Wow

Mirabile Dictu:

So, you know that "pay czar"? Well...

The pre-weekend information dump included an announcement by the Federal Reserve and Treasury Department that the federal government proposes to extend its control over pay packages beyond financial institutions which received bailout funds.

According to the press release, the government proposes to monitor and, if need be, veto pay packages at any banking institution subject to federal regulation...

This is an earth-shattering development in the annals of government control, yet because the information was released on a Friday, it has received little press attention relative to its importance.

One can understand the bargain made where a company receives federal funds to stay in business. By accepting the funds, which must be repaid, a measure of corporate and shareholder freedom was sacrificed.

But to base government control of salaries on mere regulatory jurisdiction would give the government control over much of the economy, essentially any business involved in interstate commerce. This is the harm which many of us feared from the Trojan horse of the bailouts.

Why not regulate law professor salaries (horrors!)? After all, educational institutions are tax-exempt and thereby receive a de facto federal benefit.

Or doctors? Particularly if Obamacare passes, there will be a federal interest in making sure doctors have the right financial incentives.

Or lawyers? At least those who are admitted to practice in federal courts. There is a federal interest in making sure that the federal resources used to fund the courts are not wasted.

Or truck drivers? They use roads built with federal highway funds (with a touch of stimulus funds thrown in).... And the list could go on and on.

Of course, areas where the government sets salaries tend to do quite well for themselves, as the trend is always to higher pay and gold-plated bonuses. Wouldn't you like a GS job?