration: Executive pay needs curbs, better management, across private sector

In addition, Obama’s likely instincts–cutting salaries–is the wrong one, and he’d know this if he paid attention at the many law and economics lectures that were available while he was at the University of Chicago Law School. I wrote about it here. Salaries are the long-term incentive for corporate managemnet, while options and bonuses of one kind or another are the shorter term regime. The market is already engaging in this correction, though, and, unlike Obama, it has its own money in the game.

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