Can’t anyone here play this game?

Unintended consequences, here we come!

WASHINGTON (Reuters) – The U.S. House of Representatives on Wednesday approved legislation to curb employee pay at financial firms that receive government bailout funds, a measure that could supplant an earlier effort to heavily tax executive bonuses.

The bill, which passed on a 247-171 vote, would give the U.S. Treasury broad powers to prohibit “unreasonable and excessive” compensation and bonuses that are not based on performance standards.

The Pay for Performance Act is among a number of efforts by Congress to claw back bonuses and curb pay in the wake of public anger over executive bonuses at insurer American International Group, which has received a bailout worth up to $180 billion.

via U.S. House backs new pay curbs at bailed-out banks | Politics | Reuters.

Of course what nobody seems to understand is that these businesses have to have good people in charge in order to recover. Good people demand top pay. If companies can’t pay what top people are worth, they’ll end up with secondary and tertiary talent.

If a law was passed in NY that said the Yankees can’t pay any player an “unreasonable and excessive” salary (such reasonableness to be determined by a team of politicians in Albany), which of the best players in baseball would come to play in NY? The Yankees would become the Pirates (sorry Pittsburghers). All the top players would spurn NY and go play where their value would be compensated.

The same will happen to these firms.

To say nothing of all the tax money we’ll end up LOSING when all the bonuses and high salaries are outlawed.

As Jimmy Breslin once asked:

Because yeah, after all, in an economic downturn, what everyone wants is a law that will “curb pay”.