AIG, more facts, and more framing

[drwex]

Thursday of last week I pointed out that the truth of the AIG situation is significantly different from the public frame in which it has been presented.

Yesterday, the NYTimes published an Op-Ed piece that was the resignation letter of Jake DeSantis, an AIG Vice President. The online version is here: http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=2&pagewanted=1 (probably requires registration. bugmenot is your friend.)

DeSantis points out several facts:
- people who ran very profitable business units within AIG are being penalized, despite having no association with the group that created the financial disaster
- most of the people who created that disaster are now long gone and so are escaping the barrage.
- the monies paid were not bonuses; as noted, they're deferred compensation, contractually owed to individuals who took much lower salaries (some as low as the symbolic $1) in an effort to prove that they could do well.
- crippling the profitable parts of AIG, including driving out the people who made those parts profitable, makes it much harder for AIG to repay the taxpayers' monies.

I continue to believe that these facts will have no impact on the broader debate.

It's also interesting to see how the "house fire" frame is being used. I believe it was Barney Frank who first made the analogy of the AIG situation to that of someone who smokes in bed and sets his house on fire. No matter how culpable that person is, the reasoning goes, it's still in everyone's interest to put out that house fire lest it endanger the lives of other people in the house or the houses of neighbors.

The "house fire" frame invokes a notion of immediate emergency, requiring all-out response. Even in cases of arson (Bernie Madoff, anyone?) you put out the fire first and then search for the arsonist afterward. Fires bring to mind the idea of a public hazard, which is a useful tool for people like Frank who have to explain to ordinary Americans why they should care about the collapse of big Wall Street firms full of overpaid white guys.

DeSantis attempts to fit his situation into this framing, making the analogy that his group was like the plumbers who did their job properly and are not responsible for the careless electricians whose faulty wiring burned down the house. I'm not sure if this is a deliberate act of framing or just DeSantis responding to the prevailing frame.

Comments

[badseed1980.livejournal.com]

Yeah, DeSantis is an MIT alum, and someone in my office sent this out to the research group today, to give some perspective.

Quinn McRantypants

[harlequinaide.livejournal.com]

This isn't about AIG. Yes, one of the divisions of AIG made mistakes in trying to capitalize on their three (then two) star lender rating. Yes, everyone in the company (including their largely unconnected auto and home insurance departments) is being punished. But it's not about AIG, anymore. They're the tangible face of an intangible problem. Human beings can't be effectively angry at "the financial system," and it's really hard to get a proper mad on about "credit default swaps."

But AIG? A company who... well, most people don't know exactly what they did, but they took money and then paid "bonuses," and that has to be bad. I mean, we wouldn't do that, right? If we were owed a contractual payment of some kind from our company, we would forgo that payment because of these tough economic times, right? Because it's the right thing to do, right?

AIG is the face of the problem. People who worked there made decisions to maximize the profit of the company that relied on the housing market (in particular) expanding at the same rate every year. Being mad at them is much, much easier than actually putting in the work to understand the whole mess, and ignorant righteous indignation feels really, really good. Much better than confusion, or impotent rage.

Over 100,000 people work at AIG. They are real people, with real lives. Well, some of them are. Some of them are probably caricatures, twirling their mustaches and snickering while the financial markets burn. I mean, I bet Joe Cassano has a dog with a mustache who snickers along with him.

AIG is the scapegoat. It doesn't matter what really happened, where the responsibility lies, or how complicated it is. AIG is something we can get angry at. How can reality possibly matter, in the face of all that human emotion?

Re: Quinn McRantypants

[xthread.livejournal.com]

Yuppers, on all counts.

Re: Quinn McRantypants

[drwex]

I agree with the gist of your rant but I think it misses the larger point, which is an analysis of the frame in which blaming can happen. There are lots of frames that include components of blame and it's certainly true that humans want a personal face on whatever/whomever they're blaming. But blame is a wide and varied thing.

[xthread.livejournal.com]

His comments align pretty closely with my expectation of what was actually going on.

I've been a bit surprised that no one has yet used the 'why are you trying to shoot the firemen?' frame or anything like it.

[gentlescholar.livejournal.com]

I would be more of the attitude of,
"The scammers are smart, and lots of them have flown the coop.
Let's hunt them down wherever they are hiding now, and hit the
right target for a change."

My own emotional reaction is, "Don't fall for the decoy! DON'T LET THE BAD GUYS GET AWAY!"

Then again, ever since 9/11 I've been thinking about writing a novel entitled
simply, "Aim."