Obscene bonuses

"Walmart's decision to close its South Side optical lab yesterday and lay off 650 workers has state officials considering ways to recoup a $1.8 million job-creation tax credit the company received.

Yesterday's closing of the optical lab is the region's largest mass layoff in this economic downturn."

http://www.dispatch.com/live/content/local_news/stories/2009/03/28/walmart_optical.ART_ART_03-28-09_A1_SPDCL10.html?sid=101

Thanks MWG.

It seems that people don't understand that the constitution is the "supreme law of the land" and that if you violate the constitution, it's **illegal**.

And yes, he really needs to look up 'satire', Hammer.

"When...for God's sake, WHEN will Wal-Mart finally be unionized so that this madness, cruelty and clear exploitation of its workers can come to an end?!?!

When enough Wal-Mart employees decide they want to unionize. Is that a problem for you?


"

Someone needs to look up "satire" in the dictionary.

http://dictionary.reference.com/browse/satire?qsrc=2888

"it might be an unconstitutional and therefore moot tax, but 'stealing' implies some element of illegality."

-DK

If it's unconstitutional, then yes, it is "stealing".

Daniel,

I note that you have not anwered my questions. It was of critical importance to AIG as a going concern that these individuals remain on the job. AIG, recognizing that these individuals would have a very strong incentive to leave at the very first opportunity, agreed to pay them a fixed amount in return for staying for a fixed period of time. So are you suggesting that all of those people should have stayed on the job and refused the extra money? People who, by the way, had nothing to do with the collapse? Would you have put your family in financial jeopardy by refusing the retention payment and staying until the bitter end? Opinions are fine - everybody has one - but is it too much to ask that one's opinions be consistent? And isn't inconsistency between stated value opinions and actions a definition of hypocrisy?

Note also that your differentiation of AIG from the government is an artifice. Anyone who refuses the bonus is giving the money back to the residual claiments of the company, which in the case of AIG, is mostly the government.

I believe that a 90-100% (including state taxes) tax aimed at a specific group of people as an act of vengence is theft. I'm sure that many other people agree with me.

Me either, indiana jim. It all just looks like domino theory - as if the dominoes had no independent will with which to adapt. I do think that the fall of AIG et al would have been a huge blow to the political class - but that is not something that I'm opposed to.

Daniel Kuehn,

Had AIG gone bankrupt there would have been no bonuses to argue about because whoever the court appointed to oversee the disposition of the firm's assets would not have been awarding the bonuses.

And I have seen no evidence to persuade me that AIG was "too big to fail."

jl-

I guess I see the bailout as an effort to keep the ship from sinking - not as jumping on to the first life raft. So we have a fundamental difference there.

It's not a matter of "giving it up to the government" - I said I think the tax on the bonus is bogus (you refer to it as stealing, which really it isn't - it's a tax. It may be a really really bad tax - it might be an unconstitutional and therefore moot tax, but 'stealing' implies some element of illegality). I'm not talking about giving it up to the government - I'm talking about giving it back to AIG. My understanding is these contracts were written much earlier in 2008, correct? In my mind a bonus to stay in a rough patch is very different from a bonus to stay in a near collapse, which the parties to the contract did not forsee back then. Like I've said several times - it's perfectly legitimate for people to disagree with me. This isn't a right or wrong answer thing.

Do you really think it would be right to pay people to stay on a sinking ship and not get in the life boats? I know Greg Mankiw could make an excellent market efficiency argument for that one - like he did for Leno - and I'd agree with the logic of the argument "as far as it goes" (ie - sure, it would be efficiency enhancing to pay them). But it seems to me that an escape from a sinking ship is not where our fundamental market instincts kick in - it should be where our baser flight-or-fight instincts and our nobler instincts of duty should kick in. "Women and children first" isn't something you should get paid to adhere to. It's just the right thing to do. And again - this isn't something anyone can disprove me on, it's just my opinion. But I would be very surprised (and a little disappinted) if others didn't share that opinion.

"Can you really say that you wouldn't feel some 'dishonor' if you were in that situation and then you accepted a multi-million dollar bonus?"

"I'm saying who in there [sic]right mind would feel justified or honorable collecting goodies from a sinking ship?"

These were not bonuses in the normal meaning of that term. They were fixed amounts that certain key employees were promised in return for their remaining on the job during an extremely difficult time. They stayed and did their jobs just like they promised. Now that the service has been rendered the government wants to steal their compensation.

So to you who wouldn't have taken the retention money - would you have promised to stay with AIG without it? Would you have passed on opportunities to leave or foresworn looking for better opportunities elsewhere regardless of the financial risk to you and your family?

