Poor judgment

The action Congress took last Friday to tax AIG's and other bonuses at 90 percent is wrong on so many fronts that it's hard to decide what argument against them to bring up next. Here's one that hasn't been been discussed in newspapers and blogs so far.

It's poor judgment to select someone to take charge of an organization and then nitpick or second guess his or her decisions. Instead, the selected person should be judged on results -- did sales increase, is the company more profitable, is there less employee turnover, have contributions increased, are patients happier, are fewer lawsuits filed against the entity, etc. -- depending on what the selected person was hired to do.

In the case of AIG, Edward Liddy was hired to shut it down, with minimum loss to the government and minimum disruption of the financial system. He hasn't yet done that but we knew it would take a while. AIG is large and has tentacles all over, so its liquidation will take time. While Liddy is engaged in doing what he was hired to do, he must be given the authority to make decisions. What he decides must be final, otherwise all the people he deals with will know he's powerless. A powerless CEO is worse than no CEO.

It's counter-productive to countermand a CEO's decisions. If Liddy approves of bonuses, those bonuses must stand. Liddy weighed the arguments for and against paying the bonuses before he approved them. (AIG was legally obligated. AIG needs the people who got the bonuses to help with the liquidation. The bonuses are a lot of money but the cost of not paying them would be more.)

Obviously, if Libby's overseer loses confidence in him, Liddy has to go. Apparently that hasn't happened. If it does, the debate should be over whether to keep Liddy or fire him, not whether this or that Liddy decision should be reversed.

In Congress, irrationality trumps thought and common sense. It shouldn't but it does. Capricious, ever-changing, ex post facto rule-making makes people nervous and destroys their confidence in government, besides which it's unjust.