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AIG bonus tax

I was angered by the AIG bonuses. Sure, it's a bit of a pop symbolism issue, but I found it odious that these Typhoid Marys of finance - who ought to be unemployable for life, other than asking if you want fries with that, after all that they've done to their shareholders and the world economy - should get all those million dollar bonuses out of federal money, supposedly so they won't leave, when some already have and the rest probably should. Plus my anger reflected my belief that over-the-top executive compensation, as it's developed in the last decade, has not just been wasteful and misguided, but a primary cause of the global economic disaster. Burning the money would have been better for the U.S. and world economy than letting the people in these sorts of positions "earn" it by pulling monkeyshines that involved phony income plus all too real downside economic risk.

But a 100% "tax" on a specific group of individuals with respect to items paid before enactment of the "tax" certainly makes me uneasy. (Scare quotes because - though I am no constitutional law expert - the narrowly targeted 100% rate seems to put it on the wrong side of the amorphous line between a tax and a Fifth Amendment taking.)

Frankly, it doesn't bother me in the slightest if the 100% tax applies just this one time to just these people. They would appear to deserve it many times over. But one can never be sure that one isn't creating a precedent with legs. Might the device someday be used against someone else who just happens to be unpopular?

I'd actually like to make an example of these guys - as the French would say, "pour encourager les autres," as well as for general public morale. But I'd prefer a better way of doing it, such as investigating them for looting and fraud, which might have been amply justified even without the bonuses.

Full post as published by Start Making Sense on March 17, 2009 (boomark / email).