It looks as though President Obama has got the country all riled up about the infamous AIG bonuses. To be honest, I’m not terribly upset about them, and I find the current level of public indignation to be rather ironic. Over the past 20 years or so, our politics have become more and more pro-capitalist and a good bit less socialistic. We elected leader after leader who promised to free the business class from the bindings of government regulations and controls; and those leaders made good. As a result, our nation experienced a lot of economic growth over that time. It hardly seemed to bother most people that the lion’s share of the expanding wealth was going to CEO’s and hedge fund managers and others already quite well off, with barely a few crumbs falling down where the most needy reside.
But now, those tigers of industry, who the public willingly unleashed over the past generation, have fallen into a pit and need the public’s help to get out. And in the process of helping them, we are noticing that they are still acting just like — just like unleashed capitalists! Well OK, so what should we expect? We loved them during all those years when unemployment was low and mortgages and credit cards were plentiful, when entertaining and affordable new consumer products were flooding the market. Who cared if the CEO made almost 1,000 times what the janitor was making? Or if your cousin lost her job because she was making 10 times what someone in India wanted to do the same work? Back then, she could always get another job.
Now our economy is in a pit, a pit that almost no one foresaw and most everyone, rich and poor and in-between, participated in digging. Despite all the frustration and inequality, it’s not a good time to get very angry at the investors and industry leaders (like AIG’s management) who seemingly got us into this mess. Angry reactions such as the 90% taxes on management bonuses, and restrictions on free trade, may preclude our economy from rebounding anytime before the third digit on the calendar turns from 1 to 2; just as they once made the 3 turn to a 4 before things got better. And just the sheer hypocrisy of a public that embraced capitalism so unquestioningly when times were good (which was for a long time), and now is bringing out the torches and pitchforks because of a crisis partly brought on by its own stupidity, is quite interesting. Hey, no one forced so many people to take out crazy mortgages on the assumption that housing values would forever rise faster than economic growth rates.
I myself did not previously believe that unchecked capitalism was a boundless source of good in the world, and I still think that we need to move toward a greater role for the government in our economy (albeit, a more intelligently placed role than with past attempts at government regulation and direction). But to suddenly lash out at the capitalists for doing things that we and our government have known about for a long time — that just seems stupid to me. Such lashing out doesn’t get at the real problems, and maybe even makes those real problems worse. I say let the AIG people (and the management of other financial and industrial firms now under federal bail-out) have their 2008 bonus money, so long as they know that it’s their last taste of the good old days. Mr. Obama, Mr. Geithner, Mr. Frank, Mr. Cuomo and their like should be putting full time into solving the present crisis and into designing a viable economic future; and not into punishing the fat cats for a bad twist of fate (especially after the voters who elected those now-indignant leaders embraced the fat cats for many years, when the twists were good).
Jim,
I’m not sure I agree with you on the AIG bonuses–or for that matter the bonuses I understand have been given out at other banks that have failed.
You are right when you say that the consumer has his/her share of the blame in the economic problems of our country. I find myself thinking that (and here I realize I am probably a group of one) I remember the time when a house could not be bought unless one had a 20% cash down payment. People had to actually save money to get a house. And the same goes for a car.
However, I also realize that I come from a totally different generation. There is more than one generation raised on the idea of “what are credit cards for except to run them up to the limit?” A whole generation (or more?) of college “kids” who received credit cards in the mail and sent for them after filling out a simple form. Now that practice was simply the result of greed on the part of the credit card companies who took advantage of kids who admittedly did not think past their noses but who also were taken advantage of because those distributing the cards knew for certain that the “kids” wouldn’t think past their noses about the consequences of running credit cards to their limits.
Somewhat the same goes for those who bought houses with little or no down payment; many of these people were either not educated enough to “read the small print” or not even aware that “small print” was written in the papers they signed. How many of the people who settled for ARMs on their houses actually knew and understood what they were? My thought is that anybody who actually knew and understood what an ARM was would not sign an agreement containing one.
Then too, I have read some real horror stories of gang members “in ghettos” who knew exactly what it was they were doing when they took full advantage of people who thought they could buy a house and who had no clue of what it was they were signing. They simply believed what they were told.
