Throwing the Baby Out with the Bath Water!!
Posted by Larry Doyle on March 20, 2009 3:12 PM |
I questioned a Wall Street friend of mine this morning whether Washington in general and the Obama administration and Democratic Congress specifically could be so myopic or actually are so calculating in attempting to enact legislation that would impose tax rates of 70-90% on certain Wall Street employees. My friend quickly responded that the Washington crowd is not that smart.
Make no mistake, the proposed legislation of taxing certain Wall Street employees at 70-90% rates is targeted at addressing public outrage over improperly allocated compensation. However, Washington is utilizing a bazooka when in fact they need a laser.
In so doing, the politicians pushing this legislation are showing themselves to be misinformed and misaligned in understanding the basic tenets of capitalism and free market principles.
How will individuals who work at firms that do not now need nor ever needed government assistance respond? “Get me out of this firm!!” The best individuals will go to foreign firms and privately held companies. The firms impacted by this poorly crafted legislation will be filled by lesser talented professionals. In so doing, Washington may feel they are appeasing their constituencies but they will be assaulting capitalism and free market principles. Perhaps those have been their goals all along.
Again, I am FULLY supportive of government restrictions on government firms or firms supported by government funds (AIG, Citi). However, as the WSJ reports, Wall Street Shudders as Lawmakers Take Aim at Pay. This legislation is the equivalent of “throwing the baby out with the bath water!!”