Thursday, January 28, 2010

Bonuses: Not for thee but for me

Ummm...can someone explain to me how the Democrats can be so against Wall Street incentive bonuses but back their own bonus plan for winning back the Tennessee House and Senate?

1 comment:

N.S. Allen said...

I think the simple explanation is something like this:

We just had an economic crisis of such magnitude that it literally threatened to prompt a global depression and destroy of the international financial system. This crisis' origin was centered in America and, in particular, on the U.S. financial sector. In other words: Wall Street. This crisis was only moderated by government intervention.

So, the objections to "Wall Street incentive bonuses" are therefore two-fold:

1) These guys almost ruined everyone's lives a few months ago, and, in the process of stopping them from ruining everyone's lives, the taxpayers gave them a load of cash. If they have loads of cash to give to people, now, they should be giving it back to the taxpayers, whose lives they almost ruined, not to the employees who helped facilitate the almost-ruining.

2) The incentive structure in Wall Street was itself a factor in the crisis. People got paid to take big risks in a bubble economy, not to make safe, intelligent plays with company money. To say that we're going to go right back to that without cleaning up the 2009 mess and changing the incentive structure on Wall Street, first, is inviting a second crisis, before the first one's out the door.

I'm sure people could and will quibble with both of those arguments, but those are the points being made against bonuses. Unless you claim that (1) or (2) applies to TNDP officials, the Democrats' position appears to be non-contradictory.