Employees at Financial Firms Going Galt. If you tax them, they will leave.

I wish I didn’t have to post this many John Galt stories, but as we briskly march down the road to serfdom, I fear the frequency of these stories will increase.

From the Washington Post, Top employees leave financial firms ahead of pay cuts (H/T Instapundit,)

“Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope, including competitors that have already returned the bailout funds to the government, according to executives and supervisors at the companies.”

“There’s no question people have left because of uncertainty of our ability to pay,” said an executive at one of the affected firms. “It’s a highly competitive market out there.”

At Bank of America, for instance, only 14 of the 25 highly paid executives remained by the time Feinberg announced his decision. Under his plan, compensation for the most highly paid employees at the bank would be a maximum of $9.9 million. The bank had sought permission to pay as much as $21 million, according to Treasury Department documents.

At American International Group, only 13 people of the top 25 were still on hand for Feinberg’s decision.

This is economics 101. If you decrease the incentives to work in a particular industry, people will exit that industry. Some may think forcing executives out of financial firms is desirable. Their greed and evilness caused the financial meltdown, the argument would go. I am not an expert in this field, so I won’t opine, short of saying that there is a reason certain people are elevated from the rank and file employee to the upper echelons of management. For the most part, they possess unique leadership skills that others lack.

Even assuming there is a bad apple, an executive who screws things up, the statist’s policy is a blanket approach. The pay cuts will affect all executives, good and bad. Soon, the leaders of industry, the giants on whose shoulders society rests, will no longer find the incentives to take on these high stress, high demand jobs, as the pay is not worth it. Then, where will we be? People like Tim Giethner and Joe Biden running our Industry?

At the moment, these employees are only going Galt in the metaphorical sense. They are leaving their jobs in the financial industry to enter other industries. But what happens when all industries are under the yoke? Where will they go? Who is John Galt?

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