If people knew how to count, we wouldn’t be in this mess, would we? Read some books on behavioral economics, and you’ll see people don’t respond in rational ways. You can ignore that at your peril.
Not all dollars count the same. The dollar going to the moron responsible for the problem counts for mere than the thousand dollars going off to the black hole of the banks. It t’aint rational, I agree.
Ah, but the public took care of the screwiups in 2006 and 2008. 
This is one of the issues that gives me pause here. Sam Stone has elucidated some others, and I thank him for injecting some salient analysis in defense of the AIG employees.
Ultimately, I think the dollar value of these bonuses is inconsequential. I object to them because of the principle of the thing, not the principal (couldn’t resist the pun, sorry). True, the bonuses are an order of magnitude lower than the amount given to AIG in the form of bailout funds. But where do you draw the line? Would it be appropriate to decry the bonuses if they were 1/100 of the bailout instead of 1/1000? How about 1/50? There comes a point where I think any rational person such as yourself would have to object the bonuses, and, to me, the line in the sand is very arbitrary. I’ll concede that at a certain point I wouldn’t object to bonuses (if they were, say, 10 cents), but that value is very low. The fact that they exist at all is what I object to.
I agree, but on the other side of the coin…Why is 250,000 the line drawn for taxing the bonuses? So it is OK to screw people making more than 250k, but not OK for someone making 249k? I don’t get that. The government decided to give the company money, and they set the terms upon which that money was given. They should have set different terms if they wanted to control the way every dollar was spent.
Unless, of course, AIG went under, which it would have without taxpayer support. So guess who gets to set those terms?
I can’t agree with that either. The interest of economic efficiency is served when people do the work that is most in demand. That demand is determined by wages. These people were ready to leave AIG because it looked like AIG was going down, and other financial firms who were sound were making bids for the best people. That’s what you WANT them to do. And you want those people to take those offers unless a better one is made.
A touchy-feely world in which workers just take it on the chin and stick it out with a company out of loyalty despite the fact that it can no longer pay them competitive salaries is a world in which businesses failures are much more severe, and in which ‘zombie’ companies which consume resources better spent elsewhere continue to stumble along on the backs of their employees, who could be more productive elsewhere.
And if you spent 20 years working your way up in the financial industry and got to the point where you were making $500,000 per year, would you stick with a company if it said, “Sorry, but we have to eliminate the majority of your compensation and pay you a fraction of what the company down the street is offering”?
These people did nothing wrong. They had other options, and AIG bid for their services. They had every right to enter inito that contract, and to expect AIG to live up to it. Of course, AIG could go bankrupt and wind up forfeiting some of it, but I’m sure that was part of the equation that set that price in the first place.
Populism is a terrible way to analyze problems. Tempting as it is to point fingers at rich people and blame them for everything, it’s no substitute for actually thinking through the issues. And it’s this kind of populist rage that got the Kulaks hung from trees in the Russian revolution (which led to mass starvation once they’d killed all the people who knew anything about agriculture). We’re not at the point yet where bankers will be put in front of firing squads, but it comes from the same place - unreasoning hatred and a desire to find scapegoats for your problems.
This is, more or less, a democracy. WE are the government. It is easy to forget that when most political activity happens by courageous leaders who duck their head down and plow forward, damn the masses, but the truth is they represent us, they do not command us. It is the other way around. They made a deal the public thought stunk. We are not helpless in the face of it.
This is the same public that thought going to war with Iraq was a good thing (initially)…and for much the same reasons (i.e. they were told it was a good thing, they were prepared for years that it would be a good thing, etc etc). I don’t think that this should be a good metric for what is right…that a majority of citizens have been lead by the nose to THINK it’s a good idea (for now).
YMMV of course. I have to wonder though, what your thoughts will be if AIG goes tits up and we don’t get back our money. Will you be like the Iraqi apologists and say “Well, the Public was all for it!”, or will you be like me “I thought it was a good idea at the time…but I was fucking wrong”…
-XT
OK, Sam. Just a few bad apples, that’s all.
Probably about as many times as it has been pointed out that the money being paid is not (was not/should not be) AIGs money. It is ours.
By that measure, I don’t particularly care that the current bonusees are not the culprits. They still are not entitled to be paid out of my money that was given for the purpose of fixing things. And they’re still really fucking rich without it. And if they are so bent out of shape by not getting a bonus from a bankrupt company that they have to find a new job … Great! More power to them. Go work for a company that can earn the money it pays you rather than beg for it from me.
FWIW, my ire is directed squarely at congress (including then-Senator Obama) for the way all of the bailouts have gone down.
You’re right, xt, it is a concern. But I rather think it was the other way around for the Iraq war. The government pushed us to support it. In this case, the administration is scrambling to wipe the egg off its face. Don’t you think they’re a little different?
I don’t know. But I’m not sure I’m prepared to accept a reality where the financial industry holds us all hostage over bonuses.
It will be the biggest blow to my general optimism about the potential of mankind, honestly.
They’re not the villians, but that doesn’t change the fact that these stimulus-fueled bonuses, most particularly the giant ones, are a huge hot potato and that, were these innocents not bright enough to see that prior to this week, at the first hint of pitchforks and torches they should have come out en masse, returning the bonuses on public television with much pomp and fanfare and assurance that the bonuses weren’t their idea and they’re happy to give them back. Heck, that would have been the the self-preservative approach.
Money we gave them, not out of the goodness of our collective hearts, but because if AIG went down we might have had to go back to bartering a pig for some new shoes.
