Socialism Goes Global

Without going into details, I'll say that I've got reason to be especially averse to news about exorbitant salaries for banking executives, but the international structure for market dictation that they're proposing to build to control the salaries of the ultra-rich will prove to be a ratcheting constrictor:

The treasury secretary said the G-20 countries had reached a consensus on the "basic outline" of a proposal to limit bankers' compensation by the end of this year. He said it would involve setting separate standards in each of the countries and would be overseen the Financial Stability Board, an international group of central bankers and regulators.

Until now, European countries had pressed harder than the U.S. for limits.

"We want to have very strong standards to limit the risks that compensation practices" encourage, Geithner said.

The issue of compensation has been one of the more difficult ones facing the summit.

Europeans in particular pressed for strict limits on salaries and bonuses for executives of financial institutions to keep them from being rewarded for the risky practices that contributed to the financial crisis.

National — and now international — governments are doing nothing less than absorbing the financial sector, which will prove to have calamitous consequences. If we wish to restrict salaries and restrain risk taking, we must allow the market to exact consequences for failure and ease the path by which small competitors may flourish.