Yesterday Iowa Senator Charles Grassley suggested in a radio interview that AIG executives "come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide." Foot, meet mouth!
The Grassley episode illustrates the perils of populism. Grassley, like most national officeholders, saw the outrage brewing at AIG's awarding of bonuses to the folks who almost threw capitalism off the rails, and wanted to express his anger. But, because he is a Republican and his political sense is a little off, Grassley's anger - joke? - comes across as way, way over the top. Outrage only gets you so far. It ends up being counterproductive. Anger doesn't tell you how to solve problems. It lets you stew in resentment.
Don't get me wrong, I'm all for stewing in resentment. It's something of a hobby. But AIG is also a serious public policy issue. Last September the United States embarked on a massive program of corporate welfare. We call it "the bailout." But it is welfare. And, like welfare to individuals, welfare to bank holding companies and insurance giants produces unintendences consequences and social pathologies. Among them: rewarding failure, stoking popular outrage, and politicizing the economy. More than a decade ago the United States Congress enacted a great welfare reform that encouraged recipients to get off the rolls and into the workforce. Isn't it time Congress enacted a welfare reform for the banks and AIG? The administration sure isn't taking up the slack.
