Bail us out but don't you dare tell us what to do...

According to a news story in the New York Times yesterday a lobbyist for Wall Street are waging an all out campaign to "fight compensation curbs."  The article quotes Scott Talbott, a Wall Street lobbyist:

"We support the bill, but we are opposed to provisions on executive pay."

Well how kind of Wall Street's lobbyist to accept a $700 billion bailout.  I guess we should be grateful that they are willing to take our tax dollars to subsidize their hubris and gluttony?

The argument put forth by the Wall Street lobbyists goes like this:

"Pay restrictions...would sap incentives to hard work and innovation, and hurt the financial sector and the American economy."

Generally I would agree with this as a general rule of free market economics.  But in a free market there are risks and rewards.  Risk that turns out to be successful is highly rewarded, but risk that turns out to be a failure results in losses.

Are taxpayers bailing out Wall Street firms because their risk taking strategies have paid off?  No, I think we're ponying up our tax dollars because Wall Street risks losing a lot because of bad investment decisions.

There's no government bailout in pure free market economics (is there?).  So, while the lobbyists arguments are great for Econ 101 as general principles, they don't carry much weight in the real work where the free markets are regulated.

What do you call it when men (and some women now too) who make 275 times the average worker's salary (as of 2007 according to Economic Policy Institute) fear a loss of incentive to hard work and innovation if their salaries were say, cut to only 100 times the average worker's salary?

Arrogance?  Greed?  Hubris?

The answer: all of the above.

As a matter of personal values dictated largely by Islam, I believe that a valid business transaction must have an element of risk and that free markets must be tempered by concepts of community good.

A bailout without future restrictions on executive compensation eliminates or radically reduces the risk borne by Wall Street firms participating in the bailout.  Such a move, were it to be taken, would ignore the community good.

If a bailout is the way to go to protect against a market meltdown, then it has to be coupled with executive pay regulation.