More Barney Rubble Economics
So, I’m in the middle of researching for another post on the financial crisis when I come across a new Barney Frank story. At first, I thought I had simply stayed up too late.
But Frank really does say this: “There should be a moratorium on bonuses.” “They have a negative incentive effect because they are the ones that say if you take a risk and it pays off you get a big bonus…and if it causes losses…you don’t lose anything.” (A little aside: apparently, he’s not just talking about bonuses for top-executives of financial companies.)
This is econ-incentives 101: Bonuses provide helpful incentives precisely because they reward only productive behavior. Did this guy ever have a job before going into public office?
NM
