From CNN.com
"President Obama said today he will attempt to block $165 million in bonuses to executives at ailing insurance giant AIG."
I find this statement vaguely disconcerting.
Discussion welcome.
-R
I find this statement vaguely disconcerting.
Discussion welcome.
-R
The first problem is that I cannot remember a time in my life where the government has attempted to cap earnings. Perhaps more importantly, I cannot remember a time where they attempted to do so as quickly as they are attempting to now.
This current system is flawed. The people at the top had absolutely no accountability and more power and money than they knew what to do with.
However, American capitalism has functioned in this manner for around half a century, since around the time we emerged as a global super power in the aftermath of the second world war. The system worked very well until the last ten or so years; then companies such as Enron came along, willing to do monstrous things that should be unfathomable to any business person.
Without any sort of accountability, this corruption grew unchecked throughout the system and put us in the mess we're in now. That being said, capping salaries is directly contrary to the notion of expansive capitalisim.
What is at issue is accountability and keeping those that run and oversee these companies in check. What is not, or at least in my opinion should not be at question is the system as a whole. The first reason I find Obama's words disconcerting is this action is eroding at fundamentals of a free capitalist economy.
Moreso, Obama's actions concern me due to the foreshadowing they offer: these actions, which could be considered trailblazing and unheard of, are happening within his first few months of office. I do not like where these opening moves could lead.
Second is that I have heard nothing of any sort of agreement with the banks/companies/organizations with regards to the bailout money, other than the general concept that anyone receiving bailout money must repay it, in one form or another.
From a contractual or business perspective, if they did not include more directions to those that they gave the money to, the results will be a nightmare in terms of trying to regulate and micromanage what companies can and cannot do with the money.
I may be mistaken, but it seems that this may be the case. Otherwise, the government likely would have included such directions or limitations on what companies can do after being bailed out. I do not enjoy bring up campaign rhetoric, but it seems as though some of this administration's inexperience is being shown here.
Essentially, it seems that the bailout was short-sighted and fired out much too quickly. Subsequently, the government is covering its own ass by harping on what AIG is doing with the bailout money; the same money that had no strings attached that mentioned what they could pay out in terms of bonuses.
The article I quoted from also had a very valid point: AIG has contractual obligations that were created before they received the bailout money. Even if the government wanted to bar these bonuses from happening, if AIG did so without some sort of backing, the employees whose contractually guaranteed bonuses suddenly evaporated would tear the company apart through the court system, effectively nullifying any bail out at all.
I don't like the the direction that the people "at the top" have forced our economy to go in. I don't think it's fair to Americans to be forced into unemployment whilst people are making obscene amounts of money that they can never hope to spend. But I also think that the government has done a half-ass job with a knee-jerk reaction.
-R
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