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They don't know what they're doing

The WSJ reports:

The House handily passed legislation to slap a 90% tax on bonuses at
Wall Street firms and other struggling companies that received federal
bailout funds.

It passed on a 328-93 vote, with a substantial assist from Republicans, although about half of GOP House members opposed it.

The bill would tax bonuses paid by firms that received more than $5 billion from the Troubled Asset Relief Program, plus Fannie Mae and Freddie Mac.

Although broader in its effect, the bill is a response to the furor over bonuses paid by American International Group,
which has been squarely in lawmakers' cross-hairs after it emerged over
the weekend the company had paid millions in retention bonuses to many
of the executives that worked in the firms' financial products division
that is the source of the AIG's woes.

"These people are getting away with murder," Ways and Means Chairman
Charles Rangel (D., N.Y.) said Thursday during debate on the House
floor. "They're getting paid for the destruction they've caused to our

I wonder what the effects will be of legislating moral outrage. Did Rangel wonder when he voted for it? Does he have any idea what will happen? Almost certainly not.

Adam Smith said it best:

The man of system, on the contrary, is apt to be very wise in his own
conceit; and is often so enamoured with the supposed beauty of his own
ideal plan of government, that he cannot suffer the smallest deviation
from any part of it. He goes on to establish it completely and in all
its parts, without any regard either to the great interests, or to the
strong prejudices which may oppose it. He seems to imagine that he can
arrange the different members of a great society with as much ease as
the hand arranges the different pieces upon a chess-board. He does not
consider that the pieces upon the chess-board have no other principle
of motion besides that which the hand impresses upon them; but that, in
the great chess-board of human society, every single piece has a
principle of motion of its own, altogether different from that which
the legislature might choose to impress upon it. If those two
principles coincide and act in the same direction, the game of human
society will go on easily and harmoniously, and is very likely to be
happy and successful. If they are opposite or different, the game will
go on miserably, and the society must be at all times in the highest
degree of disorder.


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