I've reported some tough stories, but this one is really, really hard to get right. Not emotionally. I'm as mad as everyone at these stupid bonuses, but I've been more upset about worse things that I've seen.
It's hard because I think the best perspective is a bit subtle, a bit nuanced, and I don't think there is much acceptance of that now.
I was in Iraq in May and June of 2003. To us reporters on the ground, it was clear the occupation was a full-on disaster, but word hadn't leaked out to the U.S. yet. When I came home on vacation, my friends — even my lefty, anti-war friends — were convinced that the occupation was going well. (Nobody believes me these days, but I swear it's true. You probably thought things were going well then.)
It was frustrating to report on problems and have the audience tell me that I was wrong. It was frustrating, but I knew they'd find out the truth eventually.
The Dubai Ports World story was very difficult to cover. For all sorts of reasons (which I can get into later) it felt clear to me (and many others) that Congress was creating a crisis where none existed, that they were using populist rhetoric to political ends and were mostly making the world a slightly worse place by showing the rest of the world's investors that the U.S. doesn't always welcome them.
That was frustrating, but I felt like I could report it well and get the ideas across. The truth was fairly clear.
Iraq, back then, could fall under the heading: "Things You Should Be Outraged About But Aren't (Yet)." The Dubai Ports World story's headline could be: "Something You Are Outraged About But Shouldn't Be." But this one, oy, the AIG bonus story: that falls under the heading: "Something You Should Be Outraged About And Are, But, Maybe, You Should Focus On Other Things Instead."
Here's my view:
- It is awful that those guys got those bonuses. "Retention" bonuses for people who were going to leave? People who destroyed the company and the world? Ridiculous.
- This is a $165 Million problem during a multi-Trillion dollar crisis. As Ian Bremmer put it, Outrage is a Luxury We Can't Afford. The economy is still horribly, scarily precarious. No matter what you think should be done—stimulus, bailout, neither, nationalization, more regulation, less regulation — it needs to be done soon. We are still in an ugly crisis and if it's badly handled, it can damage the economy so violently that we'll all be poorer, the vulnerable won't get food and health care. The stakes are HUGE. And Congress and the President and Geithner should not waste three weeks on this sideshow.
- That being said, this is yet more evidence to the tone-deafness of the whole government response. Whatever you support or oppose, it is safe to say that our leadership has not done a good job explaining what they are doing and why. Back in September, the government decided that to save the world economy they need to give a lot of money to a lot of undeserving rich people and rich companies. It's clearly not fair, and they did it fast and sloppily. It might have been the right thing to do, maybe it wasn't (we'll learn eventually, I guess). But it was the decision they made and the Obama administration continued and they haven't been straight with us, so we keep getting stunned by these discoveries.
- The outrage over the bonuses is so understandable. I have it. Finally, in this unbelievably confusing crisis we have something crystal clear: this is immoral, unfair, outrageous. It is much harder to dig in to the tough stuff, to understand the crisis more deeply, and to focus on bigger, more frustrating issues.
So, my modest proposal of things to be outraged about instead (or, at least, in addition) to the bonuses:
- The pathetic lack of global unity in the response (I'm looking at you: Europe).
- The fact that Congress still doesn't understand the issues well enough to create a coherent response.
- The fact that nobody understands Treasury's real plan and the vagueness of it makes us all suspicious that either there is no plan or they are hiding something from us.
- The stunning lack of reflection from the leadership of banks, ratings agencies, regulators, Congress, the Administration, media, etc, for their culpability.
- The lack of bold, forward-thinking responses. The Administration(s), Congress, and much of the rest of the world seem to constantly be fighting the last fight and catching up on the fly. That is not how it has to be. They can get in front of this—take bold, painful action, and clearly tell us why.
I've felt more afraid today than I have in months. I was assuming that the government would, eventually, solve things. They'd try a lot of bad ideas, they'd be late and imperfect and inefficient. But they'd solve things. Today — it's just a feeling — but I started thinking that maybe they won't solve things. Maybe they'll be so politicized and so populist that the economy will collapse.
I hope not. It probably won't happen. But if it does, I'll bet you that it'll happen because we all took our eyes off the ball and focused on the wrong things.