Economics

Ron Hart on the Notorious AIG

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Da plane, boss, da plane!

Columnist Ron Hart:

Claims by AIG executives that they deserve the bonuses are credible, since they were smart enough to effectively steal $170 billion taxpayer dollars in the first place.

It is rich that Congress, which ran up an $11 trillion deficit, bankrupted the country and then raised its own pay, tells others how to run their financial affairs.

This is particularly ironic as it relates to jets (which, behind other people's pay, is the only thing Congress seems to fixate on) in light of Nancy Pelosi's demand for a larger personal jet to chauffeur her back and forth to California—presumably so she can preach to us about using too much fuel.

Hart continues: "The great thing about leaving business owners alone is that if they make stupid mistakes, they lose money and go bankrupt. Smarter operators move in and the consumer wins.  It is the purest and best way to weed out bad companies."

More here.

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  1. “The great thing about leaving business owners alone is that if they make stupid mistakes, they lose money and go bankrupt. Smarter operators move in and the consumer wins. It is the purest and best way to weed out bad companies
    _____________________________________________
    nuff said!

  2. “they were smart enough to effectively steal $170 billion taxpayer dollars in the first place”

    My sentiments exactly. Those bastards stole it fair and square. They deserve all they can hang on to.

    Them and the Somali pirates.

    God bless them all and fuck Congress.

  3. The Pelosi jet ‘scandal’ is way overblown.

  4. This is particularly ironic as it relates to jets (which, behind other people’s pay, is the only thing Congress seems to fixate on)….

    According to NPR this morning, they’re also about to fixate on the “free” company cars and gas that GM employees get.

  5. I’m glad Ron Hart is out there preaching to (I hope) the unconverted, but his style grates on me.

    One-sentence paragraphs vaguely connected by a logical structure.

    It’s almost stream of consciousness.

    Does he have an editor?

  6. Good column mostly, but I can’t let this pass: Congress, which ran up an $11 trillion deficit

    Congress, huh? I love how the Bush administration has already vanished from history. Right, it was the Democrats who created the deficit, and obviously they managed to do that in just over 2 years, and blame Obama because he’s been in power 2 months already. Put the Republicans back in office and will be just fine. 2001-2007 just never happened apparently.

    If you voted for Ron Paul at least you have the smug satisfaction of knowing you were right all along, as the country hurtles into the abyss.

    Seriously – Paulson, more than anyone else, is responsible for this fiasco, and he was Bush’s fault. It probably wouldn’t help anything to have Bush and Paulson thrown in jail, but would it really hurt? Shouldn’t we direct a little outrage where it belongs? What short memories we have. And maybe Obama would get the hint if politicians had to start being a little more accountable.

  7. Regarding the jets: There *is* a legitimate difference between Hastert’s needs and Pelosi’s.

    Look at a map – Hastert comes from Illinois, Pelosi from California. That’s about a factor of 4 difference in distance.

    In order to fly from DC to CA, my understanding is that you need a larger plane, in order to be able to fly the whole length without having to stop to refuel.

    Perhaps one of the pilots here can fill in the details, but that it my understanding.

  8. My sentiments exactly. Those bastards stole it fair and square. They deserve all they can hang on to.

    To sum up the libertarian world view:

    If you steal $170 billion from hard working taxpayers, you are audacious and cool. If you try to steal a few hundred dollars from a Burger King you deserve to be shot to death.

    I’m off to rob anon’s house.

  9. “The great thing about leaving business owners alone is that if they make stupid mistakes, they lose money and go bankrupt. Smarter operators move in and the consumer wins. It is the purest and best way to weed out bad companies.”

    Isn’t this all kind of “Duh”?

  10. I’d like to open up government to competition. Let’s elect a new Congress and administration and start a competing government.

  11. Or a competing country! Bring back the C.S.A.

    (I’m not kidding, and no, I am not pro-slavery, so morons need not apply)

  12. J. P. Carlo,

    There are companies that will fly you from Washington D.C. to California or nearly any place else if you pay them.

  13. if politicians had to start being a little more accountable.

    I can’t think of anything less likely to happen, up to and including violation of the laws of thermodynamics.

  14. Yes, the Confederacy has bad juju. How about the Federation of American States? Just to piss off the other government, we can open our country up to new states, like Costa Rica. And Iraq (after which we will invoke posse comitatus).

  15. How about the Federation of American States?

    Sounds good – California should be excluded, though… too many fruits and nuts.

  16. Its telling that most of the notes in this forum is about the damn plane. We have serious problems – not Pelosi’s travel arrangements.

    Its a cheap shot and a false scandal. Let it fucking rest already.

