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Source link: http://archive.mises.org/9644/the-thieves-keep-the-loot/

The Thieves Keep the Loot

March 20, 2009 by

Congress passed a 90% tax on bonuses given by bailed-out companies, and thus does Congress underscore the important principle: when government steals money and decides to hand it out again, the recipient holds a politically conditioned loan that can be taken back at any time. It means that if you are subsidized, you are nationalized in principle.

The question I have is why taxpayers should somehow feel better about this solution. How does it constitute a fulfillment of any principle of justice that the thieves still keep the loot, and, in fact, are demanding trillions more? Moreover, it seems like the level of public outrage is proportional to the pettiness of the numbers involved. $165 million is a bloody outrage but $1 trillion is just good public policy.

{ 16 comments }

Enjoy Every Sandwich March 20, 2009 at 8:31 am

Watching congressmen pretend to have intelligence is bad enough. Watching them pretend to have morals is just more than I can stomach.

D. Saul Weiner March 20, 2009 at 9:21 am

The relatively small amounts are a dead giveaway that the recipients of the bonuses are scapegoats for a much larger problem. It is Congress’ and the American people’s way of kicking the dog.

J.K. Baltzersen March 20, 2009 at 9:32 am

This is similar to how personal benefits of the politicos are treated.

At least where I come from, there is from time to time fury over what politicians are paid, their retirement benefits, the length of their vacations*, etc. Recently there was a case with some politicos receiving full retirment benefits even when the rules said they should not.

However, the same media and public generally keep quiet when the bulk of the tax money is handed out in the name of “society.”

*The longer politicians are on vacation, the better. However, when the media sets the spotlight on politicians’ vacations, there is normally an outrage over the fact that politicians have longer vacations than other people.

Samuel G March 20, 2009 at 10:44 am

I get a huge kick out of this. I mean, talk about a golden example of a double standard. But Ron Paul was dead on about this being a distraction.

Here’s to hoping this backfires on der Fueher.

Samuel G March 20, 2009 at 10:45 am

I get a huge kick out of this. I mean, talk about a golden example of a double standard. But Ron Paul was dead on about this being a distraction.

Here’s to hoping this backfires on der Fuehrer.

David Spellman March 20, 2009 at 10:58 am

I thought the constitution prohibited bills of attainder?

Ken March 20, 2009 at 11:01 am

Bill of Attainder? That’s my Alliance character in World of Warcraft. His home town is Ex Post Facto.

Mike March 20, 2009 at 11:35 am

To be fair Jeffrey, taxpayers could feel better about this situation because much of the loot has not yet been stolen: it was funded with contractual promises to steal money from others in the future in the form of government borrowing. Theoretically, this move could result in (slightly) less government theft in the future. In reality, it will probably just go to fund more wars or some such nonsense.

Tom Blund March 20, 2009 at 11:52 am

The problem is really not AIG or it’s employees. The problem is the fact that a bunch of attorneys on the hill dished out money to this company without any business sense as far as using that leverage to impose some very strict guidelines (such as all bonuses go away). They should have made the company go chapter 11. Obviously the company can do without the high paid employees that drove the company into the ground in the first place.

Boston Tea Party March 20, 2009 at 12:57 pm

Taxpayers should be outraged about being forced to pay taxes in the first place, not on how taxes are mismanaged and wasted.

At the moment money is being paid to the taxman, it’s wasted money you no longer have, what the taxman does with the money is irrelevant.

What is really outrageous is the fact that there is a tax man taxing your wages.

Boston Tea Party March 20, 2009 at 1:03 pm

David Spellman,

“I thought the constitution prohibited bills of attainder?”

We have a constitution ? I don’t believe you.

What we see in practice is congress is free to pass all the laws, regulations, bills and spending it sees fit.

I don’t see congress being fettered nor bothered by a constitution.

Practice shows we don’t have a constitution. It’s probably some sort of fiction poem written in 1776 and exhibited in some museum but it’s probably worth less than the paper it’s written on thanks to congress.

