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Name: Ed Lilly
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Name: Disgruntled in NY
Email: disgruntled.blogger1@gmail.com
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Bad Analysis = Bad Policy

Posted by Disgruntled in NY on Friday, July 31, 2009 11:53:34 AM
From the first sentence of Gretchen Morgenson’s column in the NYT on 7/26/09:
 
 “SELF-SERVING compensation practices, we can now agree, played a central role in the financial wreckage that still surrounds us. For example, rewarding Wall Street’s outsized risk-takers with immediate bonuses, no matter how their trades worked out, turned out to be, well, disastrous.” 

Once the (reasonable) populist outrage over the spectacle of over-paid executives leading their companies down in flames subsides, Democrats are going to have to live the with policy choices that come from making decisions based on the ignorant belief that compensation practices "caused" the financial crisis.  The cause was obvioiusly much more complex, primarily relating to perverse incentives in the housing market (see Fannie and Freddie) and absurdly low interest rates.  Any policy choices that focus on executive compensation are doomed to failure and will only create even more perverse incentives in our economy.
 
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