The piece titled The Case for A.I.G. Bonuses, perpetuates many of the same arguments that have been floating around in recent weeks and cites the following reasons why taxpayers should accept this absurd notion:
1) The sanctity of contracts: "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."
Hogwash. No one every mentioned "abrogating contacts left and right" willy nilly. We are talking about prudent financial stewardship for one specific company, in one particular time of chaos, in one particular situation.
"If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says. “They are raising a whole new question about the trust and commitment organizations have to their employees.” (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)"
The reality is that contracts are re-negotiated and changed everyday in business. In fact, it is part of business that contracts are often re-negotiated, just as this article mentions when referring to what the auto unions are doing. They are working with management to change the original agreements. This is an absurd notion that the US is breaking these contracts. The company wouldn't even exist without the bailout money. Everything has changed in these agreements the moment the company failed and we were forced to change ownership to prevent complete failure. It's a simple rule of business (and life really) that everything is negotiable. For example, how about this. Give the 400 recipients of the bonus money a choice: accept bonus money and your name gets published for all to see. Or congress offers this choice for those who take their bonus money: take the money and we will write into the tax code that you will be audited by the IRS for the rest of your life. I'm sure their are dozen reasons why this wouldn't be legal, but you get the point. The US Government has a lot of levers and pressure points to make that bonus money much more painful than it's worth.
2) The "brilliant" bozos that created this mess are the only ones smart enough to get us out: "A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it."
Really? These are the only 400 people smart enough in the world to figure out how to get us out of this mess? That is absurd again. Everyone is replaceable in business. Everyone. No matter what degree they have, or how much they get paid. Any business that depends on any one person (in this case a relatively small group of people considering the size of the organization), is a big FAIL. The sooner A.I.G. stops depending on these morons the better. Besides, there are surly numerous brilliant professors, eager grad students, and other finance experts with the conscience, motivation and ability who would gladly step in if asked to serve their country for the greater good. Wouldn't you if The President of the US asked you too? There are good people in this world who are motivated by challenge, who want more than money to fulfill their life, and who would gladly take on this mission.
3) The bozos that created this mess may actually use it to their advantage to make more money: "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."
This is insane and criminal. If this is really the argument, then these people are treasonous at this point and should be arrested and tried in the court of law. Their names should be released to the public and they should be tried as financial terrorists. Even if they don't go to jail, the press will take care of them in the media. Surly, their reputations are worth more than a couple $ million? Maybe not.
4) There is no way to retain these geniuses without paying them absurd sums of cash for ruining their company and helping cripple the world's economic system: "“We cannot attract and retain the best and brightest talent to lead and staff” the company “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”
This is simply not true for the best talent in the world. The acting Charmian himself only makes $1. He's not doing it for the money. He's doing it for his ego. The folks in DC like Geithner don't take those jobs for the money. Their salaries are almost nil. They do it for the power. For the prestige. For the limelight. For the challenge.
Furthermore, what really gets my blood running about this line of thinking is how weak these people must be to walk out on their country in a time of need. After all they played a major (MAJOR) role in getting us to this point. And then they would consider leaving! You have to be kidding me. These people shouldn't be retained. They should be fired, and left to wither away in their own greed and glutiny.
There is a concept that makes America great. It's called patriotism and civic duty. It is the reason why we have soldiers who are sacrificing their lives everyday in wars around the world to protect us and to make us better. And guess what, they don't get paid millions of dollars. In fact, they barely get paid at all. And they are willing to give their lives to serve and protect us. And we can't even get these bonus idiots to clean up their own mess? Let's not forget that already 11 of the people who received these retention bonuses have already left. Shameful!
Now that my rant is over, here's what I've learned as an entrepreneur about the concepts laid out in these arguments. They work in the businesses I've helped build. They just might work with A.I.G too:
1) Every contract is negotiable in business. Re-negotiating is different then breaking a contract, and often a wise option.
2) Everyone is replaceable in business. Including yourself. So get to work and do something to create long-term value (as opposed to bring your company to it's knees with your "shinanigans".
3) Disloyal people should be fired sooner rather than later. They are like cancer and must be cut out immediately. Zappos for example, offers new hires $2,000 to quit in the first 30 days. If it's only money they care about, good riddance. How about accomplishment?
4) If your organization's management doesn't understand how something is engineered, they should get out of that business. A.I.G., nor the regulators, understood what these hooligans were even doing until it was too late.
5) Transparency is essential and powerful.
6) Reputation matters.
7) People care about more than money, like respect, achievement, doing great work, pride, helping others...
8) Oh and how about this crazy notion, bonuses should be given based on success, not failure.