What Took Them So Damned Long?
It's not as if corporate greed is a new phenomenon. It just got out of control during the Reagan/Friedman/Laffer years of supply side economics then went into hyper drive during the Bush administration. It's not as if leading economists such as Paul Krugman kept from us the fact that while pay for rank and file workers have gone up exactly 1% in the last several decades, executive pay is now, on average, 400 times greater than those of rank and file workers.
We were outraged last fall when we found out AIG had spent $440,000 on a retreat at the St. Regis resort in California and was about to blow several hundreds of thousands of dollars more on another.
So how come Congress is just now getting off its ass and doing something about reining in executive compensation for bailed out companies by strengthening the oversight process? The Democratic party, which obviously was more enthusiastic about the $700 billion TARP program, has been in control of Congress since early January of 2007. While they set several pre-existing conditions before disbursing the first half of the bail out money, there plainly weren't enough. And what few conditions there were, Hank Paulson effectively ignored when the money passed through his hands and into the grasping paws of his old friends in the corporate sector.
The result? Banks that were supposed to be using their share of the TARP money to free up liquidity and help unfreeze the credit market stopped making loans even to qualified applicants. The money flooded into Wall Street under the ridiculous Reagan-era assumption that it would soon trickle into Main Street. Now the Connecticut Attorney General is telling us that AIG did not disburse $165 million in executive bonuses to the very same people who landed AIG, its shareholders and clients into this mess, but over $210 million.
Yet only now is Congress getting outraged enough to mount their moral high horse after having completely ignored history. It's a history that tells us when government adopts a laissez faire, hands off tactic with the corporate sector, when there is little or no oversight and completely deregulated, the man on the street will get reamed.
If we could trust corporate executives, they wouldn't continue lining their pockets for tanking their companies such as what we saw at Merrill Lynch and AIG. We wouldn't be hearing people like AIG CEO Ed Liddy telling us that the bonuses were "distasteful" but, hey, what are you gonna do? It's out of my hands. Howz about we give back, say, half so we can still keep over $100,000,000?
This housing/credit/stock market crunch that's dragging the rest of the economy into its black hole should serve as a durable, if not everlasting object lesson as to the futility, stupidity and naivete of assuming that corporate executives could and should be trusted to be responsible captains of industry, that the free market will ensure the viability of both Main and Wall Streets.
History obviously tells us otherwise. And we all know what George Santayana would've said about not heeding the lessons of history. Except, We the People are doomed to repeat it while companies like AIG continue doing business as usual. And business, at least regarding their vast personal finances, is very, very good.