A few facts for the banker bashers (Updated)

Tom Jackson
Mar 23, 2010

 

Connie Schultz had a column in last weekend's Plain Dealer arguing that bankers working for troubled banks should not get big bonuses. She also praises "populist rage." 

Three points that she didn't mention (1) The bonuses she mentions were authorized by the economic stimulus bill that Democrats in Congress passed in February, (2) The language in the bill authorizing the bonuses was inserted by the Barack Obama administration and (3) Much of the money that makes the bonuses possible was in the Wall Street bailout bill supported by many Democrats in Congress. (Let's toss another bouquet to U.S. Rep. Marcy Kaptur, D-Toledo, who voted against the Wall Street bailout.)

Maybe the banker she mentions thought he was entitled to the bonus because Congress authorized it.

I'm sure most people would agree with Connie Schultz rather than me on whether bankers should get their bonuses. I'm part of what is apparently a tiny minority of Americans who believe that a contract is a contract, and that the rule of law is a protection of individual rights that everyone should enjoy. In other words, if a banker hasn't committed fraud or done anything else to void the contract, he should get the bonus he was promised.

The same rule of law that ought to protect bankers also protects workers. If you work under a contract negotiated by your union, your employer can't suddenly plead poverty and take away your raise.

I read a column this week by Peter Thiel (a founder of Pay Pal), and I was struck by his deep pessimism over whether anyone these days wants to hear arguments for individual liberty and individual rights. Thiel suggests that anyone who argues for free markets and limited government these days finds himself "screaming into a hurricane" and says, "The 1920s were the last decade in American history during which one could be genuinely optimistic about politics."

Thiel's sense of alienation resonates with me. I believe in the rule of law in a civil society, but that seems like a quaint notion when the mob is busy trying to punish bankers, and whoever next week's convenient group of scapegoats turns out to be.

UPDATE: Chris Redfern, the chairman of the Ohio Democratic Party, called and pointed out that the original language authorizing the banker bonuses was inserted into the Wall Street bailout bill back in October by the Bush administration.

"There is shared blame and shared responsibility," Redfern said. That's a fair point, hence this update.

 

 

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