The media's outrage over AIG's most recent conference at a resort in Phoenix - after being bailed out by the federal government - has led politicians to call for more oversight of the company and its spending. But according to entrepreneur and Business & Media Institute columnist Dan Kennedy, the outrage is misplaced.
But the furious news segments glossed over the fact that the company's conference - reported to cost $300,000 - was likely funded by outside investors, not AIG. Kennedy explained:
The facts about these big AIG meetings are that sponsors, predominately financial product providers and other vendors, subsidize large portions of the budgets for these meetings. They directly underwrite or reimburse for expenses as well as rebate after the fact based on sales made to and through AIG. Attendees also pay to attend.Story Continues Below Ad ↓The $300,000 cost of the event splashed all over the TV screen in reporting on this is likely the budget but not the actual, net cost incurred by AIG. Further, these types of events are part and parcel of fueling sales in advance and rewarding salespeople for results.
Further, Kennedy argued, politicians should know that more oversight of the bailout money is nearly impossible.
The politicians who propose micro-managing these companies' use of funds are nothing but blowhards. They know full well such oversight is impossible. Once funds are lent or invested, they merge and commingle with all other funds and no one can trace a dollar spent on a spa treatment for a top producing sales agent's spouse back to its origin.
Kennedy suggested politicians and journalists take business classes, or hire well-versed advisers, before pontificating about things they don't understand.
This incidental example gets to the core problem with almost all politicians' meddling with business, and all media's reporting on it. They are pontificating about things they do not understand, opining about things they are ignorant of.Read the full column at the Business & Media Institute's Web site....
In short, our present economic trauma has much to do with our electing ignorant, unqualified dunderheads to Congress, and employing equally ignorant journalists to serve as the public watchdogs over them. We need smarter, more knowledgeable people in these positions.
Editor at Large
Comments Policy
At least
November 20, 2008 - 10:40 ET by VonuMoney is not being wasted. In fact they are such good stewarts of the bailout funds, lets throw another 50 or 100 billion their way. At least we know they won't use the money to produce gas guzzling, air polluting cars and trucks. In fact, you can bet they won't produce anything at all except a giant flushing sound.
I think its amazing how
November 20, 2008 - 10:55 ET by GraysonI think its amazing how "concerned" congress is about this 700 billion dollars. Why the hell aren't they equally concerned about the rest of the money they spend?
11/20/2008
November 20, 2008 - 11:00 ET by billbIf I'm not mistaken, Waxman has set this date for a hearing on Fannie/Freddie that was requested by Republicans. I don't see it on the C-span schedule. Does anyone know if it's on or not?
sorry nathan
November 20, 2008 - 11:08 ET by candanceWith respect I disagree and find the "outside investor" explanation rings hollow. Why couldn't those investors use some of that extra cash on actual problems instead of a resort?
This is akin to someone borrowing money from a church to pay their heating bill and then the pastor catches them eating dinner at Outback because their friend had the money to buy dinner....
I'm a typical white person.
what do you mean Palin's wardrobe didn't really cost $150,000?
November 20, 2008 - 12:30 ET by mom_roxI'm not surprised the media does a 'cursory' investigation, and they go with the most sensational headline.
Candance, I disagree with your example because the friend should be able to choose how he spends his money. It's his prerogative to spend the money on the family's utility bill (bailing them out?) or taking the family out to dinner or saving it for a college fund or blowing it at a blackjack table.
I don't want the government 1) telling me how to spend my money or 2) taking my money because it knows how to spend it 'better' than I can - e.g., corporate bailouts, inefficient government programs, etc.
The Axis of Taxes: Obama, Pelosi and Reid (source unknown)
I think you overlooked the part
November 20, 2008 - 13:19 ET by WhoIsJohnGaltabout compensating/rewarding top producers. I work with an individual who thinks that brokers commisison should be curbed if the company is taking bailout money. While I don't agree with the bailouts, if you do not reward salespeople the way that the rest of the industry does, they will find someone else to sell for, or something else to sell. And then where is the company's ability to remain viable and payback the bailout money when all the sales talent leaves?
And if a vendor compensates the producers by underwriting their ticket to the getaway...that is the way the vendor chooses to spend their money.
I think the author hid the nail on the head in every respect. These bloviating idiots in Congress and the media somehow feel qualified to digest and regurgitate the meat of a situation without any knowledge of the subject matter. This became obvious to me back in the early eighties when an American submarine struck a Jap fishing trawler and they excoriated the captain for not coming alongside the stricken boat and bringing fisherman aboard. So much the media and politicians had no clue about...
when you talk comissions
November 21, 2008 - 14:05 ET by patmac49when you talk comissions ,that is money earned...trips like this are luxuries and should be curbed until the companies balance sheet is healthy...this is just one of theproblems with this whole situation..if the gov is going to pour money into failed business,what is the incentive to be more efficient..these people reimburse the taxpayer for this trip
RESCIND THE RMD
November 20, 2008 - 11:12 ET by billbI don't hear any talk about rescinding the Required Minimum Distibution. This law requires people over the age of 70 1/2 to sell a portion of their retirement. We are required to sell after taking a huge loss because of the collapse of the stock market. This law needs to be rescinded. Seniors have NO make up time! I've lost 40% of a well balanced portfolio and now must PAY TAX ON THE LOSS. Where is the AARP?
rewards?
