What Does Bonus Mean?

Websters Dictionary defines a bonus as, “something in addition to what is expected or strictly due: as a: money or an equivalent given in addition to an employee’s usual compensation.”
When I was a kid my parents would give me five dollars for good grades on my report card.  Not average grades but a B+ or higher.  Call it incentive to do well.  I wonder what would have happened if I would have gotten all F’s and then still asked for my $5 bucks with a straight face.  Or to take it one step further, I had the audacity to chew them out and lecture them on how they were going to lose their most talented kid if the did not incentivize me regardless of results.

I know the analogy does not cross over perfectly and is a bit silly, but it is supposed to be.  AIG recently gave  $165,000,000 million to just over a hundred people who were directly responsible for leading a business to a place where it one its own, could have destroyed the US financial system.  The average American household pays right around $3,ooo a year in federal taxes.  Therefore it is the taxable income of around 55,000 American households that will pay a $165,000,000 dollars to bonus people who have been complete failures.  This is not capitalism.

Capitalism pays for performance.  It does not have the government pay exorbitant bonuses to those who have been a blight upon everyone else, in the name of free markets.  Lets be clear this is not a bonus, read the definition again of what a bonus is and you will see that this does not meet the criteria.  This is theft, considering that AIG has been given 180 Billion in your money over the last six months.

Now the two arguments to pay these “bonuses” are;

1.  They are contractual, it would be breaking a contract to not pay them.  Was is it in their contract to make decisions that would lead to the complete annihilation of the company?  If the bonus payment really stipulated that these 100 executives should get $165 million in bonuses even if the fail, then I do not want to hear Wall Street ever again bemoan that unions force companies to pay employees more even when their performance has not increased.  Besides I would love to see any of these 100 executives face the cameras in a courtroom suing the US government to get their bonus.  That will be the day.

2.  If we do not pay the bonus we will lose our best talent.  Hey our company’s value has declined over 90% in the last year, we are $180 billion in debt to the US government, and do not know when we will ever be profitable again, but hell we got hold onto all our people who made this all happen for us.  In all seriousness where are these people going to go?  I doubt there are a long list of company’s lining up right now to steal all the great talent from failing banks.  Not to mention unemployment is over 10.5% in California, 10% in Nevada, and closing in on 9% nationwide.  So if they feel they really have a lot of options open to them, good, go ahead and move on.

Look, I am not against capitalism, rich people, banks, making money, investing, or anything of the sort. I have always loved capitialism and the stock market and been actively involved in it for a couple years now.  But anyone with some common sense has got to realize that a system in which you reward people even when they fail is not a free market or good for anybody.  The tendency in these conversations is to always go to one extreme; either ignore all the obvious flaws and failures of Wall Street and call those who point them out names like socialists, or think that all executives and rich people are evil and responsible for all of America’s economic problems.  We all have to do better than that.  I am simply advocating some sanity be brought back to American capitialism.  That our economy really is a free market, one in which no institution/company can bring the whole thing down, and that we make businesses and business people be held accountable for their actions.