I caught this article about AIG while perusing headlines the other day. What a good point it makes—what such a comparatively prolonged fuse about AIG execs and their bonuses? Aren’t there more important and impactful things to worry about and to rekindle our economy? I don’t mean say the crazy bonuses to AIG execs are morally just, but take a look around. China, for instance recently announced a major shift in its strategy concerning its investment in the U.S. dollar; in fact it suggested replacing the dollar as the international reserve currency. AIG exec bonuses of $165 million are chump change to the tectonic economic consequences such a change in policy could have for the U.S.
The Feds help AIG–but forgot to attach strings
Who picks what important and what’s not in American economic strategy? Why does AIG cover the papers and congressional attention for a full week? Much of it is certainly public outrage from all of us non-bankers or non-insurance agents at all the bankers and insurance agents for taking our taxpayer money to compensate themselves. But congress looks like Robin Hood this week—steal from the rich and give to the poor! The Big Money articles sums it up nicely: “It’s healthy and cathartic to swear about the injustices of the bastards who got us into this mess. But this past week has been shortsighted. When we’re screaming one kind of inconsequential vulgarity about another kind of inconsequential vulgarity, our anger shouldn’t become a weeklong melodrama. We simply don’t have enough time for that.”
I think it is important to realize that however undeserving many AIG execs may be, they are hardworking dudes and dudettes like any other Americans. These two articles (one and two) bring up important points concerning the fact that blaming “AIG” or “bankers” or “Wall Street” isn’t exactly the best way to go about fixing things. In AIG’s case, one London-based unit of 377 employees pumped out $500 billion in credit-default swaps. These swaps helped ruin AIG and the U.S. economy. What about the rest of the 116,000 other employees at AIG? Slamming all of Wall Street or all of AIG is similar to blaming “corporate America” for “the government” for the countries problems. Making such broad accusations is unproductive and destructive. AIG isn’t simply a faceless corporation; it is (or was) 116,000 individual faces with lives and families and communities. The government should careful not to jump on the bandwagon an crush those not responsible for the mess.
It is certainly important to punish the wrong-doers of the economic debacle. But we don’t have to spend so much time doing it. (In fact, why didn’t congress think about putting in bonus restrictions in TARR before it passed it?) Perhaps congress should instead spend time thinking about other things, like how to help rejuvenate the U.S. auto industry.