The danger of a witch hunt...

[jducoeur]

... is that, typically, the people you wind up burning aren't witches.

Interesting Op-Ed in the NY Times yesterday, from one of the people who received those infamous AIG bonuses. He argues that he had nothing much to do with the mess, and is quitting AIG because it's simply not worth the tsurrus. (And he manages to claim a reasonable moral high ground by giving the bonus money to charity insofar as he can, on top of having been working essentially without pay.)

I don't see any obvious reason not to take him at his word here. The bonus controversy has been painting with a pretty wide brush, tarring the people who *were* working hard and honestly for the company (and who probably deserve their bonuses) along with those who caused the CDS disaster. Far too much of the blame has fallen on the people who are involved now, trying to clean things up, rather than those who actually acted irresponsibly. Granted, it's hard to separate who did what when the details are hidden by the torches and pitchforks surrounding you.

I've found the whole mess pretty repulsive, and I'm at least as angry with the public, the government, and *especially* the media as I am with AIG. Yes, there were a few bad apples who managed to game the system, and who deserve to be strung up by their thumbs. But the fever pitch went past productive and deserved a long time ago. The court of public opinion never has much respect for the principle of "innocent until proven guilty", and is always fond of over-simplification and blaming groups instead of individuals, but it's outdone itself this time...

Comments

[rickthefightguy.livejournal.com]

If it is a contractual obligation, how is it a 'bonus'? How is it not salary? If we were calling it 'salary', the public outcry would be much smaller: Can you imaging the mob shouting "How dare those people receive their salaries, when they did their job so poorly?!?".

[jducoeur]

Well, there are contractual obligations that are still meaningfully bonuses. But I agree that these mostly cross the line into largely a weird way to pay salary -- they don't seem to have the conditionals that I generally associate with the word "bonus"...

[learnedax.livejournal.com]

Well, as I understand it, these are bonuses because they are contingent on remaining with the company until a certain time. The logistical distinction from salary is to change what the incentive is, but I agree that at least in principle it should be morally the same.

The question of whether these employees have, in general, been overcompensated, and whether the coziness of the individuals drawing such large compensation with regulatory bodies creates a morally dubious situation, is at least somewhat separate, though I think it foments a large part of the outrage.

[alexx-kay.livejournal.com]

The last time I heard the phrase "a few bad apples", it was applied to torturers in our military. There, as here, I am convinced that it was no such thing. These supposed 'bad apples' are merely the outlying tendrils of a systemic, deep-rooted corruption that poisons the entire system, from the top down.

I grant that in both arenas, there are good, decent people who don't deserve to get tarred by association. But I *welcome* the public outrage. It is a necessary (though not sufficient) condition to begin addressing the root corruption. I only hope the public *maintains* the outrage long enough to effect more than the symbolic scapegoating which has been done so far.

[jducoeur]

These supposed 'bad apples' are merely the outlying tendrils of a systemic, deep-rooted corruption that poisons the entire system, from the top down.

That's partly true and partly not. Keep in mind that 90% of AIG was a nice, straightforward insurance company doing its job the way it should have been -- the number of people who destroyed the company was pretty small. Yes, the rot was quite deep, extending from the CEO down into that division, but I've seen little evidence that it was broad across the company, and the backlash *is* quite broad.

And yes, I think the analogy to the military is quite a good one. In the same way, there have been tendrils of horrible rot from the very top down into certain parts of the military. But *most* members of the military have been honest people doing their job as best they can, with nothing to do with that rot. Fortunately, this time around, the American public was sensible enough to *not* blame all of the ordinary rank-and-file soldiers for the horrors committed by a modest fraction of them, but instead focus on the ones really responsible; I consider it unfortunate that the same logic isn't being applied as much to AIG.

But I *welcome* the public outrage. It is a necessary (though not sufficient) condition to begin addressing the root corruption. I only hope the public *maintains* the outrage long enough to effect more than the symbolic scapegoating which has been done so far.

There's outrage and outrage. Honestly, I think the current version is downright counterproductive: it's a wildfire, that is flaring much too hot and is likely to flame out in futile anger and resentment. The sort of productive outrage you're talking about is a much slower, colder and steadier burn -- I've never observed that sort of thing to have much to do with this sort of witch hunt, and often found them to be at odds with each other in the long run...

