First off.
The amount of these bonuses relative to the bailout money received by AIG is ($165,000,000/$180,000,000,000) = .0009166. Speaking in percentage terms, this is .09166%, less than 1/10 of 1 percent. Let's round up to one tenth of a percent. Say you make $50,000 per year salary. One tenth of 1% of this amount is fifty bucks. If you make on the order of $100,000 per year, we're talking one-hundred bucks. No, you don't seek out to toss $50 or $100 out the window. You *might* haggle over it during a car buy, but speaking for myself, I'd be willing to let if go if I was tired and wouldn't lose a wink of sleep over that decision. Let's talk kids. Say we give them $20.00 for their birthday money. Say they lose 2 cents of it. I wouldn't hang mine by their toenails, refuse to ever give them money EVER AGAIN and ground them for life because of the poor choices that caused them to lose 2 cents.
Perspective, people. Bad choices? Yes. A tragedy of epic proportions? I don't see that.
Second.
Retention bonuses are a commonly used practice by companies to keep important employees during times of crisis. I'd say AIG fits the bill for being in current crisis. People - like it or not, the US taxpayers now own 80% of this company. We do not want it to fail at this point. Really. There's something to be said for keeping employees there who know enough about the business to unravel the mess that AIG and the US public is entangled in. Tell me what talented financier on earth would go to work for AIG now? I imagine the resumes aren't exactly pouring in. You don't want to lose any quality employees at this point. We WANT AIG to pull itself out of this mess. This will take people who know what they are doing. They need a reason to continue to work for AIG.
Connie Reeve in an article from CBC News, Canada:
"As you can imagine, in businesses where the intellectual capital is the essence of the business, losing your best and brightest because people fear what is going to happen in the future is a bad thing," she said. "Retention bonuses have a place because they serve a legitimate corporate purpose."
(click to see the full article).
The use of retention bonuses is not exactly an unusual move.
Distasteful? Perhaps. Well, a hearty YES.
Worthy of gnashing of teeth and threats? Mmmmmm, no.
These bonuses frustrate me. They do not, however, signal the end of civilization as we wished it were, however. I don't know it all, but I am willing to open myself up enough to acknowledge that there may be legitimate reasons for paying out bonuses. I think we are at a place in history right now where more than ever, intellect needs to trump emotional knee-jerk reactions. Before threatening to massacre those receiving bonuses with piano string, before we allow Congress to hastily pass an excessive and ill-thought-out tax on a small group of individuals, we need to take a collective deep breath, regain perspective and attempt to make judgments and decisions based on facts and not emotions. Hold on - slow down and think this out.
A bit of frustration is fine, and I join with you all in that. This collective outpouring of abject hatred is pretty frightening to me, on the other hand.
9 comments:
I'm one of those on the hatred bandwagon. It's more than the percentage of the total that's involved. It's the fact that the government can't be trusted to close wide-open loopholes that enable such egregious behavior. It's also the fact that the executives who you consider worth keeping are among those who caused the crisis in the first place. This leads people like myself to conclude that we get screwed for their behavior, yet they get rewarded as being too valuable to lose. I had just as soon lose them. My wife's retirement has been postponed indefinitely. We have lost, not just years of accumulated savings, but years of accumulated income. Now, the people who caused it are lining their pockets? I don't think I'll ever consider THAT a small thing to get worked up about.
SB:
Do you know that? Do you know that those receiving bonuses are the ones who caused the problems?
I don't. It's hard to find information on that. Seems that Liddy's testimony suggests that those who actually built and directed the AIG mess are gone.
We are at a time when we need to think long term and not short term. While it makes us all feel better to rage at these execs, we are going to be hurting a hell of lot more if AIG fails to unravel the mess it's in, based on what I've read from economists.
No, it's not "fair" and yes, it DOES, in fact, make me angry. But there are times that you have to focus on solving the current problem and how to return to a semblance of normality, rather than being blinded by emotion. Running off every last exec at AIG, who by the account of Liddy, are indeed making progress at unraveling the books, would be cutting off our nose to spite our face.
SB -
I should add my sympathies at the financial losses you and your wife have suffered. These are hard times, and the collective "recession" we're all subjected to does not diminish individual impact. It sucks. I'm sorry (for all of us).
I think there are many many things to blame for the place we are, currently. However, I don't think that bonuses at AIG in and of themselves are anywhere close to deserving the percentage of the rage that has been garnered in the big picture. There are many many other outrages that have had definitive consequences that are quite deserving of such an united outpouring of outrage. In other words, fixing the AIG bonuses isn't going to do squat in improving the country's financial health. It's simply a convenient whipping boy at a time that we desperately need a whipping boy.
