Sunday, March 22, 2009


I have yet to see any widely distributed pundit make what I believe to be an obvious point regarding Congress's attempt to confiscate AIG executive bonuses:

The single most important determinant of economic recovery is confidence in the financial system. Predicatability is essential to confidence. One would be reluctant to drive an automobile if sometimes the steering wheel affected the direction of travel and at other times it did not. We would not use microwave ovens if sometimes they warmed our frozen burritos at at other times responded with a mechanical boxing glove sock-in-the-face.

Predictability is essential not only to confidence but to progress of any sort. That is the reason, and in fact the only reason why we have written laws and why we enforce contracts. What Congress is doing with this retroactive abrogation of contacted terms is destroying the predictability necessary to economic activity. It is undermining confidence that companies and individuals can plan and function without being frustrated by the unpredictable emotional tantrums of our elected officials.

I doubt that our elected officials have any idea at all how much real damage will result from their opportunistic grandstanding.

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