In addition I have heard that when it comes to AIG, these contracts for the bonuses given out were written by men who knew what was going to happen to the company but who manipulated the situation in such a way as to have the contracts written before the company “folded,” thus assuring themselves of the bonuses. Furthermore, I hear that it is the opinion of some who seem to be good analysts of the situation that these same people getting the bonuses may actually be indispensible to AIG (and the government) because the hanky panky dealings they “finnagled” are so intricate and complicated that they are the only ones who know (can figure out) what it is they have done that brought the company to where it is and thus they are the only ones who can “undo” the mess.
Somewhere in there these people need to be brought up short on just how much they can take in plain out and out greed. One starts to think in terms of the industrial revolution and the giants of industry of that time who made millions (and whose children, grandchildren, and great-grandchildren still live on the interest of those millions made then) on the backs of the poor working people who worked 12 or 18 hours a day 6 days a week.
Furthermore, I see a bigger issue in general involved here too. The other day I heard a psychiatrist/psychologist say that narcissism is the most common psychological problem of the current era. People simply cannot think in terms of anyone but themselves. When I heard that, I realized how right he was.
Perhaps a national outrage at such flagrant greed on the part of a few, and even the entire economic crisis, is a way to bring the entire nation up short and get them thinking in terms of someone other than themselves.
I would think that the solution to the entire economic crisis is not to see everything return to what we had before. Then we would simply have another “bubble” which is bound to burst again. I would think that the solution is for the nation as a whole–and the AIG bonus-takers
Comment by MCS — March 20, 2009 @ 6:25 am
Jim,
I’m not sure I agree with you on the AIG bonuses–or for that matter the bonuses I understand have been given out at other banks that have failed.
You are right when you say that the consumer has his/her share of the blame in the economic problems of our country. I find myself thinking that (and here I realize I am probably a group of one) I remember the time when a house could not be bought unless one had a 20% cash down payment. People had to actually save money to get a house. And the same goes for a car.
However, I also realize that I come from a totally different generation. There is more than one generation raised on the idea of “what are credit cards for except to run them up to the limit?” A whole generation (or more?) of college “kids” who received credit cards in the mail and sent for them after filling out a simple form. Now that practice was simply the result of greed on the part of the credit card companies who took advantage of kids who admittedly did not think past their noses but who also were taken advantage of because those distributing the cards knew for certain that the “kids” wouldn’t think past their noses about the consequences of running credit cards to their limits.
Somewhat the same goes for those who bought houses with little or no down payment; many of these people were either not educated enough to “read the small print” or not even aware that “small print” was written in the papers they signed. How many of the people who settled for ARMs on their houses actually knew and understood what they were? My thought is that anybody who actually knew and understood what an ARM was would not sign an agreement containing one.
Then too, I have read some real horror stories of gang members “in ghettos” who knew exactly what it was they were doing when they took full advantage of people who thought they could buy a house and who had no clue of what it was they were signing. They simply believed what they were told.
In addition I have heard that when it comes to AIG, these contracts for the bonuses given out were written by men who knew what was going to happen to the company but who manipulated the situation in such a way as to have the contracts written before the company “folded,” thus assuring themselves of the bonuses. Furthermore, I hear that it is the opinion of some who seem to be good analysts of the situation that these same people getting the bonuses may actually be indispensible to AIG (and the government) because the hanky panky dealings they “finnagled” are so intricate and complicated that they are the only ones who know (can figure out) what it is they have done that brought the company to where it is and thus they are the only ones who can “undo” the mess.
Somewhere in there these people need to be brought up short on just how much they can take in plain out and out greed. One starts to think in terms of the industrial revolution and the giants of industry of that time who made millions (and whose children, grandchildren, and great-grandchildren still live on the interest of those millions made then) on the backs of the poor working people who worked 12 or 18 hours a day 6 days a week.
Furthermore, I see a bigger issue in general involved here too. The other day I heard a psychiatrist/psychologist say that narcissism is the most common psychological problem of the current era. People simply cannot think in terms of anyone but themselves. When I heard that, I realized how right he was.