Unfortunately, none of the factors that have a "real" impact on our financial health are as easily definable as "hate the rich guys" is.
I'm not saying that the actions at AIG are defensible. I simply think that the proportion of our nationwide anger has been grossly misplaced.
I don't have it in me right now to argue the point, but I didn't want to ignore your response either. I'll just say that, at the moment, I feel somewhat despairing of capitalism as we know it. I quote from the following blog:
http://coyoteprime-runningcauseicantfly.blogspot.com/2009/03/wall-street-more-lipstick-for-pig.html
"Marxists argued that fascism is a form of state capitalism that emerges when laissez-faire capitalism is in crisis and in need of rescue by government intervention. Fascists have operated from a Social Darwinist view of human relations. Their aim has been to promote "superior" individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class."
The problem is that these "superior" individuals are only superior in the same way as the old Southern slaveholders. Our labor makes them rich, and we live in hope that they might throw us the occasional crumb from their opulent table. "Trickle down economics" appears to be trickling very little.
Actually, I agree and disagree. One, people are too focused on it and worked up about it, Two, some of those people actually are in the division that caused most of the problems...I heard it on CNN. :-(. I think people have a right to be angry about this. that's why so many are. It's not that we can't be logical about it. I get the percentage thing, but it's just not cool that they did this. If anything, it's a super PR gaffe! It's not even the money, it's the idea. Not cool.
Lynne, RE who the bonuses are going to - it's hard to tell. Yes, they are going to the DIVISION that caused the problems, but I'm not convinced they are going to the "guilty parties."
For example from this story (http://www.canada.com/news/case+forking+over+millions+employees/1404423/story.html), comes this quote:
"The bonuses aren't going to the company's fattest cats. The 25 highest-paid employees of AIG's financial products section, which has caused all the trouble, are working for $1 (each) in salary for the rest of 2009."
(I don't think this article is all that illuminating; it's just one I had handy that mentioned their version of who was or was not receiving bonus money.) Who knows??? There's a lot of conflicting information out there on where those guilty parties are (whether they are in fact working for the company) and/or if they are receiving the bonuses.
We could debate for a long time the culpability of employees that weren't directing activities but were carrying them out...I would call their actions not morally defensible, but I'm in the gray over whether I would consider them "guilty."
I'm actually more angry than those who have commented here seem to think. It is *so* distasteful. My point was mainly that we have to be intelligent about where we expend our energy - focusing on the AIG execs feels good and feels right but isn't going to help us.
What a lousy time just now...
I'm also on the angry bandwagon, although I think it's fair to say that most of this anger isn't really focused at AIG, if we're being honest with ourselves. I think the outpouring of rage is a long-pent-up frustration with the hypocrisy and injustice of "the system." AIG was just the straw that broke the camel's back.
But I am offended by the AIG bonuses (and every other inappropriate flood of bonuses) and here's why-- while these spoiled, pampered, idiot execs rake in millions for doing nothing more than f--ing up, my Republican governor keeps slashing money to social programs to balance his budget.
One of his most recent cuts was $125 million from Medical Assistance. $165 million may not be a lot to the likes of a mammoth like AIG, and it may be a grain of sand in the beach of the overall bailout, but this $125 mil cut to medical assistance really cut deep into regular people who were already struggling. I (and people like me) have suddenly found ourselves in the position of having to literally choose between groceries and necessary medication for our children.
I resent that governors like him are cutting into social programs with wild abandon, while refusing or criticizing federal bailout money that their citizens desperately need. It's beyond frustrating to know that a filthy-rich CEO got his multimillion dollar Christmas bonus, while I can't afford my kid's asthma medicine. I think this is what people are reacting to. It's deeply, painfully, unfair.
(sigh) Of course it's unfair. That's terrible. I agree with all that.
I guess my point that is having trouble making it out is that I would like to be focused on trying to FIX this terribly screwed up system. I don't want things like this to happen anymore. It's WRONG.
But having the entire country fixated on AIG bonuses is focusing on a symptom and not the cause. Passing an ill-thought-out 90% tax on a select group of people is a punishment, and not a solution. We're not having the conversations we need to be having because we are so busy screaming. It's too easy to get caught up in rage.
If I were hearing intelligent talk somewhere, ANYWHERE, I wouldn't be so frustrated, I think. Seems like a lynch mob mentality. Feels good, but doesn't move us forward.
I know what you mean. The lynch mob is chasing a tiny symptom, not the problem. It is frustrating.
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