Wednesday, March 18, 2009

AIG Bonus take away -- same flawed thinking of our punishment policies

The nation's top story is outrage that employees of bailed out insurance giant AIG got bonuses provided for in their contracts.

The mob is on the march to take them back, that is, to punish these employees.

It is assumed that the employees who received the bonuses were those responsible for the flawed decisions in the credit default swap business that led to AIG's collapse. On the basis of this assumption, and in fact not knowing who received a bonus, Congress is proposing a new law to confiscate the bonuses through the tax law. If this confiscation was in the form of a fine following a trial and proof beyond a reasonable doubt that the bonus was received by someone who was culpable in some way for the AIG collapse, the confiscation would be patently unconstitutional as a violation of the prohibition on ex post facto laws in Article I, section 9 of the Constitution.

What is striking about this is the proposed policies are driven by an intense anger and a political imperative to either stoke or respond to that anger.
This is exactly like the political dynamic that led to irrational mandatory minimum sentences for drug crimes.
Few are examining the legality or the wisdom of the bonus take back. Deciding to set aside consideration of the legality, Constitutionality or wisdom of the bonus take back in favor of the quick fix of vengeance may lead many to feel good, but this will be about as smart as deciding to start smoking crack because you lost your job, and you want to feel good.

Sphere: Related Content

No comments: