The great Jewish philosopher Maimonides wrote that a person who has suffered misfortune feels less miserable when confronted by a person in a more calamitous situation than himself. Similarly when dejected people see others who are more privileged than themselves, their sense of despondency is increased. People who are unsuccessful find it difficult to observe the success of others. One of our challenges is to overcome this negative envious trait and be happy for others even if we personally are experiencing setbacks.
Of late, it seems to me that Americans, on the whole, have failed in rising to this challenge. As the financial crisis was unfolding last summer, workers at American International Group's (AIG) financial products division were offered bonuses for remaining in their jobs for a specific period of time. At the end of last year, AIG became contractually obligated to pay those bonuses. A public outcry ensued when, this past week, it came to light that one hundred and ninety million dollars worth of these bonuses were paid out. This culminated this past Thursday with the Congress passing a law that slaps a ninety percent tax on the bonuses paid out to employees of AIG.
Whether it was fair for these employees to receive bonuses is irrelevant. As children we all learned that life is not fair. Whether they deserved the bonuses is also irrelevant. Even the fact that these bonuses were given to people who helped create this financial mess is not important here.
What is significant here is that there was a contract which obligated AIG to pay retention bonuses to these people. It was the Torah that introduced the concept of private property rights and contractual obligations to the ancient world. Western law has in many ways been inspired by that ancient code. The knowledge that property rights and contractual agreements can be enforced is the backbone of any successful economy and civilized society.
Honest and decent people abide by their contracts unless there is a mutual agreement to do otherwise. Backing out of a contractual agreement because its obligations became unpopular is deplorable. AIG chief executive Edward Liddy did the right thing in paying these bonuses. It was absolutely wrong and unethical for congress to use their legislative powers to essentially void contracts that were made in good faith. The fact that this was done simply because the contracts became unpopular in the eyes of an envious and indignant public makes it all the more abhorrent. This is a dangerous precedent. Why should anyone trust a contract if, post fact, Congress can use its legislative powers to steal money that was contractually obligated to be delivered?
Ultimately I believe that the public outcry against these bonuses is derived from envy and resentment against those making more money in a time when many are losing their jobs and homes. But instead of pandering to this character flaw, politicians should be standing up for what is right and honest. We need to remind them that following public opinion is not leadership. Real leaders lead they don't follow.