Perhaps a national outrage at such flagrant greed on the part of a few, and even the entire economic crisis, is a way to bring the entire nation up short and get them thinking in terms of someone other than themselves.
I would think that the solution to the entire economic crisis is not to see everything return to what we had before. Then we would simply have another “bubble” which is bound to burst again. I would think that the solution is for the nation as a whole–and the AIG bonus-takers in particular–to begin an entirely new way of thinking about how we live our lives.
We have already begun somewhat of that concept in the whole “green-living” idea of what is good for the planet. Now we need a change in thinking regarding how we live that considers what is good for the economic life of the nation, what is good for others besides only me, me, me.
Maybe, with some hope, the nation will come to a new stage of development where people will actually think in terms of what might be good for both society as a whole and the individual in particular. To truly get ourselves out of this mess, we simply have to develop a balance between the two–what is good for society and what is good for the individual.
And I will continue to say that Obama needs and deserves the backing of the nation. His honeymoon time may be over (and other presidents have had a much long honeymoon period); now reality sets in. I say give the man at least one term to see what he can do. Nothing annoys me more than to hear critics who have nothing good to say, yet who themselves have not one positive contribution to make in any form.
MCS
Comment by MCS — March 20, 2009 @ 6:25 am
Jim,
I’m not sure I agree with you on the AIG bonuses–or for that matter the bonuses I understand have been given out at other banks that have failed.
You are right when you say that the consumer has his/her share of the blame in the economic problems of our country. I find myself thinking that (and here I realize I am probably a group of one) I remember the time when a house could not be bought unless one had a 20% cash down payment. People had to actually save money to get a house. And the same goes for a car.
However, I also realize that I come from a totally different generation. There is more than one generation raised on the idea of “what are credit cards for except to run them up to the limit?” A whole generation (or more?) of college “kids” who received credit cards in the mail and sent for them after filling out a simple form. Now that practice was simply the result of greed on the part of the credit card companies who took advantage of kids who admittedly did not think past their noses but who also were taken advantage of because those distributing the cards knew for certain that the “kids” wouldn’t think past their noses about the consequences of running credit cards to their limits.
Somewhat the same goes for those who bought houses with little or no down payment; many of these people were either not educated enough to “read the small print” or not even aware that “small print” was written in the papers they signed. How many of the people who settled for ARMs on their houses actually knew and understood what they were? My thought is that anybody who actually knew and understood what an ARM was would not sign an agreement containing one.
Then too, I have read some real horror stories of gang members “in ghettos” who knew exactly what it was they were doing when they took full advantage of people who thought they could buy a house and who had no clue of what it was they were signing. They simply believed what they were told.
In addition I have heard that when it comes to AIG, these contracts for the bonuses given out were written by men who knew what was going to happen to the company but who manipulated the situation in such a way as to have the contracts written before the company “folded,” thus assuring themselves of the bonuses. Furthermore, I hear that it is the opinion of some who seem to be good analysts of the situation that these same people getting the bonuses may actually be indispensible to AIG (and the government) because the hanky panky dealings they “finnagled” are so intricate and complicated that they are the only ones who know (can figure out) what it is they have done that brought the company to where it is and thus they are the only ones who can “undo” the mess.
Somewhere in there these people need to be brought up short on just how much they can take in plain out and out greed. One starts to think in terms of the industrial revolution and the giants of industry of that time who made millions (and whose children, grandchildren, and great-grandchildren still live on the interest of those millions made then) on the backs of the poor working people who worked 12 or 18 hours a day 6 days a week.
Furthermore, I see a bigger issue in general involved here too. The other day I heard a psychiatrist/psychologist say that narcissism is the most common psychological problem of the current era. People simply cannot think in terms of anyone but themselves. When I heard that, I realized how right he was.
Perhaps a national outrage at such flagrant greed on the part of a few, and even the entire economic crisis, is a way to bring the entire nation up short and get them thinking in terms of someone other than themselves.
I would think that the solution to the entire economic crisis is not to see everything return to what we had before. Then we would simply have another “bubble” which is bound to burst again. I would think that the solution is for the nation as a whole–and the AIG bonus-takers
Comment by MCS — March 20, 2009 @ 6:25 am