Enough With The Pitchforks And Head-Rolling

Responses to the AIG bonuses debacle have so far been aptly described with a "pitchforks and torches" motif. Hordes of disgruntled citizens are taking to the streets -- and AIG executives' driveways -- to direct their anger over a generational economic crisis towards a select few who have received bonuses in accordance with company retention contracts. This dubiously esteemed coterie is now the scapegoat for what appears to be a vast populist resurgence of a scale not seen in decades. (And even beyond executive bonus recipients, an AIG memo last week advised all employees to hide their affiliation to the beleaguered company, lest they also suffer public harassment or worse.)

Sure, the AIG outrage is justified and comes as no surprise. But beyond the dam's initial breach, what practical goals will aimless rabble-rousing and picketing 'Joe Executive's' driveway achieve? The public's bloodlust so far has been much more a guilt-tripping effort than anything else. And though this is an understandable initial reaction, it is hardly productive. Indeed, such knee-jerk populist rage is precisely what gave populist rage a bad name in the first place, whereby a valid democratic outlook is construed as nothing more than an angry-mob uprising. One wonders how long the focus will remain on what is, monetarily, a trivial scandal rather than on the larger economic and -- crucially -- financial recovery effort.

Populist champion William Jennings Bryan's iconic 1896 'Cross of Gold speech' to the DNC reveals a perverse irony for the current crisis, wherein it is proclaimed: "Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country." The implication was of course that the farmers and middle class were the key economic drivers, and that the cities were just a bonus byproduct of this indispensable foundation.

Needless to say, things have changed since Bryan's day and the complete opposite is now true -- in this 21st Century economic triage, the 'cities' of which Bryan spoke are now the foremost priority. As both the current and past administration have emphasized, nothing will improve until credit flows freely, making the financial sector the Gordian knot of the entire crisis. Throwing a lifeline to Wall Street boneheads may seem like bitter medicine, but the alternative is like taking cyanide.

Moreover, such shrill public outcry can undermine vital recovery policies. Politicians of all stripes last week felt compelled to pick up their own pitchfork and join the anti-AIG rabble, lest it turn on them next. Congress and the White House have wasted time and political capital ceremoniously threatening to break contracts, sniper-tax corporate pay, or deduct the bonus amount from future bailout injections when, in reality, none of these solutions are at all practical or even necessarily legal. In fact, these efforts to mollify public anger could be detrimental to fixing the larger financial crisis.

Firms could become disinclined to accept the type of government assistance that is accompanied by such public flagellation and instead choose to roll the dice (yet again) by going it on their own. Of course, when they fail, the systemic Lehman-like meltdown will affect everyone. Furthermore, targeting specific individuals' pay gets one into mucky legal territory and could serve as a dangerous precedent down the road. And finally, deducting a portion from any future tranches to account for the recent bonuses would accomplish nothing. That money has already been paid, so it is AIG's other expenses that would be shorted.

Why squander such a vast, concerted effort on picketing individual homes and possibly undermining the recovery process? The pointlessness is revealed in victory. A number of AIG bonus recipients have indeed already caved and agreed to return the money, and yet nothing has really improved. It is not as though a few million dollars out of the $170 billion AIG has received from the taxpayers is any reason to break out the champagne.

In a perfect world, those responsible for the financial mess would be subject to all due banishment and excoriation, and justice would be served to the poor and middle class who suffer most. Unfortunately, however, the system and the current situation dictate otherwise. Because revenge is a dish best served cold, the resurgent populist movement should redirect their efforts for the time being towards helping themselves and those in need, rather than towards public head-rolling displays that ultimately yield little to nothing in practical gains. Destructive avarice and ridiculous double standards should by no means be upheld or condoned in principle, but it's time our government moved on from what is quickly becoming a domestic quagmire.

 

Follow Stuart Whatley on Twitter: www.twitter.com/stuwhat84

Comments

[pheepher]

I disagree with the premiss of "pitchfork" protest is bad. As a matter of fact, if the people rose up in mass numbers we wouldn't have the situation we are in currently. If those who built this house of cards and those in government who paved the way were met at anytime with pitchforks, maybe they would have thought twice prior to their attempt to rip-off the people.

Please don't claim this country is a democracy. This country is only for those who can buy any level of power they can afford to pay for.

[vortac2101]

The author said: "Populist champion William Jennings Bryan's iconic 1896 'Cross of Gold speech' to the DNC reveals a perverse irony for the current crisis, wherein it is proclaimed: "Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country." The implication was of course that the farmers and middle class were the key economic drivers, and that the cities were just a bonus byproduct of this indispensable foundation.

