Free Market System

" Kenneth Feinberg the special pay czar is either a stalking horse for rigid government. Control of the economy by feigning disinterest in power which he fully expects to acquire -- chilly won in a million. And does recognize the harm to freedom and prosperity. That comes when the heavy hand of government interferes with the economy. And that's refers to exercise as little governmental powers possible. My own view is that those in government with the exception of Ron Paul and similar minded folks get into the government. Because they -- do gooders who think they know what is better for -- Than what we know for ourselves. They're interested in power and control and not in freedom. Could Feinberg who said this week. He only wants the cap the salaries of the seven -- seven companies he's been asked to cap actually be the exception to the rule. Here to discuss the economic consequences. Of a federal bureaucrat. Regulating executive compensation. Whether the government owns stock in the company that employs the executive or not. Is doctor Walter block professor of economics that way all university to war ones senior fellow at the -- institute. And author of defending the -- dependable. And labor economics from our -- market perspective. His latest book is the privatization. Of roads and highways professor -- welcome back to freedom watch."

" Thanks for having me again."

" Don't the people in Washington understand. That if they cap the salaries of banks whether these are banks where the government owns minority. Majority. Or no shares of stock they will chase the bankers away from those companies."

" Yes and why -- if they don't know what are they doing it didn't care because they think that they can substitute there. Advanced knowledge -- out of the marketplace and as you sit there bunch of computers can think that they cannot override an overrule the markets and that's the critical -- of the economy."

" They -- that the Federal Reserve since 1913. Has reduced the value of the dollar by 95%. That's a statistic with which no one can really argue. Why in the name of heaven and earth would anybody think that a federal bureaucrat. Would know what's better for shareholders to pay the people they hire to manage their investments. That the government could do that better than the shareholders could do when they find the right money manager."

" Well what -- for the people that brought -- the post office and advocacy popular and and social security and every other. You have policy that we kind of the last hundred years is -- until repeat no amazing thing that they -- still at this state. What they don't realize is that in the markets if you. Make a mistake can boost profits you have to go -- And well you can make profits and expand your base of operation. Which is not a pretty much there are no crises can -- pencil."

" You know that didn't the government -- I shouldn't -- government that the people need to realize. Private enterprise. Produces wealth it answers to investors. And it has to meet the needs of consumers. The government consumes wealth it has no investors to answer to and it doesn't care about the quality of the product it delivers to the consumers. If it needs money it just raises taxes if people don't want its product it just makes competition illegal. When will we learn why is it that we keep electing governments that keep doing the same thing to us over and over and over again."

" Well I have met some of your biological explanation. It's a little -- expected to just. Young threw -- thirty seconds to play hard wired. Well hard wired but that's sort of thing because a million years ago when we're in the -- in the trees. There was no. -- there was no incentive. We're implicit cooperation in the markets it was only an incentive and -- hard words. Or explicit corporation -- was if you're -- this week I received June 5 next week you see me sentence. Society. Prospered. -- hard -- because we didn't do that we didn't survive and we didn't -- our team."

" Do we run the danger. Of an administration that might for example. -- people -- make a 100000 dollars a year or less from paying income taxes and provide them with cradle to grave care. Thereby creating a permanent underclass. Of people dependent upon the government. Who just might who just might be the numerical majority of voters."

" Well this is so hard scenario -- the people who have been how. Having that cradle to grave of security and don't have to work -- and welfare initiative please stand up and that these -- particularly control that's a horrendous thing. But I I want to mention the name of Michael Milken like I don't think we can still we discussed the question of executive salaries without mentioning Michael Milken one of my -- Michael Milken -- to counteract the Iraqi. Some time. Junkyard prospering and what happens -- that the government shot the -- and and then wondering what is appropriate. -- can -- be specific what Michael Milken didn't he looked around for companies with this CEO's salaries are higher than he thought they should be. Because it's fifty -- up all the profits. That means that these fair value of the stock is lower than it otherwise would be if this see a lot of hard a couple of them."

" So he bought those companies."

" Ask people what those companies and kicked out the other -- field we're making little piece horrendous IE an unwarranted. Salaries and -- out and put -- people and so he would sort of a one man band like Ron Paul -- in the media. In the house. -- it's simply not the -- stopping this problem units in its footsteps but what happened upon Michael happen."

" We'll put him in jail because he interfered with their nice cushy relationship."

" Precisely and then they wonder why CEO salaries are getting out of hand --"

" That's the moral dimension of this professor block I mean where would the government even claim. Then it got the authority from we have. Publicly traded corporations. With a hundreds of thousands of shareholders. Every -- purchaser of the shares has done so voluntarily. The shareholders elect a board of directors the board of directors -- management to maximize the return on -- on investment. So far so good nobody could disagree. With that basic scenario. Where -- the government. Get the moral authority to interfere with that. And stated this board of directors are saving the shareholders all of whom are there voluntarily all of whom -- their cash knowingly could be potential pitfalls and potential gains of the risk. We don't like the risk we're not gonna let you do it you're overpaying your people we're gonna tell you what to do with your cash."

" Then they get this started Agassi didn't murder people over clips but nerves and if it pollution I think in the constitution to -- and if we had a Supreme Court. Worthy -- if you could happen around the Supreme Court and and Ron Paul had a few other people like -- have been. We wouldn't bet that we had this threat of Supreme Court packing by. With -- things that need it right -- and ever since then he has Supreme Court has been. Lying on its back -- its legs spread historic constitutional concern with a few exceptions that there are some people who do support the constitution. But. -- they get this authorities they had no authority -- that they just. Are being totalitarian dictators in taking over as you think voluntary -- on the part of consenting adults."

" That professor -- it's always a pleasure thanks for joining us on freedom watch. I have --"