In response to the news of AIG paying contractual bonuses out to executives even after receiving ‘bailout’ funds from the federal government, we have a variety of ‘solutions’ being proposed. One such ‘solution’ is as follows…
“Democratic Representative Gary Peters introduced a bill to impose a 60 percent surtax on bonuses over $10,000 at any company in which the government has a 79 percent or greater equity stake. It now holds about 80 percent of AIG.”
Now, I don’t necessarily like the idea of such huge bonuses from taxpayers monies… but a free-market is best for the economy and supply and demand should be allowed to work. I don’t resent people being paid millions or billions. If they have the skills and put in the effort to get there who am I to say the reward is too much… the opportunity is open to us all.
Even so, what worries me most if this bill passes is the idea that if the government wants to generate more revenue, all they need to do is buy up its stake in the business… nationalizing businesses now becomes ‘profitable’ for the government and free-market economics becomes a thing of the past.
In all honesty… I think the government should have kept their nose out of it. There is no evidence that the bailout will strengthen the economy… or even that it softened the blow. Businesses that are not able to stay open on their own should not be given taxpayer money to do so… the result will be a weeding out of businesses with poor management and/or business models. In the end we would have a much stronger economic and business base.