Brain Drain? You’ve got to be kidding.

The newest critique against the Federal Government limiting executive salaries in companies that it has essentially saved from liquidation or in which it holds a major ownership interest, is that it will cause a brain drain of the best people to other companies. I have one response to such a meritless argument: Bullshit.

Some of our private sector oligarchs are so narcissistic, greedy and arrogant that they think that most human talent is limited to a very small number of them. Having worked in many large and small business enterprises directly or as a consultant, I have noticed many excellent people in middle management or as Junior Vice-Presidents would be great to promote because they are hidden great leaders merely overlooked by those above them in the organization.

I strongly subscribe to the Peter Principle of Organizational Management which states “A Person rises to his level of incompetence.” Often those at the top reap the financial rewards of the intelligence and hard work of their subordinates. If those top executives feel they can do better elsewhere, we should welcome their departure so we can promote talented and competent people within the business organization or hire new talent from outside.

Many of these established companies, heavily populated by Ivy League Graduates, are directed and managed by an interlocking, incestuous, corrupt, and ossified group of individuals who continuously reward each other for various levels of incompetence, or just enough competence to surround themselves with excellent subordinates. These arrogant “best and brightest” from Boston to Washington DC even think the world revolved around them. These alleged “high producers” create short-term profits from speculation, not by actually adding anything to the economy.

Most of the financial services, investment houses and large banks have claimed to produce many new “innovations” that were created to merely skim off money from the real world economies that actually produce valuable goods and services. These marvelous “innovations” created global securitization packages, credit default swaps, derivatives, interest-only mortgages with balloon payments and interest readjustments, and other esoteric and essentially fraudulent transactions, and they all completely blew up last year. These allegedly brilliant people forget the need to properly assess and manage risk. These innovators caused the greatest worldwide Recession since the Great Depression of the 1930’s. Fortunately for them, all the bad risks were socialized and transferred to the U.S. taxpayers and they kept the profits thanks to excellent connections in Washington DC.

We can find excellent corporate managers and leaders from around the country – from places as diverse as the University of Kansas, Ohio State University and UCLA. We can also find top business talent in Mumbai and Bangalore, India. Unfortunately too much human talent is wasted or left undiscovered unless it is given the opportunity. Too many potential leaders never reach their highest callings because many top positions are occupied by ossified and incompetent people who rose to those positions due to friends and family with money and connections.

Most executive search firms are simply arrogant and lazy. They really don’t want to work hard or look very far to find “talented” people to fill the various job openings for their clients, who also prefer hiring people who already comport with their limited mindsets and world views. These placement companies make their money by shuffling a select number of people between a limited number of companies. By excluding many talented people, they artificially limit the market and thereby raise compensation demands that increase their fees.

I do not think that many top executives from Citicorp, Bank of America, AIG, General Motors and other companies will be able to find comparable jobs at the currently profitable Goldman Saks or JP Morgan. There are a limited number of top management positions in any large organization. They might find new positions in a host of other private companies if those hiring committees think their experience in destroying their former companies is really a desirable and transferable talent. I wish no one ill if they choose to change employers but I strongly believe that this “brain drain” claim is completely baseless and arrogant.

Only in the U.S. are the top executive compensation packages (including salaries, bonuses and stock options) at our largest multinational and domestic-based corporations hundreds or even thousands of times greater than the average employee working at those same companies. This vast income disparity simply does not exist with large corporations in Europe, Japan, India, and China – and even with most middle-sized and smaller American enterprises. In fact, most of our largest private corporations have been out-competed and beaten by these foreign or smaller domestic ventures for more than a decade.

The U.S. has relied upon and still looks to our small businesses to create more than half of the new jobs in this country. Our too-big-to-fail large companies only succeed and survive when they distort and manipulate the free market capitalist system by rigging the playing field. They use their large monetary caches to buy out competitors and in bribing top governmental officials around the world to ensure they get special treatment at the expense of everyone else.

Talented individuals rise to leadership positions because they are always looking for new challenges, thinking differently from old management, and are open to starting their own companies to escape the ossification of their former employers. Their driving force is wrapped up in the whole process of creating, inventing, marketing, improving and expanding. Large financial rewards are secondary and follow years of hard work with many failures along the way. Millions of people around the U.S. and the world are just aching for the right opportunity.

What we really need to get us out of this deep recession is a significant Federal investment in new technologies, start-up ventures, and expanding all types of smaller companies by means of grants and loans between $50,000 and $500,000. Apart from large transportation infrastructure investments, our Federal government would do best by putting money into the hands of many different young and old entrepreneurs and creative individuals instead of transferring billions of wasted dollars to our failed financial and banking institutions who happen to be large campaign contributors. It has become painfully obvious that our large private financial and banking institutions are not interested in making such productive long-term investments. They prefer short-term high-risk non-productive pursuits that are based upon a rigged gambling casino where they possess insider information.

Many of the top executives at large established companies never started any enterprise from scratch. They parade around building “resumes” from top universities and pad them later with work at various enterprises thanks to the connections of friends and family. Too many have little understanding of what many departments actually do in their companies, and they rely upon others in their organizations, including accountants, attorneys, financial managers, and their sales forces to cover for their well-hidden incompetence.

These “top producers” use their intelligence and manipulative skills to excel at office politics, and readily engage in subterfuge, career sabotage of perceived rivals, creative lying, and stealing the good ideas of others. They are extremely self-centered, narcissistic individuals totally devoid of consciences and incapable of any empathy for others or remorse for their actions that intentionally hurt others. Psychiatrists and psychologists call these people sociopaths – some of the most dangerous creatures on the planet. We could all live quite well without them.

Marc Pascal