(NOTE: This is the latest in a series of articles and commentaries written by Gotham team members that we will be featuring here. This piece originally ran on ENR.com.)
Let's tax away AIG's bonuses because we now own AIG. And let's try to prevent Wall Street traders from running the world economy over a cliff. But don't pretend that we will ever tame big corporations or even bring executive compensation under government control through regulations. Business isn't fair.
After the crisis has passed, President Obama and the Democrats will have to step aside and let American business run on its own without trying to micromanage executive compensation, union organizing and other matters. Otherwise we'll waste years with experimentation and controversy, as FDR and the New Dealers did, instead of letting their sound reforms (the FDIC) and basic Keynesian stimulus do their work. The risk of a D.C.-centric economy is that investors will just sit on the sidelines.
We have a capitalist system that needs to be bailed out and re-regulated but sooner or later we must return to capitalism and all its potential excesses to produce more wealth and jobs.
For some perspective, let's talk about trust-busting Teddy Roosevelt. I love almost everything about him, including his personal bravery and environmentalist drive and his actual voice (but not his imperialist warmongering). I'll refer you to historian Richard Hofstadter, who pointed out that a lot of the trust-busting was not a true expression of class conflict and that Americans are basically at peace with corporate capitalism as long as the job-creation machine is keeping most everybody warm and dry. That populist rhetoric is a disguise for the accommodation we have with large corporations. And that there is more consensus in American life than class conflict.
Manhattan Island was settled by Dutch traders and the very first financial panic, in 1792, came only five years after the ink was dry on the Constitution. Changing the culture of Wall Street is about as likely as Bernie Madoff getting birthday cards from his former clients. Take the AIG bonuses as just another burst of excess that needs to be turned back. Right now I'm more concerned about keeping America out of the soup kitchen than whipping up a populist storm about the malefactors.
Richard Korman is the editorial manager for ENR.com.