Today this blog is coming to you from Washington DC, a place that has traditionally turned itself into something Irish on St Patrick’s Day. And so right on cue, the water fountain outside the White House has turned green for the day.
But amidst the normal Irish bonhomie, in reality there is only one topic of conversation here: the bonuses being paid to senior executives of the insurance company AIG. The latter company, as most people will know, ran into serious financial difficulties in 2008 and was saved from insolvency only through a taxpayer bail-out originally agreed by the Bush administration. More recently the company asked for and was promised more government financial support. And then the US government – now owning 80 per cent of the company – discovered that a number of senior executives were claiming and were to have paid out to them some very substantial bonuses, amounting in total to $165m. These payments are needed, the company has argued, to persuade the executives in question to remain with the company; and they are required to be paid under these employees’ contracts.
The fall-out from all this has been extraordinary, and is still building up momentum. Commentators all over the media and in the blog world are expressing their disgust at the conduct of the company and its executives, but also showing some disappointment with the government for not stopping the payments, contracts or no contracts; indeed the latter complaint has probably directly caused a slight (but noticeable) drop in President Obama’s opinion poll ratings.
My guess is that the AIG executives will not get to enjoy their bonuses; the government will find some way to stop them. Indeed, I would not be too sure about the ‘retention’ of these executives, with or without bonuses.
But the broader lesson, which has validity in all countries now tossed about in the stormy waters of the recession, is that people cannot behave as if the current crisis did not exist, or as if some (particularly those with a hand in getting us to where we are) could claim exemption from the sacrifices and hardships we now have to face. We also need urgently to leave behind us the sometimes audible opinion that it is right that society should now make sacrifices to allow us to escape from this recession – as long as the sacrifice is being made by others, not us. We need a collective purpose now, in which everyone makes the effort and, to an appropriate degree, shares the burden.