Monday, March 23, 2009

Outrage in Washington

On the news that AIG paid out bonuses to its executives, our politicians in Washinton were outraged. Nay, "stunned," was our president on the Jay Leno Show. Shock, awe, disbelief are the attendant and contiguous emotions.

The only thing politicians prefer to do more than mutual congratulation is to register their outrage. Unbelievable they say, that AIG had the temerity to have done what they did. Goodness gracious, it was so outside the boundaries of civil decorum that we could not possibly have foreseen the loophole that permitted such behavior. Executives rewarding themselves - completely beyond comprehension, surely. The politicians doth protest too much.

Poor AIG chief Executive Edward Liddy - he shall get a whipping when he testifies before Congress on Wednesday. Worse still, he will have to sit through the public grandstanding of politicians who probably would have done the exact same thing had they been in his position. (Technically, they wrote a law that permitted him to do so.)

On trial would not only be Liddy, but the ugliness that Washington has become. Our elected representives excel in mimicking the anger of their constituents, parodying this anger in hyperbolic proportions in order to cover up their complicity in the mess that is AIG. This is reverse psychology 101; we all tried our hand at it at one point or another when we were young and our parents caught us red-handed stealing the cookie from the cookie jar. Goodness gracious, I can't believe you would think I would stand by and allow all of this, say aggrieved Senators and members of Congress. (For they know full well how quickly voters' anger can spill over.) Except that they actually did.

Some Senators have suggested that if the AIG executives had any integrity, they would return the $165 million in bonus money. Well Senators, this is capitalism. Voluntary acts of benevolence and self-abnegation aren't exactly the ingredients of the invisible hand.

The truth is our politicians are crying foul and not doing much more beyond crying because we have so thoroughly bought the virtues of capitalism that we do not have the resources to correct its slip-ups other than howl. The executives should have known better, Washington sighs. That is what Washington's outrage amounts to - an impotent vent that belies a lack of will to do something to correct the situation.

Even though the American taxpayer now owns 80 percent of AIG, the truth is Washington cannot tell a private company what to do. That would be socialism, some say. Well then we cannot have our cake and eat it. Either we embrace capitalism and the predictable instinct for executives to look out for themselves, or we say, when 80 percent of a company is owned by the public, we should call things what they are and acknowledge that this company has become a public trust to whom an obligation and an accounting is owed to taxpayers for the manner in which the company is run. Mere outrage - an invitation for voluntary self-correction seldom gets us anywhere. Washington should either get its act together or stop bloviating.

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