  The radical free-market types tend not to get caught up in the details of how the market actually works preferring their neat little economic models to business reality. One are were this is glaringly true is in executive compensation. Why is it that urlLink bad CEOs are paid so much despite declining performance? The ansewr does not lie in the dry abstract world of economics, but in the very real world of corporate power politics. The executive class in America has basically colluded to set laws and regulations in their favor and to the detriment of their corporations stakeholders, including investors, communities, employees, and customers. Anyone with common sense knows that the marketplace for corporate compensation is severely distorted but rigid adherence to free-market ideology prevents the public from doing anything about it. This lack of public activism, in partiular the lack of shareholder activism, prevents the economy from functioning at its peak. 
