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Executive Pay: A Reaganesque Obama?

BusinessWeek readers on the Left and the Right clashed over "CEO Pay: Obama's Reagan Moment" (News, Feb. 16), which compared Barack Obama's assault on executive pay to Ronald Reagan's shutdown of the 1981 air-traffic controller strike. Neither side was pleased. Obama fans called the analogy "farfetched." Reaganites, for different reasons, dismissed it as "complete nonsense." Still, the impact of Obama's action won't be known for years. —Michael Mandel

Limiting the ability of public sector workers to hold the government to ransom in pay disputes is entirely within the scope of government.

Regulating bonuses at publicly traded companies is government interference in the private sector for political point-scoring—and will have very little impact.

Screen name: Scotta

A farfetched analogy. Reagan's mass firing of the air-traffic controllers came on the heels of several years of escalating anti-union rhetoric. Reagan picked the low-hanging fruit. Obama has a much tougher job.

Screen name: letsreal

Reagan never would have involved the government in day-to-day operations at a private-sector company. To say Obama is "emulating" Reagan is the height of folly.

Dale Johnson

FLAT ROCK, N.C.

The difference: Obama is attacking the disgustingly rich. Reagan attacked the middle class—hard-working people who just wanted better working conditions and fair pay. My father was one of the strikers. The effect of that mass firing was terrible.

Screen name: Brian

Obama's intimidation of bank execs is populist grandstanding. Reagan's action against air-traffic controllers was a gutsy management decision.

David Bour

CUPERTINO, CALIF.

The comparison is right on. Leading up to 1980, labor went too far. Leading up to 2009, business went too far. It's time to strike a balance.

Screen name: Tom E.

The Bank Bailout: Remove Bad Bettors from the Table

"The Bailout Is Broken" (News, Feb. 9) detailed the impossibly complicated task of implementing the bailout but did not address the toxic incentives such bailouts create.

The latest idea—buying up banks' toxic assets and creating a "bad bank"—would mean taxpayers subsidize these bad bets. This would signal to managers that if they engage in risky behavior and lose, the government will just buy their failed bets at inflated prices. (After all, the fair market value of these assets is close to zero.)

In the end, we may have to bail out banks because of systemic issues. However, the government should take steps to address the adverse incentives a bailout creates. For example, a takeover could include replacing all of the bank's decision- makers, not to punish them but to make sure that future managers know that if they take risks and fail, there will be at least one cost.

S. Abraham Ravid

Professor of Finance

Rutgers Business School

NEW BRUNSWICK, N.J.

How Tesla and GM Could Rev Each Other Up

Regarding "Should Taxpayers Fuel Tesla?" (What's Next, Feb. 9): I believe Tesla Motors Chairman Elon Musk should be rewarded for conceiving and delivering the very product the ailing car companies seek.

What I'd really like to see is a merger of Tesla and General Motors (GM). This would bring GM into the new frontier of the car business and help the company meet the green requirements of the loan package provided by Congress.

As a division of GM, Tesla could manufacture cars in plants that would otherwise be shut down. The parts could be produced by the automaker's existing suppliers, and the cars could be sold at GM's failing dealerships.

Also, the taxpayers who are footing the bill would know that the money Congress is giving General Motors is being used for what it's earmarked for—a first!

Frank Lapetina

NEW YORK


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