The case for rewarding failure

I'm a little at a loss here. There's someone out arguing for $165 million in bonuses to be paid to AIG executives. Oh, I'm not surprised someone's making the argument, I'm just surprised the New York Times got it out of the gate before the Wall Street Journal had it's pants on. But then again I'm not sure I should be surprised. This is after all the paper that spent the fall and winter regaling us with tales of our beleaguered rich betters who could no longer business lunch or marry for money. I guess someone there had to take up the cause for millionaires about to be cheated out of bonuses just for collapsing the world economy and failing to perform at even a basic level of competence.

“This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”

On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the “fundamental value” in question here is the sanctity of contracts.

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

It would look like what happens every time the government has to get involved with some mega-company going into bankruptcy that has union contracts? Go ask the UAW about the sanctity of contracts.

As to what would happen to the financial sector or banks if people had to worry about their bonuses: who cares? Are there ways with which they could actually be performing worse? If they're taking government bailouts, how many people there could have earned that bonus? Fuck 'em. You lose performance incentives when your performance collapses the economy of the world.

But what about the commitment to taxpayers? Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.

A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave — the buzz on Wall Street is that some have, and more are ready to — they might simply turn around and trade against A.I.G.’s book. Why not? They know how bad it is. They built it.

Great plan. We're hostages, pay the terrorists what they want or they destroy the eastern seaboard. Unless they just take the bonuses and then leave anyway. Maybe we should negotiate with terrorists the way Israel negotiates with terrorists. Get all Munich up in their assess. Get Eric Bana on line one. Though really, if they understand the problems so well we need to pay them ransom money...then how come they didn't understand the problems they were creating in the first place?

What is the limit on articles the Times can produce with Ayn Randian class humping coached in the argumentative cloak of "it might not be great, but we just have to do it"? Have they hit it yet? Here's a hint for the next time you decide that our financial betters aren't being properly deified: if the only two reasons you can think of are "Contract law! What will the children think?" and "Sure they failed, but only they know the specific way they failed. Let's hand them a sack of money so they tell us." then you don't really have any reasons. Just type out "They've scaled the heights of Wall Street, that means they're better than us and we need to pay them as a reward for their status." or "Some of my friends are being affected. Waaaaaaaaah!" and we'll get the message.