Is anyone not upset with AIG?
In case you missed it, after receiving $170 billion from the federal government to keep from collapsing, American International Group, the world’s largest insurer, paid $165 million in bonuses to 73 executives.
Whether the AIG executives were callous or just stupid, they look absolutely greedy, especially as tens of thousands of Americans are losing jobs and houses each week. This isn’t how we want our money to be used. So the president publicly scolded the company and Congress voted to tax 90 percent of big bonuses at any firm receiving more than $5 billion in bailout funds.
Bill Greer, an economics professor and vice president for institutional advancement at Milligan College (where I also teach), thinks we have good reason to be angry with AIG. Even so, he doesn’t assume that the lumbering giant is the only side of Wall Street.
“I genuinely believe that the vast majority of people who work in financial institutions are good, honest people,” Greer said this week. “I don’t think the majority are Bernie Madoff,” referring to the trader recently caught as the mastermind of the largest Ponzi-style pyramid scheme in history.
But Greer knows that, as in any profession, over time “a little bit of tunnel vision can develop.” It can happen to anyone. As the old saying goes, if you swing a hammer long enough, the whole world starts to look like a nail.
But the stakes are especially risky in the offices of high finance, where individuals and firms have their fingers on world economic triggers and they deal with other people’s money. When they stop asking too many questions and start making too many assumptions, bad decisions and big trouble won’t be far behind.
“People become numbers,” Greer said. “If I’m working at an investment firm, the fact that I may be managing hundreds of portfolios means I don’t see those faces any longer. There’s an anonymity that lets people make poor decisions with less fear of consequence.”
On the other hand, we can’t separate Wall Street and Main Street. Our decisions shape financial markets just as much as the markets shape us, and Wall Street’s problems aren’t Wall Street’s alone.
“In some ways, it has trickled out to the rest of America,” Greer said. “A lot of people on Wall Street saw an opportunity, but that same door was opened to us. We fed on each other, with our greed. We can gauge it by how little we have saved and how much we have spent over the past several years. We’ve become accustomed to having what we want, when we want it.”
But Greer, who has written and taught on business ethics, sees a silver lining.
“I think this economic downturn is forcing people to rethink their values,” he said. “Too many of us for too long lived beyond our means, did not save money, ran up large levels of consumer debt, and simply lived for today. Now there’s a sudden trend toward saving money. We’re getting our financial houses in order.”
He understands the so-called paradox of thrift – that if Americans save too much, the national economy can suffer – but he thinks it’s time for tightening belts. He’s convinced that living within our means and making money by making real, tangible products instead of trading in wispy financial deals will literally pay off in the long run.
He also thinks it’s time to bring back other ideals – on Main Street as well as Wall Street.
“I’m speaking as someone who teaches at a Christian college, but Christian or not, honesty and integrity are universal values,” he said. “What we do for people ought to be driven by care and compassion for individuals. That would make better decisions.”
He points to Adam Smith, who wrote The Wealth of Nations, the 18th-century book that laid the theoretical foundation for free-market capitalism. Smith realized that a free-market economy is driven by self interest, but he also knew the market works only when we also have the interests of others in mind.
“Somehow, we need to embrace more and more the fact we make decisions every day that affect other people,” Greer said. “In a lot of ways, the Golden Rule applies very well to the free-market economic system. Treat others as you want to be treated. You go out of business if you don’t.”
Johnson City (Tenn.) Press, 21 March 2009.
S. J. Dahlman 