Capitalism doesn’t scale

By Michael Fraase

Sunday, 21 September 2008 09:17PM CST

Section: Sustainability

CapitalismThe largest wealth redistribution plan in US history—a plan to transfer massive amounts of wealth from the middle class to the super-rich and massive amounts of power to the executive branch—is apparently garnering bipartisan support in the US Congress. The Bush administration has proposed raising the national debt ceiling to US11.3 trillion and letting the Treasury Department purchase up to US$700 billion in “toxic” mortgage-related assets without oversight or regulation.

The only restriction placed on Treasury Secretary Henry Paulson would be semiannual reports to Congress. Any reforms, according to Paulson, should come after the financial system is stabilized. Here’s the key bit:

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Should Paulson spend the entire US$700 billion, it amounts to more than US$2,000 for every American citizen, more than the Pentagon’s annual budget, and about the equivalent as the direct costs of the Iraq occupation. And it appears to be a revolving credit line.

Representative Barney Frank (D-Massachusetts) told the New York Times of interest in limiting the compensation of executives of firms seeking aid under the plan: “There are going to be federal tax dollars buying up some of the bad paper. They should accept some compensation guidelines, particularly to get rid of the perverse incentives where it’s ‘heads I win, tails I break even.’” The Bush administration has been adamant that any compensation restrictions are off the table.

As for not regulating executive compensation, consider the following:

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