| When Stephen Colbert promised to lead an angry, pitchfork-wielding mob to A.I.G. headquarters last week, he was joking. The actual angry mob that stood outside A.I.G. headquarters yesterday chanting “shame on you” wasn’t. Nor are the literally bus-loads of protesters scheduled to visit A.I.G. executives’ homes in Connecticut this weekend. No wonder the company has issued a security memo warning employees to hide their company insignia and, at night, to “travel in pairs and always park in well-lit areas.” As large a role as A.I.G. played in the meltdown, do you think the company will get any credit if it helps spur the recovery? In this siege mentality, what is A.I.G.’s incentive to succeed? [%comments]
Personae Non Gratae
TAGS: financial crisis, incentives
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Management incentives & bonuses are suppose to be tied to performance and be in proportion to the amount of risk involved.
If executives can receive million dollar bonuses for completely destroying their business units and company; they never really had the incentive to succeed. They just had incentive to make a quick buck.
AIG doesn’t have an incentive to succeed. (Although I think their version of “success” may be a bit skewed, judging by the 11 staff members who were paid a bonus after leaving the company.) That past incentive — a chance at a share in millions of dollars in bonuses — is obviously going out of style quickly. I’ve heard several economics commentators say giant organizations bogged down by toxic assets will have to be broken down into smaller pieces in order to weed out the “unhealthy” areas of the business before they infect the parts that were thriving. That seems to be a somewhat plausible solution to this whole mess but so far we’re just pumping money into the system and hoping it will heal itself.
The same people starting the lynch mobs today made Donald Trump a celebrity and the women of The Real Housewives of Orange County famous, and so on and so forth. This outcry smacks of complete hypocrisy. Complaining about $165 million in the greater scheme of the cost of this crisis would be like complaining that your soup was cold, as the Titanic sank. It’s nothing but a trifling diversion.
I carrying on at http://shouldntbutdo.wordpress.com/2009/03/20/feeling-sorry-for-the-aig-guys/ , but I think this post gets my point across.
Shame can be a very powerful tool….
Wow. I say, let’s work this out in a civil manner. No need to harass these executives and threaten their lives!
CNN was practically breaking out the BBQ sauce in their hyperbolic programming over AIG in the last couple of days. It is as if they never heard the Holmesian quote about “shouting fire in a crowded theater.” It is one thing for satirists to hold pitch forks on late night TV and quite another for the major news network to be stoking flames to a height and temperature at which anything coming within range is bound to burn.
The Freakonomics’ Personae Non Grata article highlighted Steven Cobert’s comedy and somehow implied that it inspired public unrest and dangerous outrage. I disagree. I believe Cobert reflected, in comedy, what the public was feeling and only related it as a reality. It is our right as citizens to disagree and protest but with restraint and respect for the safety of others. Those who thirsted for money and fame with a disregard for those in their wake should take responsibility for the anger that is expressed by the public outside their windows.
All this money grubbing by the super rich is not all that surprising. My Dad, a furniture salesman and collector–no, we weren’t among the super rich, told me it was harder to get a $1.00 from his wealthiest and best customer than to get $5.00 from his poorests who bought very little and very, very rarely. His big and most valued client owned a resort hotel on the beach in NW Florida. The only way my Dad could get $ out of him was to use his handicap, a severe hearing loss, and just hang around talking about fishing and the weather until he got paid something so he would move along. My Dad enjoyed a reputation as one of the very few people to be able to get this guy to part with a dollar.