[alexx-kay.livejournal.com]

By "from the top down", I'm not referring to anyone in AIG, or any single corporation. I'm referring to the President and Congress. Following on from them, the SEC. Only after that do you get down to the level of individual CEOs.

I would agree that the slow, steady, cold burn is *also* a necessary precondition for meaningful change. But I don't think that it, by itself, can do much without the raw power of hot public outrage behind it. I admit my belief does not rise to the level of certainty, but that's how it seems to me.

[jducoeur]

Ah, I see -- you really did mean "systemic", more broadly than I'd taken it. Yes, that's reasonably true, although even there I think it's important to distinguish between deep vs. broad rot...

[redsquirrel.livejournal.com]

As rickthefightguy pointed out, some of the squawking is due to a semantics problem. In the financial services industry, "bonus" very often has ceased to mean "we'll pay you extra at the end of the year if you do a great job" or "if the company does well" and mutated to "we'll pay you a bunch of your salary in a lump sum at the end of the year" or "we'll pay you this much base salary and this much lump sum for other considerations" And, as also mentioned, if the payment is contractual, it's not optional. It's a peculiarity of the industry.

It's comparable to the way a waiter now works for wages plus tips. The original idea was that the customer paid for the meal, the server was paid by the management for their work and he or she also got to keep anything extra the customers might leave if he or she were especially ingratiating/good/speedy, etc, however there was no assumption that every customer would leave a tip. Nowadays tipping for restaurant meals is practically obligatory and so firmly built into the price and wage structure that wait staff are allowed to be paid considerably less than standard minimum wager per hour on the assumption that they will certainly receive at least that much difference in tips.

A lot of people eat out, and most of them understand the more or less obligatory nature of tips and that these are a large part of the wait staff's income. But to the general public the word "bonus" still means something extra that the employer is not obliged to pay. Whoever drew up the employment contracts for AIG used standard industry terminology...but they're now under intense scrutiny by those outside the industry and the whole thing blew up in their faces.

[goldsquare.livejournal.com]

I am (as you saw in my blog, likely) still wrestling with this issue.

There is a line, wherein one joins a group endeavor, and benefits from the group fruits of that labor, and is harmed by the group failures. And that is good.

And, by other lights, there are times when one is unwillingly lumped in with a group, and made to suffer or win by their failures or successes, and one is not a part of either, but you are tied to them.

Where is that line? I remain unsure.

This is especially puzzling to me in the less-moral rapacious atmosphere of big business, Wall Street, and financial products. And in the anachronistic form of compensation that these businesses use.

I'm not saying that the current press and political response isn't a witch-hunt. I think, no matter where the lines would be drawn, they are. It just highlights for me how my moral understanding in this area needs to evolve.

[jducoeur]

Oh, absolutely. Much of my annoyance is the ridiculous over-simplification of a situation that is, at least, bloody damned complicated...

[dryfoo.livejournal.com]

The things you pick up by having the radio on while driving around lost: There was a court case that decided that if a "bonus" is paid regularly every year, at the same time of year, it is treated as salary and not as arbitrary largesse. The case involved whether cancelled bonuses could be subject to union grievance, arbitration, or somesuch.

That said, in the specific AIG case, I think a lot of the heat that's boiling the widespread outrage isn't about a "bonus" vs a "salary", but simply the size of payments in the current economy. A guy working two jobs watches his wife drag herself in from an overtime shift as a nursing assistant as they struggle to somehow keep their house and get their car fixed. He's had years and years of experts assuring him that the economy is doing just swell, although he was already slowly sinking deeper into the swamp even before the current crap-storm. He could always ignore the bigshots at the big banks because (1) they were experts who presumeably knew all kinds of complicated things and were keeping the system running properly, and (2) he really didn't have a specific idea of just how much money the "experts" were ladling out of Money River. News stories about some guy taking home an extra 2 or 3 million, on top of whatever his salary might be -- that's awfully specific, and easy to grasp. And then our hero reflects that single year bonus is now being paid by all the Federal income tax he has ever paid in his life, or will ever pay for the rest of his days, and certain thoughts begin to get thought.

The moment when the curtain is dragged open to reveal the Wizard is always gonna be dicey. Especially if the Tin Man remembers he's holding an axe.