The difference between the UAW and AIG

More

Why did the government require that automobile companies adjust their compensation contracts downward, but not AIG? The question has come up a lot. Ezra Klein says:

The reason for this is haste rather than malice: The AIG bailout was a rapid effort to avert economic collapse. It was meant to address insolvency, not labor costs.

I think that's true, but here's another question: Even if the government had all the time in the world, how on earth would it have negotiated labor costs with AIG? (Assuming that the contracts had already in place, as I believe they were when the first AIG bailout was announced.) AIG's financial products unit isn't unionized, so who would have done the collective bargaining?


I was talking about this issue earlier today with Matt Yglesias, and we agreed (at least I think we agreed) that there there would have been a collective action problem: It might be perfectly rational for AIG as a whole to adjust its compensation downward in exchange for bailout funds or the avoidance of public ire or whatever. But it would not be rational for each individual employee of AIG do reopen his or her contract. So how would the compensation adjustments have worked?

Jump to comments
Presented by

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.
Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Politics

Just In