Everyone's mad about banks spending bailout money! It's outrageous that anyone would take taxpayers cash and then actually use it. These whiffs of populism are like nitrous — a brief thrill that accomplishes nothing.
The legitimate-sounding concern: Politicians want to make sure that bailout money extended to banks is being used wisely. How dare, say, Wells Fargo, throw a party in Las Vegas for its best salespeople when it's on the government dole? Never mind that the government all but forced the bailout money on Wells Fargo, or that the bank, which has managed its mortgage business better than most of its wastrel peers, has thrown this annual party for years, in good times and bad.
This is insanity. How many waiters and blackjack dealers and cooks and singers will lose their job because of cancelled Vegas junkets? As John Maynard Keynes, the father of all stimulus packages, once remarked, one might as well bury banknotes in bottles and pay people to dig them up, if the goal is to boost the economy.
Likewise, complaints about sports sponsorships seem increasingly silly, like the embattled Citigroup's $400 million deal for naming rights on the home of the Mets. Is baseball some subprime sport, undeserving of money? Nonsense.
The problem with the quick-fix drug of outrage is that one rapidly gets desensitized, and has to return to a fast-depleting well. Look at how television news has chased the bull market in outrage:
(March figures month to date)
After the offenses of the primary season settled down — anyone remember Rev. Jeremiah Wright? — outrage cooled, even as the economy fell apart. Where was the outrage then? And why is it just picking up now? It just shows how faddish outrage is.
Gaffe-prone Vice President Joe Biden has offended the American natation industry by claiming that the bailout package has "no swimming pools in this money." We tend to think they're right — swimming-pool bailouts which seemed excessive in January will seem like a matter of national importance by July.
A similarly misplaced pool of outrage: TMZ, a newcomer to financial reporting, tapped into this vein by exposing Northern Trust's no-expense-spared party at the House of Blues in West Hollywood, where Sheryl Crow performed and guests walked away with Tiffany gift bags. Would TMZ rather Crow be unemployed, and the stores of Rodeo Drive shuttered? Covering impoverished celebrities does not seem like a sustainable business model for the L.A. gossip site.
Even normally business-friendly publications like the Wall Street Journal and Bloomberg News are stirring the populist pot, reporting on the PR trouble Citigroup is facing from a remodeling at its headquarters. Never mind that the remodeling is an attempt to squeeze its bigwig quarters from two floors down into one and rent the extra space to save money — it's money being squandered on offices for executives!
Nikki Finke at Deadline Hollywood Daily shows the desperation of a hopped-up addict in trying to whip up a frenzy over a marketing deal between Bank of America and DreamWorks Animation's Monsters and Aliens. Your tax dollars paying for 3-D movies! (How much did this cost? Kim Masters reports $175,000.) What's next? Are we going to boycott banks which give away toasters?
The other outrage of these increasingly minor outrages: That they distract from real offenses, like the compensation schemes of AIG, Merrill Lynch, and the rest of Wall Street. These need reform, but not the kinds being proposed. Instead of capping bonuses and salaries — a quick hit of populist satisfaction — we should be looking at how these contracts, which pay out in fair weather or foul, ever got signed in the first place. Any contracts which do not tie pay strictly to performance, over the short term and long term, should be strongly discouraged, perhaps with punitive taxes. But limiting businesses' ability to pay people who actually make money for their employers seems silly.
The whole reason why the government is bailing out banks is to make sure they carry on business as usual. And that business involves sales, which requires paying salespeople, and marketing, which requires spending to get one's name out. The whole scenario the government is desperate to avoid is one where the financial sector curls up into the fetal position and stops spending altogether.
We find ourselves agreeing, a bit uncomfortably, with former AOL Time Warner executive Bob Pittman, who has called for a bailout of the advertising industry. With the likes of TMZ and Finke fulminating against the slightest hint of commercial activity, is it any wonder banks are afraid to announce their presence to the world?
The economy is in recession, one that looks like it could last for years. Wasteful spending, per the wisdom of Keynes, is what we need. It's time to stop crucifying banks which throw bashes. Instead, let's hound the ones which don't. Parties for everyone, on the taxpayer's dime! It's the only patriotic thing to do.