"Why can't the government act like a free-market entity?" whine executives from companies like AIG (NYSE:AIG). The answer, perhaps: Because it isn't one.
Five AIG executives have threatened to walk if government overseers cut their pay, according to The Wall Street Journal. (Two members of the group reportedly changed their minds over the weekend.)
News flash, guys: There's nothing "free market" about being 80% government-owned, so I wish these people would stop making the "free market pay" argument. In a true free market, AIG would have failed. It would no longer exist, and the market would have rewarded its execs with a salary of zero dollars.
This is a major reason I was always opposed to bailouts for companies like Bank of America (NYSE:BAC), Citigroup (NYSE:C), and General Motors. It wasn't hard to predict that rewarding these businesses' failure would create a field day for moral hazard, and spawn a host of complications and controversies. Complaining about your compensation when you work for a shambling zombie of a company is a woefully clear example.
Maybe these folks should feel grateful to have jobs in the first place. Given how many folks are currently unemployed through no fault of their own, I somehow doubt that a pay-related insurrection will earn AIG executives any sympathy.
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