---

The New Wage Controls
The U.S. "market" economy took another hard-to-believe turn this week with the Obama Treasury appointing a "compensation czar" to dictate wage controls on private companies that take taxpayer money and offer guidelines for every other U.S. publicly traded company. Can wage and price controls for everyone be far behind?

The Treasury says that's not what it has in mind, but then much of what government has done in the past eight months would have been scoffed at even a year ago. Richard Nixon disavowed wage and price controls right up until the time he imposed them in 1971. The Obama Administration is hardly restrained as a matter of principle against such brute government force, and if prices start rising after our current Great Reflation, well, you read the warning here first....

...Mr. Geithner has a point, but his analysis also neatly avoids Washington's own role in encouraging "the risk of excessive leverage." Wall Street's compensation model of big bonuses for big risks has been in place for decades. How do you think Robert Rubin and Jon Corzine made fortunes at Goldman Sachs in the 1980s and 1990s?

What changed this decade is that Washington's housing policies and flood of easy money created a subsidy for credit, and especially for mortgage products, that encouraged bankers to take on even more debt and greater risks. The bankers were doing, in short, what Alan Greenspan and Barney Frank subsidized them to do. Blaming the bankers for making bigger money in the bargain is a political diversion....