Of course, like everything coming out of Washington, the move is totally dishonest:
The pay cap applies only to companies that receive "exceptional assistance" in the future, meaning bailouts negotiated just for them, such as those already given to Bank of America and Citigroup. The new restrictions do not apply retroactively to those firms or to other companies that already received bailout moneyâ€¦The $500,000 cap is not required at companies that receive other bailout money, known by the catchy moniker Generally Available Capital Access Programs.
My own view is that Obama is too much a beneficiary of plutocrats for much real to be done in this direction
Nevertheless, the move is certain to be very popular (even on the presumably capitalistic MarketWatch website the poll they have is currently 75% in favor!). So there is a real danger that public response will encourage more ventures back into the spiteful economic illiteracy of 30 years ago.
(As usual, Wall Streetâ€™s defenders are inept. The danger in this policy is not that senior managers will leave, but that they will stay - and do nothing. In Banks, that means take no risk. The Administration is further cowing an already frightened industry.)
This piece of demagogic stupidity raises a crucial issue: does Obama know any economics? Since the Obama campaign kept His Majestyâ€™s academic records secret, the best source on this is Steve Sailerâ€™s Americaâ€™s Half Blood Prince.
There is no evidence that Obama has ever actually studied economics (his degree was in Political Science). There is no record of any insight into or knowledge of the process of wealth creation (there is all too much of interest in redistribution). He did work in 1983-5 for what he described in his autobiography as
a consulting house to multinational corporations
But Sailer finds this a serious misrepresentation:
even though Wall Street was booming in 1983, Obama wound up in a job much crummier than he makes it sound in Dreams. He was actually a copy editor at a scruffy, lowpaying newsletter shop, Business International. One of his coworkers, Dan Armstrong, blogged:
Iâ€?m a big fan of Barack Obama ... But after reading his autobiography, I have to say that Barack engages in some serious exaggeration when he describes a job that he held in the mid-1980s. I know because I sat down the hall from himâ€¦ I certainly know what he did there, and it bears only a loose resemblance to what he wrote in his book....
It is clear that Obama imbibed a lot of subjective attitude about economic issues from his hard-core leftist mother (whose dissertation thesis was about â€?Peasant Blacksmithing in Indonesiaâ€?). From Dreams:
I tried to imagine the Indonesian workers who were now making their way to the sorts of factories that had once sat along the banks of the Calumet River, joining the ranks of wage labor to assemble the radios and sneakers that sold on Michigan Avenue. I imagined those same Indonesian workers ten, twenty years from now, when their factories would have closed down, a consequence of new technology or lower wages in some other part of the globe. And then the bitter discovery that their markets have vanished; that they no longer remember how to weave their own baskets or carve their own furniture or grow their own food; that even if they remember such craft, the forests that gave them wood are now owned by timber interests, the baskets they once wove have been replaced by more durable plastics.
(AHBP P 125)
If only Andrew Carnegie hadn't put all those strapping African-American peasant blacksmiths out of business ...)
This kind of touchy-feeliness about economics will be familiar to anyone who has a memory of student Marxists. Obama indeed does. Speaking of his two years at Occidental College he recalls:
To avoid being mistaken for a sellout, I chose my friends carefully. The more politically active black students. The foreign students. The Chicanos. The Marxist professors and structural feminists and punk-rock performance poets. We smoked cigarettes and wore leather jackets. At night, in the dorms, we discussed neocolonialism, Franz Fanon, Eurocentrism, and patriarchy.
There is a possibly important clue about Obamaâ€™s economic comprehension. Sailer writes
I would guess that Obama did well on the SAT Verbal subtest. Today, with the easier scoring system adopted in 1995, Iâ€?d bet that he would score in the 700s on both Critical Reading (a.k.a. Verbal) and the new Writing subsection. I don't have any evidence for guesstimating his quantitative skills since he doesn't have a very numerical turn of mind. â€¦Reagan liked numbers. Obama, in contrast, doesn't show much affection for them. That doesn't mean heâ€™s bad with numbers, just that his mind follows paths that are more verbal than quantitative.
I do not mean to endorse the econometric mumbo-jumbo which has infected modern academic economics, but the fact is that Classical economics is based on the principal of marginal analysis, which in turn needs a comprehension (possibly subconscious) of Calculus.
Of course, there is another approach to predicting Obamaâ€™s economic policies. The Left generally is motivated in this area by jealousy, resentment, spitefulness and hatred. As Steve demonstrates in AHBP, Obama is heavily laden with these qualities (albeit very beautifully veneered).
Americaâ€™s Half Blood Prince: essential reading for the Obama era.