Needless to say, things have changed since Bryan's day and the complete opposite is now true -- in this 21st Century economic triage, the 'cities' of which Bryan spoke are now the foremost priority."

This is not a problem of the 'cities' being on fire. We, as a nation, have already burnt down our farms and factories, and this economic crisis is the grass beginning to grow through the streets.

That being said, I don't think we want the task of re-building the cities. Hopefully, we will realize that the strength of any economy, despite what 'the best and brightest' have been insisting since the Eighties, is producing REAL, tangible products, the kind that are produced on farms and factories, rather than "financial" products, those that are produced only on paper.

[squarebird]

Wow. Whatley is, of course, quit correct. Governing by riling the rabble into directing their "pitchforks and torches" towards government selected scapegoats is exactly how Mugabe turned Zimbabwe into a horror show. Interesting aside .. why is it that most Huffington Post readers agree with Whatley's article, but are lambasting Rush Limbaugh for making exactly the same point, but in a more humorous and bemused manner?

Robert in D.C.

[amessenger]

Step right-Up to the new AIG Brand name folks ---- It's AIU (Underwriters -- coulda guessed, huh?)now and they even took the name off the front of the bldg, (probably best for awhile huh?) Nine out of ten gave their bonuses back so lets make sure and tell the Frankenstein Murder Mob.

It has been a very good way to fan the fires of money rage, as if these guys have been doing anything more than default swaps that were made possible by Sen. Phil Gramm, Texas -- of course, (retired now and serving at UBS AG, a colassal, Swiss-owned investment bank), remember him? John McCain's buddy helped us all into this Dec 15, 2000 when he snuck in a Santa's List Amendmant known as The Commodities Futures Modernization Act, 262 pages of deregulation which Warren Buffet labled: 'financial weapons of mass destruction". This was the "Go-Law' which allowed banks and insurers to swap derivatives, (meaning the notes were based on the value of something other than them -- like bogus paper). It made it possible for the new: shadow banking system, which operates out of government oversite, but counts on rescue from taxpers to avert national catastrophe.

These "bonusees" were not doing anhting they haven't done for ten years, as a result of Bush, McCain and Wall Streets complete lack of ethical interest swapped for profit.

[vinny]

I think we should discuss Whatley's brilliant conclusion in more depth:

"In a perfect world, those responsible for the financial mess would be subject to all due banishment and excoriation, and justice would be served to the poor and middle class who suffer most. Unfortunately, however, the system and the current situation dictate otherwise."

[vinny]

Whatley couldn't be MORE WRONG. Bonuses drove the bad financial decision-making that ultimately had REAL effects on REAL people's life savings and their job prospects. Images of face-to-face confrontation with those who made bad decisions reminds us (and them) that they can be touched.

And admire the critical thinking going on here: "In a perfect world, those responsible for the financial mess would be subject to all due banishment and excoriation, and justice would be served to the poor and middle class who suffer most. Unfortunately, however, the system and the current situation dictate otherwise."

Americans love to be dictated to, Whatley. Please tell us more about what we shouldn't be doing.

[Dallen3978]

Certainly the public is upset with the AIG debacle and rightfully so. However, our leaders in Congress are acting in a ridiculous manner and fanning the flames of this public outrage. They should grow up, be adults and get something done.

The whole idea of taxing individuals differently than as a "group" is dangerous and probably unconstitutional. Is this a road we really want to go down??? There are any number of scenarios that could play out regarding this use of taxation as a political weapon against an individual that are truely frightening.

What upsets me more are the recent revelations regarding how much money our congressional representatives are continuing to receive in political contributions, PAC's, from the very institutions that are taking the taxpayers bailout money. Both Republicans and Democrates alike are hypocrites...they are throwing verbal grenades at AIG when their own behavior is just as reprehensible . Just as they say it is immoral for the AIG employees to take their bonuses it is just as immoral and unethical for our representatives in Washington to take, what is in effect bribe money, from the crooks on Wall Street.

AIG is just one (albeit a major) problem that will eventually go away with destructive consequences However, our politicians in Congress and the rigged system that governs their behavior will be around for a lot longer than anything that comes out of the AIG mess. A bribed politiican is far more dangerous than an AIG executive taking a bonus.

[CelticDragon]

Pitchforks and torches??!!

The hell with that. Main battle tanks and automatic rifles, please.

We will stop screaming for blood when we see fraudulent bankers and hedge fund managers in prison.

Until then, "aux barricades!"

[bingvangorden]

Enough with moderate complacency and ineffectiveness. We need more pitchforks and torches please, if anything we are not yet angry enough to bring about the change that is needed.

[KillTheMessenger]

You go first. I will watch how anger works out for you.

