An Op-Ed in the New York Times by Paul Krugman this morning caught my attention.
http://www.nytimes.com/2009/04/27/opinion/27krugman.html?ref=opinion
Dr. Krugman is responding to an article about executive pay on Wall Street, which is set to shoot back up to 2007 levels this year following a brief drop in 2008. This revelation brought up all the feelings of anger and resentment that I felt after learning of the ridiculous AIG bonuses about a month ago. You may recall that it came out that AIG was paying huge bonuses to the executives in their financial products unit. This would be the very same group of executives responsible for the decisions that nearly ran AIG, and our economy, into the ground.
While the public anger over these bonuses has died down somewhat since the news came out, you probably remember all the demands for the return of the bonus money and the plans to tax them at rates of 90% or more coming out of Congress. Senator Grassley even suggested that the AIG execs should either resign or commit suicide! At its peak, the public anger over this news rose to such heights that it appeared that President Obama’s plan to stabilize the financial sector was in serious jeopardy. Even now, it is unclear what the sort of political will there will be to approve more bailout money in Congress, should Mr. Obama decide that it is needed. The news about rising executive compensation certainly doesn’t help matters.
This brings me to a question. It is clear that the taxpayers of this country have been wronged by having their money go to pay bonuses to the very people responsible for this mess. However, taking revenge on these people or the banking industry as a whole could undermine the effort to stabilize the system, possibly pushing the country, and maybe even the world, into a depression. This would have an extremely adverse effect on all of us. So, at what point do the benefits outstrip the consequences? It is pretty clear that, in this situation, the negative consequences of revenge outstrip the benefit to society. However, there are many other situations where this cost-benefit analysis is not so clear. How do we decide when revenge is “worth it”? Is it ever?
I don’t think that revenge is worth it. While I am, of course, upset that these executives were allowed these bonuses at the expense of the American taxpayer. I feel that taking revenge would not set a very good precedent in the current economy. Businesses and executives would constantly be looking over their shoulders to see whether they too were going to have revenge taken upon them. In a climate like that, how would the economy ever recover?
I would say, no, revenge can’t be worth it especially when, by exacting it, we compromise a system that has taken years to build.
This reminds me of capital punishment, especially as an international issue. Many countries, particularly members of the EU have survived without the death penalty for years. Their reasoning is that we live in a civilized time and along with our technological advances should come moral ones. This may seem like an obscure example, but it comes into play most seriously when the global community is forced to deal with really really horrific crimes against humanity including genocide. The goal of bodies including the ICC is to impose justice but it is important that its actions don’t contradict its purpose. If the Court was authorized and did kill guilty individuals it would devalue the lives it seeks to avenge. Truly avenging the victims lies in the Courts ability to prevent future terror, not in overcompensating for past apathy.
The case of the banking industry relates perfectly. Punishing the execs responsible would compromise the banking system, crippling it. It is important to assert that the government will not allow another catastrophe such as the current economic crisis to take place and by doing that it should correct the problem. I’m not saying those responsible should get off completely free and clear, but the most important goal is fix their mistakes first before trying to punish anyone. After the dust clears the government will hopefully have plenty of time to go back and evaluate the situation with a far clearer perspective.
I think the fact that these executives will accept higher wages in an economy like this is appalling and proves that these people are not ethically sound enough to run these companies. Thus, keeping them in their position may not be the best idea. It may be worthwhile to have a sort of TRC in place here, so these executives can realize the damage they are causing to the economy and the downstream effects that it has on people in the United States. Although in Desmond Tutu’s case, they gave amnesty to the people who confessed to their crimes, I think in this situation the executives would still have to be punished as well. They should give their bonuses back to the government for better use in saving the economy, not destroying it. However, I think the priority is to make sure that these people realize their selfishness in such a trying time and that they should be helping the economy and not themselves.