It was in our collective best interests (which is, of course, why we did it). Myself, even if this bonus money was exactly what folks in this thread are trying to portray it as (i.e. money for a bunch of useless Fat Cats™, or even if they took it out and used it to light their cuban cigars or build bonfires with I wouldn’t care…as long as they do their freaking jobs, stabilize the company and start selling it off so we can get the REST of our money back. I seriously don’t understand why it’s so hard to understand that. $100 billion dollars vs $165 million.
Except one thing…if they all bolt we won’t get our money back. AIG will fold and we’ll be out a hundred billion dollars. And this doesn’t even take into account what might also happen to us collectively if AIG folds.
Again, we didn’t give them this money because they begged for it or out of the goodness of our collective hearts…we gave it to them so that our own house wouldn’t catch on fire along with AIG’s. And if, in a fit of pique and stupidity we make an issue of this and this causes us to lose a hundred billion dollars plus (while righteously getting 90% of the $165 or so million from the bonuses back), then I’m thinking we’ll get exactly what we collectively deserve. Of course, I’m equally thinking that folks are going to blame AIG and anyone else they can for this.
Couldn’t agree more.
-XT
Blah, blah, blah. Again, people all over the place have lost their job through no fault of their own. No one is going to feel sorry for these people who aren’t going to get a 100k plus bonus. You efforts, though admirable, are doomed to failure.
Well, I don’t want to hijack the thread, or open a huge can of worms, but no…I think that the public WANTED some payback for 911, and Iraq was a convenient target. I think the Republican’s played on this to get the war rammed through…but that the majority of American’s were willing and even eager to pound Iraq and Saddam into scrap.
In this case, I think the Dems are getting bit squarely on the ass for their own propaganda. For years their rhetoric has been against the rich fat cats and over paid executives…and the press has gleefully gone along. Now, with the press and the left egging on the public even more over stories from the bailouts (remember the CEO’s of the big 3 flying in corporate jets story?), the situation has exploded in their own faces. This isn’t to say that it hasn’t equally exploded in the Republican’s face as well of course. This story has been so blown out of proportion and so over-hyped that I’d have to agree with you…it’s even more so than the run up to Iraq.
But in spirit there are certainly some similarities. I just hope this isn’t nearly as painful as our fuckup in Iraq.
Well, how would you suggest retaining these folks? We can’t put a collective gun to their heads and make them stay. It’s a highly uncomfortable (to understate) situation that a lot of these folks find themselves in. I think a lot of them would much rather bolt, even if it meant unemployment (which I doubt…my guess is most of them would be able to find jobs with other companies…hell, the guys who ACTUALLY fucked up are by and large and, afaik, working).
I know it’s difficult, but try and put yourself into some of these guys shoes. The company has gone tits up. It’s dead…and their jobs are dead ends. At this point they are just trying to stabilize the situation and position the company to be chopped up and sold off. They have no real future with AIG. And, on top of that and even before this whole blowup over the ‘bonuses’ there was a lot of anger and invective against AIG (and them by extension). Now…it’s a fucking witch hunt.
So, having put yourself in their shoes…would YOU stay if you had any choice? I know I wouldn’t. They couldn’t pay me enough to continue in that situation.
And that’s the difference. At this point, if it happens, I won’t be surprised at all.
-XT
You raise a good point. $250k is an equally arbitrary line to draw. Someone obviously thought it was an appropriate point to make a distinction. And to some extent, it seems to be a good one. $250k+ is considered upper class by most measures, although it would make more sense if it coincided with the top federal tax bracket.I also agree that the government should have specified more stringent terms for the usage of every dollar given over the AIG. As others have pointed out, though, Congress was in such a scramble to pass a stimulus of some kind that some specifics couldn’t be hashed out as well as they should have. This tax on bonuses is an unfortunate consequence of the way the stimulus bills have apparently been written.
I won’t “repost” what you did, but want to say that I came to about the same conclusions (thanks to Scylla’s posts on the subject). This is a punitive tax, regardless of claims to the contrary, and “the villains” have already slipped away, leaving us to punish those who are left holding the bag.
I feel like this is a loaded question. I’m sure it is a difficult position they’re in. Most of the country is in a difficult position.
Forgive me, really, but “the few bad apples” line is simply not going to work on me. There are systematic problems. These guys are part of that system. They must be, if they’re expert enough to wade through this, yes? I’m glad people think they’re smart enough to figure this out. They think they’re blameless, you think they’re blameless, fine. I’m not asking for public hangings. I’m asking that they be smart enough to realize that it is pretty unreasonable to expect the taxpayers to pay bonuses to a failed company, no matter who is there. The administration wasn’t smart enough to realize this.
Imagine why it is difficult for me and you will see why I am so upset. My anger has caused me in this thread to say unreasonable things. But I will not suddenly find myself saying, “Gosh, we should use taxpayer dollars to pay these bonuses!”
They have jobs. How high does unemployement have to climb before it is reasonable to ask them to identify with the rest of us? Of course I wish I could identify with someone who’s biggest problem atm is whether or not my bonus was going to be taxed at 90%. I haven’t had a bonus in eight years.
Having been offered the chance to leave what was pretty much a sinking ship in the 2002/2003 downturn, I can tell you I chose to stay on it. Maybe they should put themselves in my shoes.
Good point. The current issue aside hose people need to be found wherever they are and taxed at 110% of their net worth, and their employers taxed at 100% too making them unemployable, their passports revoked, so they can be driven to the poverty they deserve, have everything of value they own sold at auction, and be stuck there.
Maybe for good measure against the ones that have already left the country we could put a nice bounty on turning in their heads, body optional.
You worked at Enron or Worldcom? If so then I suppose you do have some idea of what these guys are going through. If not…then not so much.
-XT