THE AIG Bonuses and Altruistic Punishment March 24, 2009
Rick Newman of U.S. News makes a key point about the rage unleashed by the A.I.G. bonus mess: it’s easy to understand. Americans are unsurprisingly angry about the economic chaos of the past year and a half, and certainly there’s been no dearth of righteous fury and populist outrage. But it hasn’t quite had a good target: yes, people can rail against the banks, but they’re a kind of amorphous villain, and in any case we’re relying on those same banks to get the economy moving again. And yes, there was John Thain, with his eighty-seven-thousand-dollar rug, but those expenditures had happened before Merrill received any bailout money, and in any case he hadn’t been at Merrill Lynch when it had made all of its awful bets. The A.I.G. bonus-getters, by contrast, were responsible for helping run the company into the ground. They are being paid with taxpayer money. And they’re getting compensated despite, by all indications, performing badly. The whole thing seems designed to demonstrate Wall Street at its worst: short-term profit being put ahead of the long-term health of the company (that’s why this small division of A.I.G. made these massive bets which put the firm on the hook for hundreds of billions of dollars in losses); pay for not-performance; and a refusal to change even after everything has fallen apart.
It may be true, as Andrew Ross Sorkin has argued, that not paying the bonuses would actually end up hurting taxpayers, either because we’d be setting a precedent that contracts can be easily broken or because we need to keep the A.I.G. employees in-house lest they start trading against the company. (I don’t buy either argument, but I can see the logic behind them.) But I think it’s pretty clear that even if the “this will hurt you more than me” argument were true, it would not prevent people from wanting to get the bonuses back. Myriad experiments in behavorial economics have found that people are willing to pay to punish members of a group whom they believe to be shirkers or free-riders. In other words, people are willing to make themselves worse off (they have to pay their own money) in order to insure that others don’t get undeserved rewards. Economists call this “altruistic punishment” (because the punishers are putting the interests of the group ahead of their own interest), and argue that it played an important role in fostering cooperation. So even if people believed that getting the A.I.G. bonuses back would be a net loss for the economy, chances are they’d still want to do it.
To be sure, cutting off your nose to spite your face is generally a bad economic strategy, which is why the legion of bailouts we’ve made since last September (including paying off A.I.G.’s counterparties) have, for the most part, been necessary. It’s been expensive to bail out the banks, but as Lehman Brothers demonstrated, it would have been far more costly to let them go under. But when it comes to the A.I.G. bonuses, the costs of clawing them back are trivial at best, while the public satisfaction at seeing what feels like justice being served will be great. Getting all worked up about this money may not, strictly speaking, be rational, but I think that paradoxically, if some of this money is clawed back, it’ll increase the chances that we’ll be able to keep dealing with the ongoing crisis in a rational way in the future.
25 random things about Singapore Youth March 18, 2009
this is fucking funny, got it from mengs.
By Daniel Reimold WORLDWIDE, randomness has reached a tipping point – and you can blame Facebook. The social networking site has got millions generating a list of their innermost quirks called, somewhat unimaginatively, ‘25 Random Things About Me’.
In the past six months that I’ve lived here, I have worked with, observed and come to respect one native group more than any other.
Youth.
So to my friends and family back in the United States, here in Facebook lingua franca, is a list of ‘25 Random Things About Singapore Youth’:
1) They speak to me softly in perfect English, then turn around and scream in Singlish to their friends.
2) They SMS with a speed and frequency that makes my own thumbs sore from sympathy pains.
3) They admit they are apathetic, and speak about it passionately.
4) They complain about the lack of culture on their school campuses, then immediately go back to studying.
5) They wear their emotions and intentions on their chests in the form of T-shirt sayings. A few of my favourites: ‘Little Miss Giggles’, ‘I SMS Your Mum’ and ‘Are We Having Any Fun?’
6) They are extremely quiet in class, but downright chatty one-on-one.
7) They love David Beckham. They lust after George Clooney.
