Abuse Begets Abuse
Saturday, March 21st, 2009Most people would agree that the government giving gifts to a small number of corporations is wrong. It falls outside the powers and thus the rights of the US federal government, and thus it is also unconstitutional, for those who think there’s any value left in that document.
The problem with doing something wrong is that it often generates even more wrongs. Now that my money has been stolen to reward AIG’s failure, the US house of representatives has felt the need to selectively punish the same corporation it wrongly gifted. In passing the bill that taxes select AIG bonus recipients at a confiscatory 90% rate, 328 ignorant congressmen violated Article I of the constitution twice.
Most people need to be reminded what section 9 of article 1 says: “No bill of attainder or ex post facto Law shall be passed.” A bill of attainder is, per Wikipedia, “an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial.” An ex post facto law is a law that “retroactively changes the legal consequences of acts committed or the legal status of facts and relationships that existed prior to the enactment of the law” (per the same source).
Ex post facto, really? Yes, the bill would make the 90% tax on AIG retroactive to December 31, 2008.
This is a solution that pleases a very angry and very dangerous president. For those willing to defend Obama’s actions, imagine the havoc for which this precedent paves the way. Think about a Bush-like predecessor, perhaps. Do you want this person arbitrarily gifting favorite companies, or arbitrarily punishing companies that have fallen out of political favor?
There is no justifying either the bailout or the punishment. “But, we had to bail out AIG and these companies…” Well, no. By allowing AIG to succeed, we reward failure, and instill a system that will create larger and larger corporations. That should be frightening to even the socialist left who likes the idea of government control over corporations.
Instead, AIG and ilk should have been allowed to fail, or better, do whatever it had to in order to figure out how to survive. The outcome? Lots of people would probably have suffered. Better “lots” than “all.” But what positive might have come out of this? Perhaps ingenuity from some of the bailed out companies, cleverness that would have enabled their survival and advanced our survival skills in the face of severe economic problems. Perhaps the failures might even have signalled the end of monstrous corporations like AIG, begat by a widespread lack of trust in them; this failure might have led to the rebirth of small, competitive financial firms with little political power. I know who would be happy with that!
The cynical, conspiracy-theory side in me says that all of these events are scripted. From failure (long predicted by sensible economists) to bailout to revenge, it’s all about granting the monstrously bloated US federal government even more power over you.
Too bad for all of us that a petulant Obama will likely get his way for a while.
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