  17. Oh, hi tim. Were all of the other bazillion articles on reason.com deleted when I wasn’t looking?

  18. We could have different states. For instance, we could incorporate parts of California. Like the State of Tahoe.

  19. Its a cheap shot and a false scandal. Let it fucking rest already.

    By my count, three of the five notes in this thread say the same fucking thing.

  20. Yes, all the protests are making me wonder whether it’s more of a scandal than I originally thought.

    Of course, us paying for any of these jokers to travel is ridiculous. If we simply must cover the bill, let them ride Amtrak.

  21. Ron Hart’s column was outstanding. Stream of consciousness, maybe, but he put together alot of thoughts I had about this deal.

    Pelosi’s plane is an issue because Congress made such a big deal out of the private planes that corporate honchos fly.

    Maybe if we moved the capital to the center of the country, the Speaker would not need a bigger plane. We could do like Peru or the EU, and have two capitals: a winter capital in Fargo, North Dakota, and a summer capital in New Orleans.

  22. Or a competing country! Bring back the C.S.A.

    (I’m not kidding, and no, I am not pro-slavery, so morons need not apply)

    Nor am I!

  23. Agreed. In fact, if they feel so strongly about all that “legislation” they want to create. I think they should have to pay for that too. Seriously. Let them hold fundraisers. If the idea really is so great, they should raise plenty of money.

  24. Any congressperson who votes for a new government program, and it passes, must either write a check, accept a “right to lein” on their personal assets, or after a certain time without funding the program ends.
    Those who vote against it don’t have to pay a dime.

  25. Whoever sponsors the bill would get, say, one year to fund it before it starts. In that time congress can vote again to stop it if they so choose.

  26. When you allow monoliths to exist, allowing them to fail under some flippant Libertarian ideology, effectively turns them into a political tool.

    Again, a little “socialism” can save you from a lot more down the road.

    If anything, all of this demonstrates why a Libertarian mindset would likely send the country even further into the depths of serfdom or Socialism as a reaction to an extremist philosophy.

    I know, I know. You guys don’t really believe what you say. It’s just a valve release. Still, it should be said just in case an impressionable soul is reading any of this.

  27. Congress’s criticism of private actors is especially hypocritical given the failure of Freddie Mac, Fannie Mae and the other government sponsored enterprises that played a key role in the real estate bubble.

    The GSE borrowed money with the federal governments credit rating and most of the benefit from that went to the private investors instead of homeowners. They operated within a custom set of laws with the least transparent accounting in the financial industry. They got busted for massive fraud in 2003. They bought up both subprime mortgages and securities based on them. The stocks, securities and bonds were used as legal collateral for banks which brought down such banks when the GSE went tits up. Their mortgage backed securities were involved in many of the credit-default swaps.

    Had the GSE never exited, the real estate bubble and the subsequent collapse would have been significantly smaller or might have never happened at all.

  28. My favorite vote I ever made was against Pelosi. Is it that big a deal to tack on an extra hour to refuel? You’re in a private jet, suck it up Nancy.

  29. “tells others how to run their financial affairs.”

    I’m not sure it’s “others” financial affairs when they have our dollars.

  30. Why isn’t socialism extremist? Even whatever permutation of socialism we’re being threatened with today? It’s certainly not moderate or a proven model in this country.

    As for the more important issue about funding, let me suggest a Hollywood answer: Americathon.

  31. Because its not socialism Pro. That’s the problem. If you cry “socialism” at everything from Nazi Germany to minimum wage laws it makes most people think you’re full of shit when you use that word.

    When Obama took office people owned property, businesses, stocks, etc. And when he leaves people will own property, businesses, stocks, etc.

    SOCIALISM!

  32. My fav is when people hurl the charge at Obama of wanting to make the U.S. like that socialist hell-hole, Sweden. Yeah, when I think of a tyrannical oppressive government I think: Sweden.

  33. “Had the GSE never exited, the real estate bubble and the subsequent collapse would have been significantly smaller or might have never happened at all.”

    You can smell the bullshit from miles and miles around.

    Face it, private actors did amazingly stupid things because there are strong incentives in a market to for humans tendency to irrationally act towards big short term gains and discount the risk and size of large long term losses.

  34. Had the GSE never exited, the real estate bubble and the subsequent collapse would have been significantly smaller or might have never happened at all.

    More moronic garbage from the basement. The GSE set accounted for exactly 14% of the sub-prime loans by numbers and less by dollar volume since Fannie and Freddie could only buy non-conforming low value loans.

    But the Rushnecks gurgle their pablum like cum-drunk whores on Saturday night and there is no “truthiness” to be found on the AM redneck dial.

