The Corner

AIGS AND PAINS

I’m no fan of what was done by the folks at AIG (who can be?) but I find it impossible to disagree with this comment from the New Republic’s Noam Scheiber:

As for the consequences we can’t foresee, most of them relate to the precedent of taxing income retroactively, which seems to introduce a level of arbitrariness that can’t be good for economic growth. My only hope is that there’s a hidden genius at work here–a kind of unintentional good cop/bad cop routine. That is, maybe the House’s efforts will get the AIG derivatives-meisters to cough up their bonuses, which will appease the public a bit and make the new law moot. But even then the precedent is pretty ugly. Getting people to hand over money under the threat of legislation that will take it from retroactively is pretty damn coercive. There are third-world juntas that would think twice before doing this.

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