Michael A. Clem March 20, 2009 at 1:46 pm

Yes, the Constitution does prohibit Bills of attainder. But there are two problems: 1 – the constitution has to be defended by living people, especially judges, and 2 – someone has to understand what a “bill of attainder” is and accept that something existing is, in fact, a bill of attainder.
In short, ignorance is bliss, as long as you aren’t concerned with the long run.
I’m concerned that so many people want to kick the CEO’s for “mis-use” of the taxpayers’ funds, and so few people want to kick Congress for mis-use of taxpayer funds, i.e., giving taxpayer money to these companies in the first place!

AC March 20, 2009 at 4:12 pm

According to a report on foxbusiness, about an obtained email (probably through their Freedom of Information Act request, although they didn’t say), the Treasury Dept knew about the potential bonuses when they were negotiating with giving AIG money in the first place, back in November 2008. There were negotiations back and forth concerning the bonuses. Eventually the Treasury decided to limit the compensation of the top 75 AIG company executives.

Now the gov’t wants to change the deal it made. It reminds of the scene in Star Wars the Empire Strikes Back, when Darth Vader is talking to Lando and Vader changes the terms of the deal. Lando says something like “…that was never part of this bargain.” Vader replies something like, “I’m altering the deal, pray I don’t alter it any further.” At least with Vader, he made no pretence that he was good.

So my point is this, how can we expect a gov’t to be limited, enforce contract law, and protect property rights when it won’t even keep its own bargains.

Mr. Tucker is right, the gov’t takes your tax dollars, telling you it is for the good of the country, that it is needed to keep these companies from going broke, which would supposedly plunge us into some economic nightmare. They give the money to companies such as AIG, then turn around and say we’re going to take back those bonuses and pretty much drive any talent out of your firm. But the gov’t isn’t going to give back whatever it gets from these AIG bonuses, if anything, to the US taxpayer. It’ll spend it on some crony friends somewhere.

I’m with you Michael A. Clem, the gov’t takes from the taxpayers trillions of dollars (every year) for various nefarious purposes and people don’t seem to get too mad. But give out around $165 million in bonuses….oooh boy look out, time to get the pitchforks.

Make no mistake about it, I’m no apologist for the folks at AIG. I think AIG should’ve gone into bankruptcy. But when the gov’t has taken over $170 billion and given it to AIG, I don’t see why people are so upset when 0.1% of that money went for some bonuses. Where do they think the other $169.835 billion ultimately went, not the toothfairy. Some one got the money, other banks, foreign banks, which are owned by PEOPLE. Even if some foreign gov’t owns the bank, ultimately then it went to the rulers of that foreign gov’t. It’s still going to PEOPLE.

mark March 20, 2009 at 4:14 pm

There was this guy who broke into my house the other week. He and his cronies backed up a truck and emptied out my house. That was inconvenient enough, but I was outraged to discover that the guy’s truck dripped oil on my driveway!!! Well, I was able to track him down and the guy promised to look into some way to clean that oil spot.

So I’m feeling pretty good about it, but my wife and kids are still complaining about not having any furniture, clothing or food. What a bunch of ingrates! After all, that guy’s gonna do something about the oil spot! What do they expect?

OK, stupid parable, but I was outraged when I heard Obama talk about making the American people ‘whole’ (!!!) by ‘going after’ the bonuses. Unbelievable. This is so Orwellian and Matrix-y.

Chad Rushing March 21, 2009 at 2:40 am

mark, that’s a great analogy. I have found that a single, good analogy using common, everyday situations can enlighten the man on the street far more than all the textbooks in the world.

AC’s comment on “altering the deal” was very apt, too. If I was a business owner, I would opt to liquidate before accepting a federal bailout of some kind with all the strings that are sure to be attached.

Does anyone want to make any predictions over whether or not AIG will end up going bankrupt eventually anyway?

bummer March 21, 2009 at 4:39 pm

when government steals money and decides to hand it out again, the recipient holds a politically conditioned loan that can be taken back at any time. It means that if you are subsidized, you are nationalized in principle.

No, we are ALL “nationalized in principle”. The critters can rummage through all of our wallets and our lives regardless of whether we have been “subsidized”.

Also, the executives who pocketed the compensation were not forced to pay it back. Those taxes are coming from the company. AIG got screwed twice; first paying off the executives, then paying tribute to Washington.

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