    Merrill, Lehman, and Bear were the worst of the actors here – and virtually unregulated.

    WaMu failed as a regulated depository bank and was easily absorbed by Morgan.

    But the market fundies don’t give a fuck about reality – it sits on their flat skulls.

  35. Face it, private actors did amazingly stupid things because there are strong incentives in a market to for humans tendency to irrationally act towards big short term gains and discount the risk and size of large long term losses.

    But when they fail, they are the ones to pay the price.

  36. Is it that big a deal to tack on an extra hour to refuel?

    It is for the air force air and ground crews.

    (ok, not a ‘big deal’ but not trivial either. Actually, the problem is that the entire program has been ad hoc since it started under Hastert and is overdue for some standardization and structure.)

  37. Modern small corporate aircraft are extremely efficient and fast. A Cessna Citation X has a range of over 3,000 miles, greater than the distance between Washington, D.C. and California. To play it safe (and probably overkill, actually) this would mean the plane might have to stop and refuel once. By contrast, a larger jet would sacrifice a shitload of fuel economy for the extra range and therefore costing more money in both the cost of the plane as well as fuel.

    Conclusion: Pelosi is a cunt.

  38. I’d like to open up government to competition.

    The Seasteading Institute would also.

  39. But the Rushnecks gurgle their pablum like cum-drunk whores on Saturday night and there is no “truthiness” to be found on the AM redneck dial.

    This is awesome.

  40. This is bullshit. I hate Pelosi, but she most commonly uses the aircraft available that doesn’t need to refuel. The need to not refuel was the call of Sgt. at Arms.

    The irony is that her position has the same need for travel or less than a the leader of a major corporation. Her flying is a matter of national security, third in line, and the CEO flies to ensure deals get done. Same need two legitimate reasons. In the end her pissing and moaning about company jets is two faced, but for another reason.

  41. Hart is about the best libertarian humor writer working. His op-eds speak to the masses and I have seen him on CNN. Very funny guy.

  42. Why are we talking about jets still?

    I thought the more salient point was that it would be way cool to be able to pick up my shit and move out to a nation that cared at least a little bit about freedom.

    Believe me, I would happily found said nation.

  43. Agreed, Hart is about the brightest and most read guy in the South who waves the libertarian banner. He does a talk radio show in our town once a week and makes a power case for less government. Yet he does it with humor that the rednecks understand.

    He said once libertarians say smoke all the meth you want, just don’t be mad if I shoot you when you try to steal my lawn mower.

    He also said Libertarains have about as much power in the GOP as the Log Cabin Republicans but not near as good Halloween parties. 🙂

  44. He also said that “the Democrats would not pull out of Iraq and Afghanistan..they are not organized enoug.they could not even get Bill Clinton to pull out of Monica Lewinsky.”

  45. He also said Libertarains have about as much power in the GOP as the Log Cabin Republicans but not near as good Halloween parties. 🙂

    So true, so true. I was at the California GOP convention last month, and the LCR had a blow-out party. It was Hawaiian themed and I wondered in not knowing who the group was. About five minutes later I realized it was the Log Cabin party, and I had to make a quick escape, lest anyone discover I had been “lei’d” by the Log Cabin Republicans!

    p.s. Another reason is that libertarians never have enough money to host a decent bar.

  46. I think Hart dumbs down his intellect for his columns to appeal to Southern folk. He worked at Goldman Sachs in the day— and I am pretty sure he can take his thoughts deeper; but it would be lost on the audience. He is damn LOL funny though.

  47. This is damn right too: “In the same way we only learn geography when we invade a country, Americans only learned about credit default swaps when forced to pick up the tab for someone else’s poorly calculated risks. Each administration teaches us something. Bill Clinton’s presidency taught a nation about DNA testing on dresses.”

    This cat is deeper than 99% writing out there today. At least those writing out there that are read by anyone.

  48. I loved this column. He is entertaining.

    This is good too

    http://www.youtube.com/watch?v=94lW6Y4tBXs

    If you did not see it.

  49. “Her flying is a matter of national security, third in line”

    This thread is one of the dumbest ever.

  50. Whoah! Whoah! Whoah! Liberal nellies. No one around here worth libertarian cred is saying that Bush wasn’t a free-spending sorority girl. What a lot of us are saying is that Dems have aided and abetted the Bush debacle and now that they hold the reins they are continuing his disastrous path. Where is the change?

    As for Pelosi. I don’t care if she has her own jet. I just think it should be invisible because she IS Wonderwoman. Oh Yeah!

