James Barron and Russ Buettner write in a human interest piece in today’s New York Times that “many [A. I. G.] workers felt demonized and betrayed. ‘It is as bad if not worse than McCarthyism,’ [an anonymous A. I. G. exec] said. Everyone has sacrificed the employees of A.I.G.’s financial products division, he said, ‘for their own political agenda.’”
Bless Barron and Buettner for trying to put a human face on this mess. But the execs who cry “I didn’t have anything to do with those credit problems” (James Haas) still don’t understand why their fellow citizens want to lynch them. Let me attempt to put a face on populist outrage.
All working Americans pay taxes, from the lowliest gas station attendant to the Bill Gateses, Warren Buffetts, Nancy Pelosis, and Richard Cheneys of the world. But only the smallest fraction of those people get million dollar bonuses.
We used to pay our taxes, and didn’t resent the bonuses, as long as it seemed like the people making the bonuses deserved them. I may not want to work 80 hours a week and have no weekend, so I’m OK with $60,000 a year and no bonus. If you do work that much, and you get a $2,000,000 bonus, if you employ 2,000 people and make sure they get their paycheck too, take your $2,000,000. You deserve it.
But it has become clear that many (if not most) of the people drawing giant bonuses don’t deserve them. This is from the Wall Street Journal affiliated web site Marketwatch.com:
State Street shares have slumped 66% since the start of 2008 and the giant custodian bank announced plans in December to cut up to 1,800 jobs. CEO Ronald Logue missed out on a bonus, but collected $28.7 million in total compensation from that year.
Hovnanian shares are off 79% since 2008 began. The homebuilder cut more than 1,500 jobs last year, but CEO Ara Hovnanian got a $1.5 million bonus in cash and stock.
Euronext unveiled plans to cut a quarter of U.S. jobs last year. Shares of the stock exchange operator are down 78% since the beginning of last year, but CEO Duncan Niederauer still got a $2 million bonus, the same as 2007.
These people take it for granted that a bonus is merely a part of their pay. But it’s not. It’s not taxed as heavily as take home pay. It is a reward for exceptional service. Though once bonuses may have been an incentive for hard work, they are now a tax dodge.
That kind of low-grade theivery doesn’t bother your average Joe. We get ours back from the company by taking some pens from work, or billing a client for the half hour we sat on Facebook. For the most part we give a measure of forgiveness because we hope for one in return. Besides, if we could avoid paying more to the government we would. But when we hear that the money coming out of our checks is going to pay your reward for exceptional service, we get mad. It doesn’t matter if you meant to destroy the world economy or not. It doesn’t matter to me at all if you have to take your kids out of private school and enroll them in the most dangerous excuse for a juvenile correctional facility. I don’t care if you have to hold back tears because you were only middle management. You are associated with a corporation that was corrupt to its very core. If you want my sympathy for your integrity, you should have become a school teacher in the first place.
Even so, people who got a measly $500,000 bonus don’t get my ire up. It’s the ones who got more than a million dollars, who are now crying that life is unfair to treat them this way, that set my blood boiling. You made a conscious choice to take outsized risks with the hopes of outsized rewards. That’s how you justified enjoying all the things that are denied to 99% of the rest of us. Would I like a six bedroom mansion in Florida? Sure. But I don’t want to risk people trying to garrote me with piano wire when I lose their life savings. (Hello Bernie Madoff!) So I forgo the mansion to preserve my piece of mind. You got the mansion, and this was the price — responsibility to ensure the happiness of your shareholders, your fellow citizens, your brothers and sisters. You failed, and now you have to pay the piper.
If you need any further proof that AIG execs aren’t put upon victims of irrational hatred, read this Op-Ed. This is the money shot: “Even if the conclusion is that a few experts need to be retained, offering guaranteed bonuses to virtually the entire operation is hardly the way to achieve the desired results. We should not let people think that the best way to guarantee job security is to lose lots of money in a really complicated way.”