March 27, 2009

A Consistent Stand from the Right Perspective

Justin Katz

W. Edward Massey reminds us that conservative free-marketism doesn't really dictate was can or cannot be put into a contract by one of the parties creating it — salary caps are a perfectly legitimate item for negotiation — as long as the agreement is mutually agreeable and considered binding. The possibility of changing the rules midstream is among the reasons that certain tendencies in government make it a treacherous partner:

It is possible to set rules for reasonable compensation of executives. It should matter little whether the money source is the government or the shareholder. What matters is that men with good judgment and better character come together to agree on what is reasonable. It can be done when the money is private, if there are truly interested parties involved.

It cannot be done when the senator who heads the Banking Committee asserts that exemption of contractual bonuses in his bill had actually been inserted at the insistence of the Treasury Department. There is the second rub: Politicians are rarely reasonable because power is a non-economic force that interferes. When the money is public, we are left with nothing but the forlorn hope that men with good judgment and better character are involved.

Except inasmuch as is necessary for its own operation, government should remain — at most — an arbiter of market exchanges, not a participant.