PrintAugust 31, 2010
Ammunition for the left
With the Obama administration and the Democrats in Congress the "Law of Unintended Consequences" is not just something that rears its ugly head upon occasion; rather it has become standard operating procedure. The real consequence of all this inanity is to drive more nails in the coffin of any substantive economic recovery.
The Health Care and Financial Reform Bills between them contain nearly 5,000 pages written by wet-behind-the-ears congressional staffers and left-wing lobbyists with no knowledge or experience in real world economics and human behavior. The opportunity for mischief and mayhem is nearly infinite with the ability of the bureaucracies to write untold pages of new regulations.
A case in point. The aptly named Dodd-Frank Financial Reform Act contains a benign sounding provision (section 953b) that requires US companies to disclose the ratio between the CEO's pay package and that of a typical employee. Beyond the fact that it is no one's business what a private entity through its stockholders and Board of Directors decide to pay someone, this provision is solely intended to provide political ammunition to left-wing activists to pillory capitalism.
Last year S&P 500 companies CEO's received annual median pay packages of $7.5 million; by comparison official statistics show the average private sector employee was paid just over $40,000.00. This is a ratio of 187 to 1. On the surface this sounds terrible but it does not take into account job responsibilities, competition to attract the most qualified and a myriad of other factors.
Further this is also a logistical nightmare for the companies that will encourage false comparisons. For example: multinational companies, in calculating the ratio, will have to determine the median annual total compensation for all employees worldwide. This is not doable for a large company with tens of thousands employees worldwide, not to mention skewing the ratio to make it look even worse.
To avoid the inevitable public relations nightmare, companies that remain in the United States will look to ways to lower the ratio and make it more palatable. One way is to out-source overseas or elsewhere low-paid work or hire workers through temp agencies. The ultimate solution is to move all operations overseas to get away from the constant harassment of not only this but tens of thousands of pages of new regulations and taxes.
Who suffers? The job seeker who either cannot find employment because of outsourcing, or the exodus of companies overseas, or is forced to settle for lower paying part-time work through an agency.
This provision is nothing more than an attempt to satisfy a blood lust by the Progressives in their never-ending war on capitalism. Never mind that "the Law of Unintended Consequences" is triggered again.
