doom letter #8

The next round of sacrificial lambs have been offered up to the masses in the economic scandal. This time, the evil ones are the functionaries of AIG’s finance arm who received millions of dollars in bonuses for helping run their company into the zombie zone. I told you previously not to waste time worrying about rich people and what they are doing – but the mainstream media wants you to stay focused on those they deem worthy of your scorn.

The problem with all of the hype is two-fold. First, nothing is different from before the supposed economic crisis began – nor should it be different. Rich people have always reaped huge amounts of money in bonuses from their employers. The media and some members of the government want you to be outraged because the money they are now receiving is tax money. But is there really a difference between money from the government and money from turning a profit? In the end it all comes from the same place – that is assuming you believe that government will inevitably repay the debts they are building up. Although I can imagine the arguments explaining the difference, I don’t think one exists.

All of the money that goes to bonuses for rich people either comes directly from the people in the form of profits or indirectly from the people in the form of government aid. Not very many people were outraged about the bonuses that people received when the money was just coming from profits, and those that were outraged did not receive much attention. It is accepted in our society that rich people get richer through profiting on economic activity. I would argue that financing their wealth accrual through government debt is actually better because the burden on the majority of people is shifted out to some undetermined point in the future – and that future will likely never come. What the government has created is essentially a new welfare class of over-educated functionaries with an inflated sense of entitlement. I say give them the money, and maybe a few trillion more on top of it. It is all fake anyway. None of it will ever be repayed. The economic activity necessary to create the tax base that produces such a tax surplus that will be needed to cover the now-nearly $10 trillion in federal debt will never come.

The second hole in all of the hype is the bonuses are such an insignificant portion of the problem. Whatever the actual sum of bonuses is, lets go with the $169 million figure, it is peanuts compared to the trillions of dollars the government has taken on to attempt to maintain the status quo. The reason that they want you to be outraged about the AIG bonuses is because these are the people the powers that be have decided to sacrifice. They are not an important piece of the puzzle, they are probably not even bad people. They are employees, and the reason they have been singled out is because they happen to work for a part of their company that failed incredibly. There isn’t anything remarkable about them, and therefore no reason to put blame their feet.

Now that the time has come for me to publish this, it is old news. So for the three of you reading, thank you very much. I hope that finding this little piece of confirmation of your hopefully-already-existing thought processes will help you in some way.

-mike