Jason Busch, in his March 23rd SpendMatters blog “A modest proposal” sarcastically (I think) suggests that we should take the bull by the horns and begin restricting performance-based procurement executive bonuses. Busch’s tongue in cheek argument is based on the idea that the Government has proposed huge taxes on F&I (finance and insurance) industry exec bonuses and that we shouldn’t wait for the interventionists to do the dirty work.

Consider first that the proposed 90% tax was a symbolic measure. Those who know about the politics of patronage understand that such a measure, even in this dark period, would never pass in the face of legislators who garner a huge portion of their campaign war chests from lobbyists; many of whom spring from the finance and insurance industry.

And forgive me Jason, but you’ve mixed your metaphors. The true flaw in your case is the idea that performance based bonuses and the thievery of finance and insurance execs are somehow tantamount. The reason for the interventionists’ intervention is not that the F&I execs received performance based bonuses, but that teetering institutions shelled out the megabucks in the face of the opposite of good performance, financial disaster. In many cases, the bonuses went out to execs who knowingly speculated on packages of bad paper (toxic debt, as we now label it) with the “in the long run, we’re all dead” investment plan and the “but Mom, everybody else is doing it” business case.

So let’s call a spade a spade, a crook a crook and a performer a performer. It’s not the Government’s efforts to curb executive thievery that’s at issue here. If restricting corporate rape is “paternalistic totalitarian legislation” then maybe what the world needs now is more paternalistic, totalitarian legislation merely to avoid another economic debacle. The short verse is this. The only flaw in performance based pay is the fact that the performers may work as hard or harder to manipulate the results as they work at their jobs.

It’s easy to blame the government, and always the hip, nihilist choice as well. But let’s not lose sight of the real problem, shall we?
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  1. It's a great point. We also hear that these were "retention bonuses" even though many of the execs that received a payout no longer worked at the company.