People were initially upset b/c they thought, "why are AIG employees getting bonuses when they TANKED?"
1. These were not performance bonuses, they were retention bonuses.
2. These contracts cannot be written ex poste.
Okay, fine. I agree that legal contracts should be upheld in order to maintain credibility. After all, poorly defined property rights and threat of expropriation hinder assets from realizing value beyond their natural states in developing countries.
But seriously? Why do we need to retain any of these people who f*cked up? Clearly, if performance is any indication of talent, these people are not worth RETAINING.
Blah. So give them their bonuses for having BEEN retained, and let them all go.
Cuomo wants the names of these people to be released but I can see that going down soooo bad. I want people to be fired, not killed. If my name were released, I would just donate all of it to charity.
In other news:
Martin Feldstein is a board member of AIG. I will be writing him an e-mail with some questions. I hope he responds.
I'm still waiting for George Akerlof to respond to my e-mail from 2 weeks ago...what a heartbreaker he is...
Here's what I wrote:
Dear Professor Akerlof,
My name is Esther Jang and I am an Economics major taking a Money and Banking course at Wellesley College. We are discussing the role of asymmetrical information in the current macroeconomic malaise and obviously your "Market for Lemons" paper came up during lecture. My Professor said that the brilliance of your paper lies in its simplicity and that before you won the Nobel prize, the American Economic Review rejected your paper claiming that they "only publish serious economics." So our question for you is, when you won that Nobel prize, did you go back to the AER and say, "well, Nobel prizes are only given to serious economists, so HA?"
Also, I would just like to say, for what it's worth, that I will gladly publish anything you have to say [uncensored] on my blog at: http://esthernomics.blogspot.
Thank you for your contribution to the field of Economics.