Good morning. Welcome to Cato Daily Podcast for Friday, February 9th. I'm Anastasia Glova. Today's

podcast concerns the contentious issue of executive pay. President Bush, Labor Secretary Elaine

Chow, and Commerce Secretary Carlos

have all spoken out on the issue recently, contributing to the debate over regulating CEO salaries,

or leaving them to the market to decide.

Our expert today is Cato Senior Fellow, Dan Mitchell.

Do you think that our executive pay system is working well?

Markets are very efficient in making sure that if a company underpays or overpays

they'll eventually be punished by competitors. Does that mean our executive pay

system is perfect? No, of course not, but one thing I can say for sure is that if the government gets involved, it's going to make it worse.

We don't want government, bureaucrats, and politicians trying to tell private companies, private board members, private shareholders, what executive... private It should be just a matter of supply and demand and even in a system of supply and demand

it doesn't mean that companies are going to make perfect decisions.

Companies sometimes hire bad CEOs, sometimes they hire bad secretaries, sometimes they hire bad hire bad production workers but the beauty of a marketplace is that there's an

incentive to correct bad decisions quickly so that we can have the most

efficient possible use of resources.

Now that sounds very dry and technical.

What does that really mean?

It means we'll have higher living standards because we'll be producing more with less.

You've got to agree that the excessive paychecks

executives receive and compensation are contributing to the middle-class

squeeze. There's not a fixed pie in the economy. If Bill Gates is

getting richer, it doesn't mean that I'm getting poorer. We want everyone to

...