The continuing AIG controversy is a textbook example of blaming the market for the sins of government. Rather than allowing a bankrupt company to get its just desserts, the government stepped in and took it over. Now taxpayers are on the hook for billions of dollars in bad bets. And instead of being outraged at the government’s unconscionable use of our money, many are upset at the AIG employees who recently received retention bonuses.

A resignation letter from one such scapegoat highlights the injustice of this condemnation. These bonuses were offered specifically as a way of retaining AIG staff—many of whom had nothing at all to do with the doomed credit default swap deals and understandably were not keen on staying aboard a sinking ship. Now, as a reward for faithfully fulfilling their contracts, AIG employees are being burned at the stake, rather than being paid the bonuses they earned. This witch hunt is reminiscent of communist dictatorships like Soviet Russia; it’s hard to believe that it is actually happening in the land of the free and the home of the brave.

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