AIG Bonus Scandal Spotlights the Bankruptcy of Wall Street's "Greed is Good" Values
When reports spread that insurance giant AIG would give top executives huge bonuses after a $170 billion taxpayer bailout, you could feel the anger rumbling in Middle America like boiling magma before the eruption of a volcano.
Many top officials of the Obama administration were beside themselves with outrage.
And just imagine how protestations from AIG's CEO about its "contractual obligations" sounded to UAW workers who are being asked once again to modify their contractual agreements to keep the auto industry in business. But the titans of the financial sector seem to have very different standards for themselves and the rest of the American economy.
Recall that these bonuses are going to executives at AIG's financial products division -- the very unit that wrote trillions of dollars of "credit-default-swaps" that insured investors against defaults on bonds backed by sub-prime mortgages. The problem was that AIG used a loophole in the law to argue that the "credit-default-swaps" were not really insurance, so they weren't required to abide by insurance laws which would have assured that they had the capital on hand to pay claims when defaults actually occurred. That caused AIG to collapse and helped precipitate the global financial crisis. Seven of these executives get from $3 to $6.5 million. So much for responsibility.
Now the CEO of AIG has the audacity to argue that it has to pay bonuses because, if AIG loses it best employees, it would be harder for the company to recover and help the government recoup its investment. These are the best and the brightest? Could the gang in the financial products division of AIG done any worse? They helped precipitate the worst economic collapse in more than half a century.
But the really important thing about the AIG bonus scandal is that it is emblematic of the need to fundamentally change the culture of Wall Street and the American economic elite in general.
In 1987 Michael Douglas starred in a film called Wall Street where he famously intoned: "Greed is good."
That has been the motto of the American financial sector for the last thirty years -- and it became the accepted moral frame for much of American economic and political dialogue -- culminating in the "markets uber alles" philosophy of the Bush years.
The "Greed is good era" is over. It died on September 15, 2008 with the collapse of Lehman Brothers and the right wing myth that if everyone looks out for his own self interest the "invisible hand" would assure that the public interest would take care of itself. More than Lehman Brothers went bankrupt that day. So did Wall Street's entire system of "greed is good" values.
In fact, of course, "greed" was never "good". The ethical and religious teachings that have evolved over thousands of years of human development don't hold up "greed" as a value. The minister, priest, imam or rabbi doesn't get up on the Sabbath and encourage his congregates to go be "greedy".
Commitment to others -- commitment to our country -- selflessness -- that's what is good. Most everyday Americans understand that to their core. They get chills when they hear about the soldier who sacrifices his life for his buddies. They are inspired by the doctor who devotes himself to heal people who can't afford health care.
They know instinctively that hard work -- and sacrificing for your kid's future -- and teaching the next generation -- and inventing cures for diseases because they will help other people -- and creating something that is beautiful, or improves the lives of your fellow human beings - those are the things that are "good" and should be valued by our society.
They know that the highest calling of human beings is not to go make as much money as you possibly can, but rather to live a life of service to other people.
Normal people know that, but it has been completely lost on the Wall Street crowd and the American economic elite. They see no contradiction to paying CEO's of hedge funds $450,000,000 while day care workers make $19,000 a year. They think it made perfect sense for Martin Sullivan, the former CEO of AIG to have received a $47 million severance package when he retired from the firm as the financial tsunami swamped his company last summer. They are the first to urge UAW employees to lower their middle class pay, but don't hesitate to dole out $6.5 million to people whose actions lead AIG to disintegrate.
Last week an analyst for government-bailed-out Citicorp had the gall to argue that the Employee Free Choice Act would be bad for the economy because it would allow more everyday people to join unions and raise their wages -- this from a company that gave its retiring CEO a $29 million retirement package just last year.
The sense of entitlement is awe-inspiring. But the failure to understand the values and economic circumstances of average Americas is even more breathtaking.
In fact, of course, the notion that "greed is good" is just so much self-serving drivel. It has nothing to do with the traditional progressive values that have always defined what is best in America. It has nothing to do with "good" -- only "greed".
Future generations will look back on "greed is good" values the same way that we now view the ethical systems that once legitimated the view that "slavery is good" or that it is right for a king or emperor to conquer and dominate others through military force.
The good news is that out of the ashes of the "greed is good" world view, a new ethic of service, sacrifice, responsibility, patriotism and hope have swept America. It is up to all of us to reestablish those traditional progressive values as the bed rock for political decision making at this critical time in the history of our country and our planet.
Robert Creamer's recent book: Stand Up Straight: "How Progressives Can Win" is available on Amazon.com.
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