  51. AIG makes a great anal lube.It tastes like shit though.

  52. “We have serious problems – not Pelosi’s travel arrangements.

    Its a cheap shot and a false scandal. Let it fucking rest already.”-tim

    In other words, good peons do not criticize their lord’s and lady’s demagogic hypocrisy.

    The AIG bonus scandal and the outrage over the auto execs flying corporate jets are just as much cheap shots as the criticism of Pelosi’s demand for a bigger plane. Live by the gun, die by the gun.

  53. “I’m not sure it’s “others” financial affairs when they have our dollars.”-MNG

    Everyone remember that sentiment when it comes to issues like universal health care.

  54. Face it, private actors did amazingly stupid things because there are strong incentives in a market to for humans tendency to irrationally act towards big short term gains and discount the risk and size of large long term losses.

    Of course they did. But most of them that did these stupid things were acting with a moral hazard created by the government. Remember Citigroup got bailed out in the early 1990’s. Of course you are going to do much more riskier things when you realize it won’t be your neck on the line if you fail. The “Too Big to fail” mentality is a huge problem in this.

    This principle holds true no matter if it is an individual or a company. The rich kid is going to spend more money recklessly if he knows daddy will always have his back. A person with no support other than himself is going to be much more careful with their finances if their is no one to bail him out.

    And yes, there are strong incentives in a market for humans to act irrationally, but without moral hazard, it is that individual or company who’s neck is on the line, not the taxpayers or the government.

    AIG’s triple A rating. Another thing based in government.

  55. burn the witch

  56. Hart continues: “The great thing about leaving business owners alone is that if they make stupid mistakes, they lose money and go bankrupt. Smarter operators move in and the consumer wins. It is the purest and best way to weed out bad companies.”

    Not true. The business owners don’t go bankrupt. Rather, their corporations go bankrupt, and the business owners take the money and move on, effectively stealing from the corporation’s debtors (such as its ex-employees).

    The purest way to weed out bad companies would be to end the government imposed form of the limited liability corporation. But, tfp, corporatarians.

  57. Not true Dave, the Chapter 11 claw back provision keeps them from taking from the company before they leave. Too, Hart is talking about “business owners” which can be an individual or stockholder.

    Hart is dead on with this column and the other ones that I have seen of his.

  58. Dave W
    Excellent point about the corporate form. It’s not just that the corporations can go bankrupt allowing the owners to move on, but the management can enrich themselves and move on as well.

  59. Bill
    A company can’t pay out generous and perhaps reckless dividends (as long as they don’t do it in some way to obviously defraud debtors), then go bankrupt and the owners liability be limited?

  60. Hey MNG!

    It’s a real pleasure seeing you flail all over the place trying to defend Jimmy Carter II, aka Barack Obama (Teleprompter of the United States).

    How does it feel to have backed a miserable fucking FAILURE MNG?

  61. If a company goes under, as Hart points out, “usually their only asset is a few Senator they have in their pockets.”

    Economic Darwinism is a fine way to sort out the winners from the losers.

  62. Just “Follow the money” folks. Always leads to the Dems.

  63. The problem with Pelosi jet is that she attacked the auto makers for flying private while they were billions in debt and trying to live off the taxpayer dollars while having fraudulent accounting. Yet the Federal Government of which she is head of the House and third in line to the President is trillions in debt, is stealing the taxpayers dollars and whose accounting is nothing but fraud.

    So, lets have both automakers on the dole and government workers on the dole both flying commercial.

  64. Okay, it’s not the dictionary definition of socialism. But that’s discredited, anyway. This is Neo-Socialism, where the illusion of property is maintained, while the government controls everything in practice. Kinda of similar to a socialism practiced during the early-middle 20th century.

  65. Regarding the jets: There *is* a legitimate difference between Hastert’s needs and Pelosi’s.

    How so? They both need exactly the same thing: an airline ticket.

    Its a cheap shot and a false scandal.

    I would agree, except for that Pelosi made private airplanes an issue. Hoist, meet petard. Her standard seems to be “charter flights for me but not for thee.” As an EZ example of the double standards Our Masters have, its hard to beat.

  66. Hart is right, the real issue is the $170 bil, not the BS bonus payments. Only the government can own 80% of a business and trash it verbally to a point where no one wants to do business with it. Yet another management success story!

  67. is any one of you, who posted negative comments, doing anything about your qualm? or are you just spouting off at the mouth?

  68. Reported today that AIG execs who gave back bonus etc quit. The WSJ says causing them to default (likeley) on $234 bil in credit default swaps. Hart is dead on, we are stepping on ants and elephants are jumping over the fence.

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