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Honestly, we should give the Federal Reserve performance-based pay. Elon Musk has literally been paid billions for Tesla's phenomenal stock outperformance, why
by FormerBandmate 5y ago
Honestly, we should give the Federal Reserve performance-based pay. Elon Musk has literally been paid billions for Tesla's phenomenal stock outperformance, why shouldn't we pay the Fed Chairs tens of millions for sustained real GDP growth above 4% balanced with low wealth inequality, low inflation, and low unemployment? They have the most important job in America and they should be paid like it if they do well
- errantmind 5y agoThis breaks down when multi-term policy decisions need to be made. This would only push them to kick the can down the road
- srcreigh 5y agoWhat if they are paid based on performance in 10 years, after they are out?
- handmodel 5y agoWould certainly be better but I would say ten years is not a crazy long time when it comes to borrowing decisions that often have 30 years timetables. Also doesn't capture in the the unequalness of gains. Which is better - the fed doing something that has 90% chance of huge gains or a 10% chance of catastrophic economy shattering loss? Or an 80% chance of huge gains and a 20% chance of gains netting 0? The first is much more desirable if maximizing a bonus and could be tempting - but I dont think we want that risk.
- spaetzleesser 5y agoIt’s the same problem as CEO pay. But measuring success is even harder.
- FormerBandmate 5y agoYeah, this is about what I’m thinking. Normal salaries but options for massive payouts if things do well
- sofixa 5y agoIt would just incentivise short-term policymaking.
- newaccount2021 5y agoHeavyweight industry chops are a prerequisite for a Fed board job, none of them is a pauper.
- spaetzleesser 5y agoThat invites short term decisions to pump up markets. I think the Fed should be concerned with long term health of the economy.
- alexashka 5y agoBusinessman + lots of money = bigger/new business/investment in business. Politician + lots of money = golden toilet? In other words, money works for building a competence hierarchy in business. It doesn't for politics. What you want is a competence hierarchy in politics. It needs its own separate currency that can only purchase political decisions. Because it doesn't have that, money is used and that creates a business-in-politics aka corruption problem. ps. Has this been tried anywhere? This is an idea I thought of on the fly and have not looked into or thought through.