Barney Frank: Bonuses to Financial Executives Are Bribes
Capitalism Derangement Syndrome was on full display during Wednesday's House Financial Services Committee hearing when Chairman Barney Frank (D-Mass.) accused the financial industry executives present of needing to be bribed with bonuses to do their jobs.
That's right: a bonus is now the equivalent of a bribe as far as Frank is concerned.
Given the beating capitalism and the free market have been getting from the press on a daily basis since the financial crisis began in September, it seems a metaphysical certitude that Frank's rant to the CEO's of America's leading financial institutions will get a lot of play in the next 24 hours:
BARNEY FRANK: Let me ask you, on the incentive, and I'm glad to see that you're not, many of you are not taking bonuses. But I have to say this: if you believe in bonuses, then is that something bad? I mean, I guess, you've gotten bonuses over time. If in good times you were told you weren't going to get a bonus, what part of your job would you not do? I mean, if you weren't getting a bonus, would you like leave early on Wednesday? Or would you take longer lunches? Would you bypass a certain class of investors? I guess that's, you say, and somebody said, well, your incentive comes in shares that align your interests with that of the company's. Here's one of the problems: why in the world do some of the most highly-paid talented people who have jobs that are fun. Let's be clear, not always fun, this is not amusement park time. Why do you need to be bribed to have your interests aligned with the people who are paying your salary? And this is part of the problem. I know it's a problem at the lower end who get bonuses and that's been built into their compensation. But at your level, again, why do you need bonuses? Can't we just give you a good salary, or give yourselves a good salary, you're in charge of that -- and do the job? This notion that you need some special incentive to do the right thing troubles people.
Actually, Congressman, that's exactly what incentives are for: to encourage people to do the right thing. It's called positive reinforcement, or in more simple terms "a carrot."
That Frank and his media minions don't understand this is the problem, for every business owner, manager, and executive in America knows that incentives do indeed work AT EVERY level of any successful organization.
Will press outlets address that side of the equation when they report Frank's comments, or just applaud his Capitalism Derangement?