Monday's interesting reads

"Boards Flex Their Pay Muscles" WSJ by Joann Lublin:

"Directors, facing unprecedented pressure from investors, lawmakers and regulators, are increasingly cutting back the pay-setting power of CEOs. Board compensation committees are retaining their own lawyers, holding frequent executive sessions and evaluating management more rigorously.

The result? Bold boards are killing practices long popular among big bosses, such as retention grants of restricted shares, generous exit rewards and "gross-ups" to cover the taxes that executives have to pay for certain benefits."

There has been a lot of talk recently about executive pay from the presidential candidates. This is not somewhere government should get involved. Even if it's in small increments, things will sort themselves out. These are private contracts between a company's board and its management. The mechanisms to make sure underperforming executives lose their jobs are in place. Let them function.

The following is the full quote of what Obama said to get him in trouble last week with the offending parts removed (I got the quote from this article in the WSJ):

"You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton Administration, and the Bush Administration, and each successive Administration has said that somehow these communities are gonna regenerate and they have not. And it's not surprising then they get bitter, they cling to...antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

When you look at that statement, I don't see anything wrong with what he said. It actually hits at my big problem with mainstream Republicans as well as one of the major problems with a lot of Democrats. People are frustrated and they want to find something or someone to blame. They turn to foreign workers who are willing to work for less than what citizens make, either at home ("anti-immigration sentiment") or abroad ("anti-trade sentiment"). What doesn't help the situation is that these jobs have, apparently, been gone for 25 years and the people still think they're coming back. I'm not exactly sure what Obama was trying to say here, but I'm dissapointed that he says this and then goes out the next day and perpetuates the anti-trade sentiment by bashing Nafta and the Colombia FTA.

I was reading this article on Reuters about funding for alternative energy projects. I was pleased it talked only minimally about government intervention in the development of clean energy options. It mostly focused on venture capital and private equity as sources of cash.

"Unproven technologies, combined with the hundreds of millions of dollars in costs to build project such as solar plants, biodiesel facilities or wind farms, have always made investors skittish.

'There is a need in the market for financing vehicles that will take that first project risk,' said Dan Goldman, chief financial officer of Chicago-based GreatPoint Energy, which has a technology to convert coal into cleaner-burning gas. 'There is a real gap in the market now.'"

We need to avoid falling into the trap that government is the ideal way to fill that gap. It goes back to the speech I heard back in October that said that "$100 oil is not the problem but the answer." I get the feeling that market "gap" will be filled sooner or later, but not before the price of oil makes it economically viable. It reminds of a quote left in a letter to the WSJ Don Boudreaux quotes here:

"If a technology is commercially viable, then government support is not needed, and if a technology is not commercially viable, no amount of government support will make it so."