AIG

AIG, one of the biggest financial institutions in the world, received $85 billion last fall in order to stave off failure. They are now receiving another $35 billion for the same purpose. At the same time, however, they are paying out $165 million in bonuses. Bonuses! There is general outrage about this not because of the total amount (it's merely pocket change compared to other stimulus and bailout dollars) but because employees who ran a company into the ground are receiving extra financial compensation for failing. If the local bakery employees suck, the bakery folds and they lose their job. If the massive multinational corporation employees suck, they get a bonus!

Auto Company Bailout

The big question on Capitol Hill is whether or not the government should provide billions of dollars to the big three American motor companies--Ford, General Motors, and Chrysler--in order to keep them out of (probable) bankruptcy. The basic argument is as follows: The three car companies directly employ about half a million workers and indirectly employ about two million. If they go out of business the national unemployment rate would quickly go up a few percentage points. Yikes, right? The argument against the bailout is that these are three poorly run companies, dinosaurs of the past who have not changed with the times, and should therefore die just as any business would that doesn't offer a good product.

Both arguments have merit. In a recession, conventional wisdom goes, the government should increase spending and fuel the economy while it's down. Of course, there is also basic capitalistic theory that says companies must offer a good product or die. So where do I fall on the auto bailout? Not sure.

I'm leaning toward letting them fend for themselves simply because there are lots of innovative businesspeople out there who will fill the void. Who doesn't think there will be brilliant people who step up and create a big, successful auto company to fill the "American-made" slot? Perhaps, instead, the big three auto companies will step up to the tough situation and get better. Novel thought? My guess is that either option will result in better cars. The worst option? Give them unconditional money. My fingers are crossed.