Paul M. Jones

The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.

The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance.

Administration and regulatory officials are looking at various options, including using the Federal Reserve's supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.

Among ideas being discussed are Fed rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank -- such as paying loan officers for the volume of business they do, not the quality. The administration is also discussing issuing "best practices" to guide firms in structuring pay.

via U.S. Eyes Bank Pay Overhaul - WSJ.com.

(Emphasis mine.) Government "guides" at the point of a gun. They won't call this "nationalization" because that would mean the President and his administration would have to own up to their end-game.

You can't blame Obama for the recession or the bank bailouts and maybe even the auto bailout. Those started on Bush's watch. But the record-setting deficits? Those are Obama's idea. He's not grappling with that problem. He created that problem, certainly in the dimensions that we're talking about. It's not one of his short-term "headaches." A headache is what usually happens out of the blue. But if a guy is banging his head against the wall, you don't want to say that one of his short-term problems is a headache. The short-term problem is that he's banging his head against the wall.

via Cafe Hayek: The Grappler.

Civil rights "boo!" to this LA:

Sen. Alexander votes against guns in national parks

More here. Here's the vote. AP story. Another story. It appears he was the lone Republican voting against it. Here's his no vote.

UPDATE: Just confirmed with his office he did vote against the measure. Details coming.

UPDATE II: Here's the statement his office just e-mailed me: I have consistently been a strong supporter of Second Amendment rights, but this legislation goes too far - further than President Reagan, further than President Bush, and further than Tennessee law.

UPDATE III: TN's other senator, Bob Corker, voted for the measure.

UPDATE IV: Glenn Reynolds: Not a good move for Lamar.

SayUncle: Neither Bush was exceptionally friendly to gun rights. While Reagan signed the Firearms Owners Protection Act, it also contained the Hughes amendment.

Rustmeister's Alehouse: Ok, Mister Senator, but I have to ask: Does it go further than the US Constitution? Or, for that matter, the desires of your constituents ?

UPDATE V: Statement from Sen. Bob Corker, R-TN: I understand the importance of ensuring the safety of people visiting our national parks as well as protecting our nation's wildlife from illegal poaching. I believe states should have the ability to weigh these considerations in carrying out their responsibility to regulate firearms within their borders.

via Sen. Alexander votes against guns in national parks.

But civil rights "yay!" for this LA:

The House Committee on the Administration of Criminal Justice voted 9-6 today for a bill that would allow those with concealed handgun permits to carry their weapons on campus.

House Bill 27 by Rep. Ernest Wooton, R-Belle Chasse, was approved over the objection of college students and officials who said the measure would make their campuses less safe.

Officials at Tulane and Loyola universities have said they are opposed to the bill, which would allow the concealed guns on campus if the individual has passed a background check and is qualified to carry a concealed weapon.

The bill would allow the governing boards of the colleges to designate where the weapons would be stored while the carrier is on campus.

via http://www.nola.com/politics/index.ssf/2009/05/house_committee_says_ok_to_gun.html.

More commentary here: Common Sense in Louisiana.

The rule of law, not of men -- an ideal tracing back to the ancient Greeks and well-known to our Founding Fathers -- is the animating principle of the American experiment. While the rest of the world in 1787 was governed by the whims of kings and dukes, the U.S. Constitution was established to circumscribe arbitrary government power. It would do so by establishing clear rules, equally applied to the powerful and the weak.

Fleecing lenders to pay off politically powerful interests, or governmental threats to reputation and business from a failure to toe a political line? We might expect this behavior from a Hugo Chávez. But it would never happen here, right?

Until Chrysler.

via Chrysler and the Rule of Law - WSJ.com.

The "green shoots" theory of economic recovery is starting to look a bit like the herbs in my back yard--the ones I forgot to tell Peter to water while I was in Omaha. Retail sales fell again, despite confident proclamations that consumers had rethought their overreaction last fall. And foreclosures hit another record, which was oddly described as a "levelling off" by a lot of papers. The March numbers showed a big spike, because legislative and corporate moratoriums expired. In that context, a 1% increase in April isn't a "levelling off"--it's extraordinarily worrying.

I don't want to push the Great Depression analogy too far, but what's surprising when you go back to primary sources from 1930 is the optimism. I don't mean to imply that everyone thinks things are just swell. But while you know that they are facing the worst economic decade of the twentieth century, they don't.

via Green? Shoot. - Megan McArdle.

In the past few months, Americans have seen their government essentially seize control of one sector of the economy after another. Federal authorities now tell the automobile, banking, credit card, and insurance industries what products and services to offer, all while hiring and firing industry executives in order to implement government orders.

Health care represents the latest frontier in this drive to centrally manage the American economy. Yesterday, the country's major health care producers, including insurance companies, hospital and physician organizations, pharmaceutical companies, and health care labor unions, promised President Barack Obama they would reduce the growth rate of their future incomes by 1.5 percent over the next ten years. If those cuts actually happened, it would mean that in 2019 health care costs (both government and patient) would be $700 billion lower than current projections, reducing health care spending by $2 trillion over the next ten years.

Why would the industry agree to this preemptive surrender? Because it means the end of competition. Under the proposed agreement, the government would guarantee a certain level of profit for each health care producer. From the industry's point of view, the goal is to get a seat at the table as politicians and government technocrats "reform" health care--which means it will decide who the winners and losers will be.

via Health Care Corporatism Arrives : Consumers will pay the price if government partners with the health care industry - Reason Magazine.

Regarding increasing health care costs:

if Medicare were less generous, much less would be spent on health care. Now you might think that would be a bad result and that of course a debate worth having. But the mere fact that you favor some amount of Medicare does not lower the cost burden of the amount you favor. If your preferred policy induces say "40 percent more of health care costs" and you can't put all the blame on the preexisting level or path of health care costs. You also have to accept responsibility for the 40 percent boost or whatever the increment is.

via Marginal Revolution: More health care cost fallacies.

This is late notice, as usual, but I'll be speaking at php|tek next week in Chicago. You can see the schedule here.

In addition to my Organizing Your PHP Project talk (updated from the one I have given in the past to include nods to formal namespaces and framework-based projects), I've got Solar on the Hackathon roster, and I have two proposed unconference talks:

• Your Framework Sucks! (a new talk that I'll probably write the night before, if it gets enough votes), and
• Benchmarking PHP Applications and Frameworks, updated with new numbers, and a Rails and Django comparison that might surprise you.

Vote those up (I guess by commenting) if you want me to present them. Hope to see you there!

I'm sure that most people reading this blog via RSS are here mostly for the PHP content. The recent spate of economics and government-related blogging is probably feeling like a bait-and-switch to many of you. For those of you interested only in the PHP-related content, you can subscribe to the PHP-only feed here: http://paul-m-jones.com/blog/?feed=rss2&cat=2.

Most people underestimate just how economically valuable the rule of law is. A roughly stable investment environment that doesn't maximize social justice is undoubtedly better than an unpredictible one that tries to--just as the billions of poor people who live in states that have tried to exchange the former for the latter. The winners were not the dispossessed.

This can be exaggerated--markets have memories, but they don't last forever, and robust democracies can survive a fair amount of skullduggery at the margins. But on balance, I doubt that deal maximized utility compared to an alternative where the government stayed out of it and Chrysler made whatever deal it could.

via The Better Bankruptcy Bureau - Megan McArdle.

(Emphasis added.)