A Capitalism for the People: Recapturing the Lost Genius of American Prosperity

A Capitalism for the People: Recapturing the Lost Genius of American Prosperity

A Capitalism for the People: Recapturing the Lost Genius of American Prosperity

A Capitalism for the People: Recapturing the Lost Genius of American Prosperity

Excerpt

Have you ever received a death threat? In the United States death threats are very uncommon, at least among the law-abiding. Yet a friend of mine actually received one. His transgression? He worked as a consultant for the now-infamous insurance giant American International Group before the 2008 financial crisis. AIG had been so pleased with his performance in devising a mathematical risk model that it offered him a noncompete contract: a sum of money meant to compensate him for agreeing not to move directly to another company or to start his own hedge fund. This is a standard corporate practice that allows companies to retain talent, but unfortunately for my friend, his payment under the agreement was to be made at the end of 2008—just after the biggest government bailout in financial history, with the US government lending $223 billion to AIG at favorable conditions to prevent it from failing. If you find it difficult to appreciate the magnitude of this bailout, consider that it was as if every household in the country had lent AIG $2,000. Thus, few were surprised by the public anger that exploded after the revelation that the insurer, despite its catastrophic performance, had paid $165 million in bonuses to its top executives.

My friend’s noncompete contract was one of those bonuses. Even before the scandal, he had received several death threats when a . . .

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