Wednesday, March 25, 2009

More Outrage

Today's New York Times has published a resignation letter from Jake DeSantis, an executive vice president of the American International Group’s financial products unit. In the letter, DeSantis criticizes how dysfunctional the work environment at AIG has become and defends his bonus (and presumably those of some others) on the grounds that their particular departments at AIG were making money and these were the bonuses they had contracted for. I won't reprint the letter here, but it's well worth a read. And what's DeSantis doing with his bonus? He's donating 100% of it to charity.

It's a PR move certainly, but God knows it's a needed one, as DeSantis's references the reckless and baseless comments by the Connecticut and New York attorney generals indicate the need for some opposing voice to be heard over the cacophony of criticism. I won't begrudge anyone the chance to tell their side of the story.

But even more interesting than the letter was the reactions of the New York Times commenters, a great many of whom are not just angry about the bonus, but angry that this bonus is going to charity (and not, presumably, back to the government).

I'll post one of the comments that's more reasonable in tone, but indicative of the flawed logic we're dealing with here:

Lately, a lot of people have been experiencing a version of the distress, frustration and anger Mr. DeSantis describes. You work hard; you do nothing wrong; your company tanks because other people were stupid or wasteful; your own employment and income prospects turn dark. You are asked to continue working, to help save the company, but there are no guarantees . . .

Unless the taxpayers are underwriting your million dollar contractually guaranteed bonus!

Few workers have been offered that kind of safety net, because few work for private businesses funded with public dollars. That seems to be the part of the puzzle that Mr. DeSantis and his colleagues have not figured out. They are basically civil servants now, and their contracts for continued employment should have been negotiated to accept that reality: neither asking anyone to work for $1 nor guaranteeing anyone that the dollar would turn into millions at some future date.

Maybe this is just my legal mind at work here, but what the commenter describes is a real problem. Fine, so you want to consider AIG employees as civil servants, as they are getting paid out of TARP money. And fine, their contracts for continued employment should have been renegotiated. But the point is that their contracts weren't renegotiated and that these AIG folks were still operating under their old contracts. Casting these AIG folks as public servants doesn't make things better, it makes things worse. After all, when was the last time you remember the government tearing up a valid public sector employee union contract and take back money that had already been paid out to government employees?

There's been so much anger directed at AIG, I've been surprised there's been so little directed at government at all levels. It was the government that gave AIG this TARP money and it was the government that didn't place any conditions on it. It was the government that should have "renegotiated the contracts of public servants" and it was the government that once again failed to do so. Perhaps just as bad as the hundreds of billion being poured down the drain into failed companies, is the ginned up outrage expressed by politicians of all stripes. All this political posturing needs to end; the very last people who should be outraged about how taxpayer money is being spent are the very people who decide how to spend taxpayer money in the first place.

Yet there's more anger directed at AIG and men like Jake DeSantis than there is anger directed at the government that hasn't managed to do a single thing right in regards to this financial crisis. You would think that Mr. DeSantis giving his money to charity would be a worthwhile compromise, but no, there are still those who demand that the money be taken away from charity and put back in the hands of the very same politicians who created this problem in the first place.


Anonymous McMc said...

Did you see Obama when that reporter asked him why his outrage in regards to the bonuses was so delayed? Obama was mad at the guy for asking a fair question and stared him down like the reporter stepped out of line.

Why aren't people more upset with the government? Because politicians are echoing the people with their "outrage". They are deflecting the fact that something could've been done beforehand and putting the blame solely on AIG.

While I understand the anger (from the people), it is starting to get a bit out of hand and the government really isn't making anything better. This reminds me of Bud Selig condemning the steroid era yet he did nothing to stop it. People clearly blame Selig for it and fault him for his comments, so why is it so hard for people to do the same with Obama? Simple answer: because he's too well liked. Ask a question he doesn't like? You're getting a cold stare and being painted as the bad guy.

If this happened under Bush, people would definitely be blaming him and the administration. Who knows? Maybe this will be what brings Obama down to a level where criticism will be more acceptable.

4:51 PM  
Anonymous rose said...

Emotion seems to rule in tough times. Truth doesn't matter very much. It is incredible that in a free society the pols can manipulate public opinion to such an extent. It is so easy to unite angry people against a certain group, in this case bankers in general and AIG.

The climate of attitude is something I think none of us has experienced, and provides some insight into the past.

Picture Germany in the 1930's. Government controls the media and people are going through economic pain unlike anything in American history. If you can generate this kind of anger in America, in a free society, during a 6.2% dip in GDP, imagine how easy it would be in Germany in the 1930's.

It always was hard for me to understand how an entire nation got behind the Nazi movement. I think I understand a little bit better now.

9:48 AM  
Anonymous rose said...

LL, in the past few weeks economic indicator after indicator has been coming in better than expected; retail sales, housing starts/sales, durable goods blah blah blah. The economy is showing signs of bottom basically and that's what the market is responding to.

Yet Geithner's bank plan hasn't been implemented yet, cash from the stimulus bill won't start flowing for awhile...basically none of the fiscal measures taken(aside from the bailouts) have been implemented yet. And we appear to be bottoming.

The improvements will become more apparent to average folks in the coming months, right as the fiscal measures start to be implemented and the administration can take credit for getting the economy out of its death spiral.

A rebound is inevitable and everything good about it will be attributed to government programs and Obama.

10:27 AM  

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