How Many Angry Populists Does it Take to Run the Finance Industry?
My father in law asked me today what I thought about the AIG bonuses. I explained that I have no idea how things work at AIG or in the industry in general, so how could I possibly know whether they were excessive or not — all I know is that they were paid in accordance with valid contracts. Well, yeah, he replied, but it’s just ridiculous.
I went on: the finance industry is a mystery to everyone (even those in it), but there are lots of incredibly bright people there, and given the incentives they had (about which we now scream bloody murder) they were able to put untold thousands of families into homes and generally finance the lifestyle we are now upset over losing. Sure, we’re disappointed and want to blame the people who made it all possible.
But would anyone have tolerated some wonk warning us, in the face of the possibility of untold egalitarian prosperity, that we could not have it all, because there’s a possibility all this sophisticated financing calculus had an error in it somewhere? He would have been run out of town on a rail for trying to keep the little guy down, for trying to dam up the river of wealth at just the moment when it finally looked to make it downstream to the middle and lower classes. Of course, NOW we know that it was all too good to be true. But no one could have kept us from trying out the experiment that, for nearly a decade, gave so many so much.
We have justification to be disappointed, frustrated, and upset with the finance industry. But if we want to be the recipient of any of its future opportunities for prosperity, we can’t go barrelling over the right of contract and politicizing corporate compensation structures.
All I know is, my father in law inflexibly replied, at the end of the day, I didn’t get those bonuses. So screw ’em.
So, for my father in law and anyone else who is anxious to see what it looks like when a pissed off populist mob runs the finance industry, enjoy the show.