As "pay czar" Kenneth Feinberg announces considerable salary reductions at seven large companies that received bailout dollars, taxpayers should be wary of the unintended consequence of government price-fixing - saving a few million dollars in employee compensation could well put billions more in jeopardy.

Mr. Feinberg's plan will slash salaries for the 25 highest-paid executives and employees at these companies. The cash portion of their salaries will be cut by 90 percent on average, and total compensation - which includes restricted stock that cannot be redeemed immediately - will be cut by an average of 50 percent.

The natural response, in light of these companies' disastrous track record, might be, "So what?" If the pay czar has the power to fix these wages as he chooses, why shouldn't we cut executive salaries down to size?

You don't have to be an economist to see the faulty logic here.

Most taxpayers would like to see a good return on the money they've invested in these banks, carmakers and financial institutions - for the stocks they've purchased to gain value, for the loans they've made to be repaid with interest. The persons who will actually do the work to realize that return don't come cheap. It's that simple.

As much outrage as enormous compensation packages generate, we can't fall victim to the view that these wages are arbitrary numbers that can be decreased without consequence. Otherwise, taxpayers could find billions of their dollars being handled by executives who are left over because their skills aren't deserving of high salaries elsewhere.

To better explain this idea, let's look at an example from baseball. Imagine that seven major-league teams have hit hard economic times. Unwilling to see America's pastime fall by the wayside, the U.S. government offers a bailout to those struggling franchises. But the bailout money comes with a condition - the government's baseball czar declares that all player salaries on those teams will be cut in half.

What happens next? All the talented players inevitably leave the bailed-out teams for teams without fixed salaries, and the government is stuck with seven teams that can't win a game or attract top recruits.

Uncle Sam had better hope the farm team is well-stocked.

Whether it's baseball or banking, the government is on dangerous ground trying to fix wages. This is a lesson it should have learned from the consequences of its efforts to raise the minimum wage.

The federal minimum wage - currently set at $7.25 - works in a similar (but reverse) way to Mr. Feinberg's limits on executive compensation. But where the government's ceiling on executive salaries threatens to create more vacancies than there are talented applicants to fill them, a government floor like the minimum wage creates fewer employment opportunities for those low-skilled employees whose skills don't measure up.

The take-away lesson here is that good intentions are no guarantee of good policy outcomes. Even the pursuit of an admirable goal - reining in the fiscal excesses of corporate executives, providing higher wages for low-skilled employees - can do more harm than good when it's coupled with government wage intervention.

People can debate whether the bailout was a wise use of taxpayer money. However, now that the money is out the door, the top concern should be seeing our investment returned. For us to retain those talented employees whose contributions are essential to meeting our goals, the fundamental decisions about pay and hiring should be made by the companies and shareholders who know their business best - not detached bureaucrats in Washington.