So I was talking with some people from the SydLexia.com forums, and they were having trouble understanding why I don't think the bonuses for AIG are necessarily wrong. These people seemed to be speaking from a very shortsighted position where all they could see is "AIG is bad!" without actually looking at the entire situation to understand it; I think this is what most of America is doing, and I'd like to help. Again, I do NOT like the idea of them getting bonuses, but I at least understand it and don't think they should be taxed in an unconstitutional fashion over it. Also, people are pissed at the fact that the bailout exists, so they're looking for an excuse to take back the money. While the bailout was a bad idea to begin with, passing an unjust and unconstitutional tax doesn't make up for it, it only makes the situation worse. When we examine the AIG situation, you have to ignore your feelings about the bailout in general. It's already happened, so nothing can be done about it.
So here's my hypothetical version of what's actually happening. The government has given this company billions of dollars because they fucked up and were losing $100 billion. All the people who are responsible for this tremendous fuck up have been fired, and they're looking at hiring me to fix things. As it turns out, I am the single best loss management executive in the world, and I'm willing to work for them to cut that number down. I am hired at a salary of $250,000 with a $10 million bonus if I reduce the loss to under $20 billion. Keep in mind that executive contracts are often written with small salaries and large bonuses because while the top jobs in companies warrant this amount of compensation because of how much they can directly affect the bottom line (In this case, tens of billions of dollars), they also need to be written with incentive bonuses like this rather than a straight salary, otherwise the executive could become lazy and collect the money without doing their job.
Now let's say I succeed and reduce the debt to $10 billion. Don't I deserve the $10 million bonus, even if it's from the ill-conceived government bailout? Sure $10 million seems like a lot, but it's 0.0011111% of what I personally saved the company. Wouldn't it be better for the government to have to spend $10.01 billion dollars, $10 million of which goes to me, to save the company rather than needing to spend $100 billion to save the company? If it weren't for the fact that it's government money, would you even question this bonus?
One person kept insisting that we should make an example of AIG and punish them for giving these bonuses, and that's why the 90% tax should be passed.
But what are they being punished for? How can the government punish a company that didn't break the law or the terms of the bailout
agreement just because they're angry?
The economy sucks right now, but we're not going to fix things by making irrational, knee-jerk decisions based on our emotions.
I look forward to the day when we have a robot president
© 2009 by Dr. Jeebus