AIG Bonuses – Making Contracts Sacred
March 19, 2009
This contribution is from friend and colleague Lucas Graves, Columbia Communications graduate researcher, COI affiliate, and journalist extraordinaire.
Wherever you stand on the AIG retention bonuses, or the bank bailouts in general, it’s impossible not to notice how our ideological seams start to show in moments of high unsettlement. Here’s Thomas Friedman weighing in on why the AIG bonuses have to be returned voluntarily or not at all:
“We do not want the U.S. government abrogating contracts — the rule of law is why everyone around the world wants to invest in our economy.”
The rule of law creates an inviting climate for business. That sounds eminently reasonable, even obvious, until you consider the equally common claim — made by Friedman and countless others — that it’s precisely the lack of certain onerous laws that draws entrepreneurs to the land of opportunity from more rule-bound societies. (Like, say, France, Friedman’s favorite bête noir.) When laws seen as unfriendly to business do make it onto the books, the Chamber of Commerce and industry groups will argue quite openly for laxer, more “reasonable” enforcement, for instance of labor or environmental standards. Suddenly the rigidity of the rule depends on the nature of the law.
Meanwhile there are entire worlds of meaning in this beautifully parenthetical dismissal, from Andrew Ross Sorkin’s NYT column one day earlier, also arguing for the inviolable sanctity of contract where AIG bonuses are concerned:
“If government officials were to break the contracts, they would be ‘breaking a bond,’ Ms. Meyer says. ‘They are raising a whole new question about the trust and commitment organizations have to their employees.’ (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)”
An excellent if inadvertent reminder that contracts are legitimately broken all the time; that legitimacy is precisely the contested issue here; and that invoking the abstract principle of upholding contracts actually, and paradoxically, does the rhetorical work of claiming that in this case, as opposed to others, contract must be upheld. Likewise, it goes without saying that what constitutes legitimate bilateral “negotiation” is a matter of argument, not fact, as any auto worker can attest. No doubt “renegotiating” AIG bonus contracts a la Luca Brasi (i.e. at the point of a gun) would be perfectly acceptable to the bloodthirsty masses.