[kamact]

Stuart, your focus on AIG is too narrow. AIG just became the latest symbol of government-assisted Wall Street greed and entitlement, and the sense of helplessness that most people are now feeling.

I believe that we need more, not less, public outrage against the powerful few in corporate America, especially those in the financial and energy sectors, and their government agents, who have managed to destroy the dreams and financial health of million of Americans. In fact, I believe that the path we were on was creating economic slavery -- a few controlling our laws, commodities, production, and, in turn, increasingly concentrating wealth in their hands.

Kamact -- A capitalist that believes in regulation, and does not believe in trickle down.

[DestinationsUnknown]

Once again- AMERICA is BEHIND THE 8-BALL!

Have you seen what European Bank Executives have done with bonuses?

Not the GREEDY AMERICANS!

How many Americans can define what a Global Economy is?

Disregard the fact that Americans world ranking in education is on a steep decline and not stopping. I guess that is irrelevant. Americans are always right, aren’t we? 1 out of 4 of you has a passport?

HOW MANY TAX PAYING AMERICANS HAVE LEARNED WHAT A DERIVATIVE IS IN THE LAST 6 MONTHS?

WHAT is our grade for learning what a CDS or a derivative is since September 15, 2008?

Let them fail?

Explain why Republicans are such a fan of Corporate Bankruptcy? What does the American Taxpayer know about Corporate Bankruptcy? What do Americans know about DIP Finance TOOL, Debtor in Possession, created in the late 80’s by none other than Richard Rainwater’s wife Darla Moore.

Who are the losers in Corporate Bankruptcies?

Or better yet, can you explain who the real losers are when corporations utilize that great FINANCE TOOL created in the late 80’s in CORPORATE BANKRUPTCY?

How do we grade ourselves or the MEDIA which includes you, as informed AMERICANS for the special "FINANCE TOOLS" also contributing to this FINACIAL CRISIS – a GLOBAL FINANCIAL FAILURE and FRAUD?

WHAT HAVE WE LEARNED IN THE LAST 6 MONTHS?

[winstonian22]

You can have my pitchfork when you pry it out of my cold dead fingers.

[bingvangorden]

Nice!

[KillTheMessenger]

That's the best characterization that was given about the French Revolution today. That is indeed what they ended up doing...

[NedLong]

Dear 'based in Virginia',
If you seriously think that the execs at AIG would have given back their bonuses without the 'rabble' in the streets, and you can time travel, king louis the 16th needs a good PR man.

[jhNY]

"Whereby a valid democratic outlook is construed as nothing more than an angry-mob uprising" by whom? And why is the unmentioned construer's opinion so darn important?

People are often agry when they are being robbed in broad daylight, even if the robbers are really important people who know others in DC much like themselves-- really important.

The practical outcome of all the pitchforks brandished in the general direction of Wall Street and in the direction of AIG particularly is that many more ordinary people, regardless of party affiliation, are coming to see the death-spiral embrace of the financial overclass by their representatives in Congress for what it is-- a disaster for the people. So, in that way at least. light has been shed in dark corners where the deals are made, and trust in the parties will diminish, as it should, so long as the politicians continue to demostrate their loyalty to financiers in practical action, and their manufactered outrage in front of a bank of microphones.

[mjwca]

Hmmm, your blog sounds suspciously like the last 8 years of rhetoric used to shut down dissent. Shame on you and all those in the Obama administration who refuse to listen to the people. Obama was not voted into office to be yet another puppet figurehead who does the bidding of Corporate America and tells the rest of the country that real patriots keep their mouths shut. Right or wrong, the people derserve to be heard and truly listened to - not patted on the head and patronizingly told "there's nothing to see here people, go on home".

[Fempatriot]

I totally agree with you. It's time the average American citizen woke up and smelled the brimstone emanating from Wall Street and Congress and got well and truly angry. For decades there has been a war on the American middle class. It's time we demanded to bring back the middle class and that we reject the third world status that the rich would relegate the majority of us into living. Wall Street and the corporations and our Congress have rewarded the rich more and more and the average American less and less. We the people are the employers of Congress. Without our votes and our confidence, they're out of their cushy jobs. We voted them in--we can vote them out. We the people are the consumers of the corporations--without our consumption, they will fail. (and look at the car industry if you don't believe that!) And the rich...well, our apathy and blindness has enriched the rich many times over. And they have used their money and influence just to gain more money and influence. Every year when the Bilderbergs meet secretly (with tight, tight security) they _plan_ for the enrichment of the "entitled" and the poverty of the rest of us. It's time for a change. And things will change...or else. As for those who tell us to shut up and calm down...they should shut up.