Apparently, procreation is not their forte. At this point in their lives, they could not care less.
9) Marriage is not yet on most of their minds. Instead, they say they want to keep getting red packets of some kind.
10) Romance is not an art many young males here have mastered. I recently overheard two young women complaining that their boyfriends had surprised them on Valentine’s Day with gifts – a schoolbag and an external hard drive.
11) They are incredibly, falsely, modest. They know they rock. Just don’t tell them to their face. They’ll look at you like you insulted their mother.
12) They are way too polite. I asked a young woman to take my picture in front of the Merlion. After she snapped the shot, she thanked me – apparently for the once-in-a-lifetime chance to capture me on film.
13) Speaking of photos, they pose for them everywhere. I recently saw a group of students smile for multiple pictures with their taxi driver at Clarke Quay. He was smiling too. The meter was running.
14) A few engage in ’serious blogging’, but most just blog about their friends and pets and upload pictures of last night’s dinner.
15) They are very productive during classes – at catching up with friends on MSN Messenger and updating their Facebook status.
16) They remain sceptical of their country’s growing global status, often asking me ‘Why would you want to come here?’
17) They already express nostalgia for days gone by, at the ripe old age of 17.
18) The few young men who have long hair seem to be teased mercilessly by friends, and hit on frequently by strangers.
19) They catch catnaps at the most unlikely locations – bus stops, campus canteens, even the school library.
20) Their eyes have a tint of worldliness to them, especially the young men who have been through national service.
21) They passionately watched something called ‘The Little Nyonya’ until recently, but not all will admit it publicly.
22) They think it is funny that Singapore has a professional basketball team.
23) They love their parents, but they definitely do not tell them everything.
24) They love to dance …
25) But it does not mean they have rhythm.
This list may be random, but they make modern Singaporean youth truly an enigma – a mystery I cannot help but gawk at and adore.
Dr Reimold, 28, is a Fulbright research fellow serving as a visiting scholar at Nanyang Technological. University.
In betweens March 13, 2009
In betweens are the worst kind of place one would want to be stuck in. You could arguably say perhaps that you would rather be in a gray area than stuck in an abyss. In the spectrum of colors, black is well, the black sheep of the family. It is resigned to absorb all frequencies of lights and with no light at the end of the tunnel. Other than firms who rationally would like to be in the black, no one wants to be black-marked.
Yet, it is the dissatisfaction and inertia of being in between two stages that in my opinion makes it the worst position to be in. For in the throes of hardship, there emerges two categories of people; those who resign to their dreadful fate, or cling onto hope with blind faith. The futility of trying to outmaneuver an inexorable destiny brings acceptance, while hope, however thin, brings optimism. Acceptance and optimism are emotional states that one would much rather possess than constantly being trapped by mediocrity.
It’s like a friend whom you can’t quite open yourself up to, though you hang out all the time because of circumstances. It would be inappropriate to classify someone like that as a close friend, wouldn’t it? That would make him/her an in-between friend, which makes it even worse than an acquaintance, whom you couldn’t care less about. The obligation to maintain a level of cordiality would wear one down. It is precisely these claustrophobic in-between relationships which we form, where the desire to be liberated stems.
It’s like a partner with who you possess excellent chemistry but whom you simultaneously harbor nagging doubts about. It’s like the ex-boyfriend whom you are still cuffed to but still can’t quite get out of your life. Or it could even be the guy that you have been sleeping with whom you find yourself slowly falling for. Some say choice liberates people, but the very freedom to choose one’s destiny is the reason why many are stuck in a rut. At least during a mid-life crisis, while one contemplates the passing of youth, and imminence of old age, there aren’t decisions to be made, as the only way forward is seniority.
Like a GPA that is higher than a second lower but falls short of a second upper, in betweens to me, are the worst kind of place one would want to be stuck in. Are you an in between?
Random Rant March 2, 2009
I am so upset that I miss Coldplay and Rachael Yamagata live while I am stuck in Kingston. Boo.
