- We have a history in this country of vastly overpaying professionals like lawyers, traders and managers whose net benefit to society is not clear. So, why is their payscale suddenly outrageous? Did they actually deserve what was paid to them when the market was going up? Is it ever justifiable for people who manage money to extract 1-2% of assets as "management fees"?
- The $118 billion (i.e. more than 1000-times the bonus amount) that Uncle Sam paid to AIG actually went to "counterparties". These are politically well-connected firms. If we're going to impose punitive tax rates on retention bonuses, why not also impose punitive corporate taxes on the amounts paid to these companies? Or at least, insist on an ownership stake in these companies in exchange for payment?
- The pass-through payments are risible for another reason. The banks apparently didn't quite buy insurance for their portfolio. Instead, hedge-funds that shorted the housing market bought the insurance through the banks, and the pass-through funds are actually going to these hedge funds. That's who we have been supporting. We need to punitively tax hedge fund profits -- any fund that makes a profit is making a profit only because the tax payer has been shoring up the economy.
So rather than be outraged at the AIG bonus, be outraged that Wall Street banks are getting 1000-times the money for free. Be outraged that dubious professions are collecting rent off our productivity.