AIG Woes
Congress just passed legislation taxing executive bonuses at a 90% rate. Not just those AIG execs, but any exec making over $250,000 working at a company taking bailout money from the government. At least that's how it was reported.
So now the government's got its hand directly in how people are compensated. Yes, I know it's only for companies taking government money. Since the companies are taking government money, the government should have some say in what they do. That's the logic.
But here's something to consider: the law of unintended consequences. That's when you do something without fully comprehending the consequences of your actions. Government's got a habit of ignoring this law.
Consider the whole "Dodd" thing. Senator Christopher Dodd is now being criticized for having "allowed" the bonus payments in the first place. Ah, but he claims he didn't know that he was voting to allow the bonuses when he voted on some Committee measure. He thought his vote was avoiding potential lawsuits from the execs who would claim they were owed the money under binding contract.
Seems he didn't know the real consequences of his vote.
Here's the point. Dodd didn't know the implications of his vote then. How do we know the folks who voted for this legislation know the implcations of this new vote? In fact, unintended consequences frequently occur with legislation of this sort. What sort? The stuff that gets passed quickly to "solve a problem." Did they really think this through before voting?
Could this issue have been addressed in some other way? Did Congress need to pass a law? Once that law goes "on the books" it'll stay there. Will that "solve the problem," or will it just be yet another example of the law of unintended consequences?
So now the government's got its hand directly in how people are compensated. Yes, I know it's only for companies taking government money. Since the companies are taking government money, the government should have some say in what they do. That's the logic.
But here's something to consider: the law of unintended consequences. That's when you do something without fully comprehending the consequences of your actions. Government's got a habit of ignoring this law.
Consider the whole "Dodd" thing. Senator Christopher Dodd is now being criticized for having "allowed" the bonus payments in the first place. Ah, but he claims he didn't know that he was voting to allow the bonuses when he voted on some Committee measure. He thought his vote was avoiding potential lawsuits from the execs who would claim they were owed the money under binding contract.
Seems he didn't know the real consequences of his vote.
Here's the point. Dodd didn't know the implications of his vote then. How do we know the folks who voted for this legislation know the implcations of this new vote? In fact, unintended consequences frequently occur with legislation of this sort. What sort? The stuff that gets passed quickly to "solve a problem." Did they really think this through before voting?
Could this issue have been addressed in some other way? Did Congress need to pass a law? Once that law goes "on the books" it'll stay there. Will that "solve the problem," or will it just be yet another example of the law of unintended consequences?
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