Jeremy J. Jones – Stranded in Thought

March 15, 2009

Seeing the Forest for the Trees

Filed under: Opinion,Politics — Jeremy @ 6:50 am

The New York Times has reported in an article dated March 14, 2009 (AIG Planning Huge Bonuses After $170 Billion Bailout) that A.I.G. employees in its Financial Products Group, the group largely responsible for the company’s collapse, must be paid a total sum of approximately $165 million in bonuses by March 15, in accordance with legal contracts.

Edward M. Libby, the government-appointed representative at A.I.G., informed Timothy F. Geitner, U.S. Treasury Secretary, last week that the bonuses were legally required to be paid. He further advised Mr. Geitner that if the government completely removed the ability to pay bonuses, the “best and brightest” talent could not be attracted to lead the company from the brink of financial ruin.

We hear a lot of talk about these “best and brightest” executives, who have collectively destroyed the greatest economy in the history of the world with their arrogance, incompetence, and greed. I’m sure I speak for most Americans when I say I’ve had enough.

I have a better idea, Mr. Libby: let’s refrain from attracting the “best and brightest” executives in the future; they’ve shown demonstrated unreliability. Instead, why don’t we try and attract some less-wealthy, apparently “average and moderately-intelligent” executives who won’t demand bonuses in excess of $3 million per quarter per person for posting record failure numbers that couldn’t be exceeded by the most uneducated, incompetent people in the United States? One could jest that a group of trained monkeys might be able to avoid backing subprime mortgages to the tune of several hundred billion dollars because it just doesn’t sound right and they’d have a funny feeling in their bellies while making the decisions.

Rather, let’s look to the upper-middle class, where we might find some recently unemployed people who are willing to work for A.I.G. – and other companies for that matter – for less than the previous group receive in bonuses per quarter. I’d be stunned if we didn’t find some really great people this way. And we might just have the added benefit of stumbling across someone (maybe one or two) with some intelligence, common sense, and a conscience.

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3 Comments »

  1. I remember talking with my father when I was little, and saying that we should have a poor guy in charge of running the national budget. He informed me that the rich guy probably got rich by understanding money better than the poor guy did. While this is a vast generalization, there is a heck of a lot of weight to it.

    First, legally, we need to give them their bonuses, but like you said, we don’t need to rehire. Second, they may be the best people to get us out of the mess because they are some of the few who understand this. Typically people don’t achieve those high-paid positions because they’re idiots. Yes, they’ve made cardinal blunders very-likely motivated by greed, but they knew how to do it, as most people do not.

    Personally, I’d like to see more stockholder revolts where they tell the board they are gone unless they restructure some of these ridiculous compensation plans. This keeps the market free of gov’t intervention, while forcing companies to think a little more about what they are doing.

    Comment by LOUDelf — May 1, 2009 @ 5:09 pm

  2. These are all very good points. I fully agree that stockholders should take control of their companies, just as consumers should control the market as well.

    For some reason, many of us, me included, have forgotten that this country was intended to be run by the people. We have the power to control the United States through our pocketbooks and our votes. Our political system, economy, and market are each set up in essentially the same way; if we don’t like it, we use our power to change things. Unfortunately, most of us have become complacent with the use of that power, allowing these systems to control us, rather than the other way around.

    Oil prices are a great example. I’m not one to fall in for the “nobody buy gas on Tuesday” plans, because those provide artificial power to the people on the basis of feeling in control. Rather, a sustained decrease in usage of oil products — a tall order, I admit — is the only thing that can decrease the price of oil. We saw it last summer when gasoline prices topped $4.00. Usage decreased and that, among other reasons, cause the price of a barrel of oil to decrease from more than $150 to less than $60 in about two months. Since that time, we’ve all forgotten, and have gone back to using as much oil as we want. As a result, prices have been increasing steadily for about two months now, and no one is talking about it or readjusting usage.

    It’s important to remember that we are in control here, and that if we don’t understand the situation, it’s our responsibility to become educated about it. I’m not recommending that we all become stock market analysts; that would be time-prohibitive and unnecessary. But it would be most helpful if a majority of people understood some simple concepts; I think knowledge of the market for the average American is limited to “you put money in, and it goes up.” That’s just not enough.

    Comment by Jeremy — May 2, 2009 @ 7:04 am

  3. Action is always more productive than talk. Like you say, we need to educate ourselves if we haven’t already. After that, we need to be more vocal, and not just on blogs, but with elected officials, at stockholder meetings, and among circles of friends. It’s got to get rolling somewhere.

    Comment by LOUDelf — May 5, 2009 @ 1:02 pm


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