Getting Paid to F*** Things up

Oh how dreary a time it is to be a closet economics wonk.

Nicholas Kristof has a superb column lambasting Lehman Brothers CEO Richard Fuld, who earned $17,000 an hour to drive the 158-year-old company into bankruptcy.

Awesome job. As Kristof notes:

These Brobdingnagian paychecks are partly the result of taxpayer subsidies. A study released a few weeks ago by the Institute for Policy Studies in Washington found five major elements in the tax code that encourage overpaying executives. These cost taxpayers more than $20 billion a year.

That’s enough money to deworm every child in the world, cut maternal mortality around the globe by two-thirds and also provide iodized salt to prevent tens of millions of children from suffering mild retardation or worse. Alternatively, it could pay for health care for most uninsured children in America.

These bailouts (Bear Stearns, Fannie Mae, Freddie Mac and now A.I.G.) are the perfect example of corporate cronyism in government. All the profits are capitalized into swelling paychecks for executives (instead of going to the lower ranks -- median household income has gone up by a little under $12,000 since 1965) and the losses are socialized.

Europe and all people opposed to unfettered free-markets rejoice!

In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.

“I fear the government has passed the point of no return,” said Ron Chernow, a leading American financial historian. “We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams.”

The bailout package for A.I.G., on top of earlier government support for Bear Stearns,Fannie Mae and Freddie Mac, has stunned even European policy makers accustomed to government intervention — even as they acknowledge the shock of the collapse ofLehman Brothers.

“For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example,” said Mario Monti, the former antitrust chief at the European Commission. “They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior."

Hooray for free markets!