Haimkeh and Shelly Will Decide

There is not one Western state in which the legislature decides salaries in the private sector, but that does not bother Katz, Yachimovich and Oron; their populism knows no bounds.

That irritating Roni Bar-On again. All of a sudden he supports the Neeman Committee recommendation not to limit executive salaries, as if he forgot that he is in the opposition. Doesn't he know that Justice Minister Yaakov Neeman and his whole "panel of experts" is only a fig leaf for the tycoons? Let him learn economics from MKs Haim Katz and Shelly Yachimovich. They understand better than he does, also about management. They've captained corporations, hired executives, built factories, distributed dividends, so they know there is no problem getting any executive at any salary. All you have to do is whistle. No matter the industry, the state of the company, the market, experience or reputation. They will determine the remuneration formula (no more than 50 times the salary of the lowest-paid company employee ), and the executives will form a line. No negotiations necessary. No need for supply and demand. Only Katz and Yachimovich, who want to implement the success of North Korea and Cuba here.

But that stubborn Bar-On insists. "The government must conduct itself cautiously and honorably vis-a-vis the private sector." Cautiously? Honorably? What's going on with him? The honor is all Katz and Yachimovich's. Thanks to them, we are alive. Thanks to them we have bread to eat and clothes to wear. They are responsible for the rise in exports, thanks to them inflation is low and unemployment is declining. A word from their lips, and new jobs are created. Not people in the private sector, who only doze from the winter recess to the summer recess and the High Holy Days recess.

And they're not alone. Meretz chairman MK Haim Oron is sure he knows the proper salary for a CEO. In his opinion a CEO should be paid the same as a Supreme Court justice, about NIS 45,000 a month. But what does the business world have to do with being a judge? Can a judge manage Teva Pharmaceuticals or Israel Chemicals? Never mind, what's important is the media buzz.

Oron of all people, from the Kibbutz Artzi Federation, should know why the kibbutz movement went bankrupt: because it tried to impose the kind of uneconomic behavior that he is now proposing. As a result, the good, talented and successful people left and the kibbutzim collapsed. So what does Oron want? For developers and executives to leave and for the state to fall, like the kibbutzim? In fact, it will fall farther, because there is no one to wipe out its billions in debts, as was done for the kibbutzim.

There is not one Western state in which the legislature decides salaries in the private sector. But that does not bother Katz, Yachimovich and Oron. Their populism knows no bounds. They want to control the economy through laws, rules and regulations of every possible kind. They want a bureaucratic-Marxist economy in which they make the rules and they decide who makes money and who loses it.

They do not understand how a free economy works. They do not know what competition or Adam Smith's invisible hand are. They are sure they are wiser than the market forces, just like the rulers of the Soviet Union - until it fell apart before their very eyes with a huge crash.

The Neeman Committee's recommendations should be supported. It rightly decided not to intervene directly in the wages of top-earning executives, but instead to do so indirectly. It imposed a number of obligations on boards of directors to make the process of determining compensation more transparent and orderly, and conditioned on numerous criteria.

That is not to say that the recommendations are perfect. They could be improved. For example, the issue of wages in the big pyramid-structured conglomerates could be dealt with more successfully. Controlling owners should not be allowed to appoint themselves company chairman and draw a huge salary, because that is clearly robbery of the public shareholders.

In addition, performance-based bonuses and options should be awarded to executives in accordance with performance over several years, not a single year. Bonuses should be a function of the company's out-performing the market and the sector. And board members must have fiduciary responsibility, so that if they set excessive salaries they risk being sued personally to return the money, out of their own pockets.

But what is the Neeman Committee in the face of neo-Marxists Katz, Yachimovich and Oron? They know everything better, including economics. It is high time that Bar-On also realize their great genius.