To the Editor:
The argument that capping financial executives’ pay would make it hard for the companies to recruit and keep executives is wholly unproved.
There is no free market in executive pay on Wall Street. The grossly inflated rewards that have prevailed over the last decade have, in fact, been based on market imperfections.
In place of the perfect information that laissez-faire enthusiasts advocate for all market participants, Wall Street has fattened on the ignorance of American investors, exploiting their gullibility and trust; the more uneven the playing field, the more profitable have been the rewards.
Exposing the chicanery of the financial sector has begun to tip the scales in the other direction, however slightly. So by all means, let’s see what the skills and talent of financial executives might really be worth on an open market.
Ellen Leopold
Cambridge, Mass., Feb. 4, 2009
Note from KBJ: I support the pay cap. If ordinary people such as you and me are bailing these companies out, then ordinary people such as you and me get to decide how much the executives of these companies earn. Don't misunderstand. I'm not saying that bailing out these companies is acceptable; it's not. They should be allowed to fail. Nor am I saying that any given company should accept a bailout. I'm saying that if you accept a bailout, then you must submit to a pay cap. Fair is fair.
