Friday, March 20, 2009

Greed and Capitalism....

A Washingtonpost article by Steven Pearlstein (and I am sure many many more) was posted today on the question of additionally taxing bonuses at AIG and other companies which received American Tax payers money. The author argued against it. This prompted me to put down some of my thoughts on this subject which I have been ruminating on for some time. I agree that taxing specific bonuses is not good but not for the reasons which the author mentions.

Capitalism is about greed. This has been said many times already. So, it is not a surprise that those in the finance industry go for high paychecks which are compensation based and motivates them to take as much risk as possible. How can the American Government which is the bastion of Capitalism restrict how much money a person can make? The fact that it is tax payers money does not matter because it is being provided to AIG to keep it afloat for very selfish interests (avoiding a collapse) and not to push some kind of a social reform. Therefore the Governments interest should primarily be in ensuring AIG gets back on its feet and not how much pay/bonus it can give. Once America starts setting such terms, they are no different from a communist or a dictator run country. You cant have your cake and eat it too.

The problem I feel is not that they are asking for obscene amounts of compensation/bonus for a job badly done, it is that it has become part of the culture now. There is no feeling of guilt when you get that package and you know that you don't deserve it or you try to avoid any kind of accountability or real measurements put in the compensation clauses through legal talk to ensure you get that obscene bonus whatever happens to the company. Does the CEO or other executives really think they are that smart or that hard working compared to any other employee that they deserve 1000 times more salary? I think they do and therein lies the problem.... with American type of Capitalism. It goads all to strive to reach that top where you can demand those obscene salaries and once you get there look down and ignore all others. If you are still down, don't complain, just try to get to the top and you will be fine as then you will be looking down at others.

Somewhere along the way, on its momentous journey to the top of the world, American Capitalism has lost its soul. I don't think Government legislation or taxes on bonuses is going to help get it back. It might be better to let AIG and other greedy capitalists fail and let the events set the course for some healing.

Don't tax their bonuses, just let them all lose their jobs!

2 comments:

Anonymous said...

AIG = American International Greed

Nanda said...

A reference to a nice research paper which substantiates my point was posted on www.salon.com recently.
http://www.cab.latech.edu/~mkroll/510_papers/fall_05/Group6.pdf
Greed has crossed a reasonable point when you are demanding and getting 400times another person who is also working 8hrs a day, that too for a job poorly done!