This is really the point. There is absolutely nothing honorable about refusing the money and then bailing out on the company. So don't puff yourselves up and simply claim that you wouldn't have taken the money. Try to convince me that you would have passed on the payment and provided the service anyway. There is no special honor in refusing extra pay to risk your life staying with a sinking ship and then grabbing the first seat in the liferaft.

And if you claim you would have soldiered on, please tell me how much more of your compensation you would have been willing to give up for good old AIG and their new owners. After all, if it makes sense to contribute your retention payment to the government, why not the rest of your salary, ye of noble spirit?

Excuse me if I don't wait up for your answer.

Besides cheap batteries that an employee will actually install, you can have links removed at no charge.

What? what? Business and logic at play at Walmart?? This can't be the change we hoped for----

"Huck..Becky...Judge Thatcher!! Ah'm a-fear'd...ah'm a-fear'd!!"

... money ... is a gift to the corporations and individuals who are allowed to keep it (for now).

In the case of AIG, it happens to be true.

When...for God's sake, WHEN will Wal-Mart finally be unionized so that this madness, cruelty and clear exploitation of its workers can come to an end?!?!

When enough Wal-Mart employees decide they want to unionize. Is that a problem for you?

Welcome to Walmart! I recently went to a Target store to get a battery replaced in my watch. The employee told me that they will not put the new battery in because of possible problems but I could buy one for $5.95. I told him that Walmart will. He said that's why Walmart is number one. So I went to Walmart and paid $4.00 and they gladly put the new battery in for me.

geoih -

I think you're missing the point.

Nobody (well... not nobody - but not me) is arguing that the government shouldn't let the bonuses be paid. Also nobody (well... at least not me) is arguing that it was in the contract and therefore they had a right to the bonus. They did have a right - of course they did.

IG Farben had a contract with the Reich for Jewish slave labor. Doesn't make it honorable. I'm just saying that I'd be embarassed to take it. It's not a point that anyone can disprove. And geoih - if you would take it more power to you. I fail to understand your perspective.

Can you really say that you wouldn't feel some "dishonor" if you were in that situation and then you accepted a multi-million dollar bonus?

All the way to the bank.

Quote from Daniel Kuehn: "Can you really say that you wouldn't feel some "dishonor" if you were in that situation and then you accepted a multi-million dollar bonus?"

Nope, no dishonor here. It was in the contract. If they didn't want to pay it, then they should have let the company go bankrupt. It's too late now.

Well of course they're not responsible for the recession. That would be a silly accusation to make.

And of course politicians seek out the limelight and shun the spotlight.

I'm saying who in there right mind would feel justified or honorable collecting goodies from a sinking ship?

Maybe you would - I'm not trying to say this is some kind of universal wrong that they did. I sure wouldn't want the bonus. I'd feel like a jackass.

Daniel,

I might, if I felt that I had actually screwed up, but I don't think its clear at all that these guys are "responsible" for the recession. They miscalculated the probability of a black swan event, but hey, who didn't? I think their being responsible is just an idea that the politicians have proposed in order to take the spotlight off of themselves.

If I was a Wal-Mart employee, you bet I'd keep a bonus and I'd be proud of my company on top of it!

Randy -

I don't know if the demand for sacrifice is particularly dishonorable, but I would agree with you that individuals DO NOT exist to serve the nation.

All I'm saying is that I would be too embarassed to keep a bonus that I got from a company that was teetering on the brink of collapse and had to come wimpering to the government for help. Can you really say that you wouldn't feel some "dishonor" if you were in that situation and then you accepted a multi-million dollar bonus?

I just hope all the AIG traders quit and go work at Wal-Mart. SOOO much less stressful.

Wait... I thought Walmart was evil. Hmmm....

Randy: spot on.

Great post Russ.

Daniel,

"I think if the AIG execs had any sense of honor they would give the bonuses back..."

I for one don't buy into that particular concept of honor - the idea that the individual exists to serve the nation. I think the dishonorable behavior here is the demand for sacrifice.

They should all give a bunch of the money back to the government. What? The bonuses aren't being funded by taxpayers?

Not so fast. Never forget: All money that isn't confiscated by the government is a gift to the corporations and individuals who are allowed to keep it (for now).

I think the big distinction is that Wal-Mart did quite well and AIG quite poorly. And, as you say, taxpayers aren't Wal-Mart shareholders.

That having been said - I'm going to shock everyone on this board and say that the windfall taxes that Schumer is messing around with are coompletely inappropriate. I think if the AIG execs had any sense of honor they would give the bonuses back - it is disturbing. But the idea that the government should ride in on a white horse and force them to is equally disturbing.

When...for God's sake, WHEN will Wal-Mart finally be unionized so that this madness, cruelty and clear exploitation of its workers can come to an end?!?!