November 20, 2008 - 11:29 ET by jackie3The company is in dire straights and they are rewarding their sales people with a resort conference? WTF? Maybe it's AIG that needs the business classes?
Never under estimate the power of stupid people in large groups.
That's simple-minded logic
November 20, 2008 - 13:24 ET by WhoIsJohnGaltIf you don't pay salespeople what they have earned, they leave. Then who sells? I know your answer...someone else will sell. Yes, but who? Who (worth their salt)will work for them when they have decided to stop paying their salespeople the going rate (resort joints included)?
It's folly to think that you can get from Washington DC to NY with five gallons of gas simply because you believe gas is too expensive and you refuse to pay for ten gallons. That's your logic.
Where will they go?
November 20, 2008 - 14:08 ET by WagaIn normal market conditions, you're probably right. In this market, where will these top salespeople go? With thousands of people losing jobs in the financial sector, I'm pretty darn sure these salty salespeople will stay put and feel grateful for earning their commissions and appreciate the recognition during tough times.
If they're all selfish bastards jumping ship because AIG cancelled their spa retreat, I seriously doubt they're the type of loyal employees that would foster positive morale for the company anyway.
selfish
November 20, 2008 - 15:03 ET by cassratThey aren't "selfish Bastards". They are mostly indipendent contractors who sell hundred of thousands of AIG products. The resort stay is a bonus for good sales. This tends to give incentive to the salesmen to do good next year so they can win the trip again. Seems to me it is a good deal for AIG.
Never try to teach a Liberal to think! It wastes your time and annoys the Liberal.
now that the american
November 21, 2008 - 14:13 ET by patmac49now that the american taxpayer is bailing out aig,it should come down to what is good for us not aig..that have given up the right to be so self centered
AIG
November 20, 2008 - 13:17 ET by east tennessee johnWhat does AIG care? Afterall, Hank "the Hammer" Paulson knows Goldman has a big AIG position, so they aren't going to be allowed to fail. 9 weeks into "we got to have this our the economy is going to fail" and dollar 1 hasn't made it into the marketplace to relieve the "credit crunch". We just got fooled again. Where's Soros been?
Sorry I don't buy it. I
November 20, 2008 - 12:12 ET by UtherpendSorry I don't buy it. I work for a multinational corporation and they waste massive amounts of money on events and seminars to useless locations. These are the same corp leaders that told the working poor here that since the company took a hit with Countrywide that we wouldnt be recieving our yearly bonuses, even though we made over our prjected profit.
"If you love wealth more than liberty, the tranquillity of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you
Why should NB defend this?
November 20, 2008 - 14:01 ET by WagaWhen NB defends this type action, it justifies people saying Republicans just don't get it. Even if AIG didn't have to pay for most of the costs, and even if it were held to introduce fantastic new financial products and to reward top salespeople, this looks just as bad as Big 3 auto CEOs flying private jets to DC to plead for public funds. Sure, they're entitled to do it, there's nothing illegal or immoral about it, but it plain looks bad.
Would typical Americans care or know AIG's excuses? Even if the MSM reports it fairly and openly, most people will not accept these reasons. Many people don't even know the Democrats control Congress.
Instead, during tough financial times, it's far better to err on the safe side and protect whatever image or reputation a company has. It is said that "perception is reality." AIG, the Big 3 and others seeking bailouts should not only understand this principle, but apply it. I'm sure its top sales will understand the cutbacks and hopefully the company will rebound next year to reward them then.
As for NB, please don't even go there--you'll lose touch with the common folk and be perceived as too right wing to have credibility and in turn taint your other more legitimate posts.
Defend it
November 20, 2008 - 15:11 ET by cassratWaga,
Why do you automatically equate NewsBusters to the Republican party?????? The purpose of NewsBusters is to expose BIAS in the MEDIA. The (supposed) purpose of the Republican party is to provide the voters a conservative alternative to the Dumbacrat party. Not equal in any way. I guess you could come to that conclusion since the LSM is so in the tank for the Dumbocrats that exposing their BIAS would seem to put you on the side of the Republicans.
Never try to teach a Liberal to think! It wastes your time and annoys the Liberal.
Of course it is
November 25, 2008 - 05:47 ET by WagaOne may not necessarily equate NB to the Republicans, but certainly it's right leaning. The main posts are more favorable to the right, and as for the comments--anyone who'd write "Dumbacrat" is probably rooting for the other side.
Bill O'Reilly might claim he's a "traditionalist" but his ideas are clearly conservative. In the same way, I don't disagree that most of the MSM is left leaning, but it's awfully hard to deny NB is gosh darn "traditionalist" too.
Of course it is
November 25, 2008 - 05:47 ET by WagaOne may not necessarily equate NB to the Republicans, but certainly it's right leaning. The main posts are more favorable to the right, and as for the comments--anyone who'd write "Dumbacrat" is probably rooting for the other side.
Bill O'Reilly might claim he's a "traditionalist" but his ideas are clearly conservative. In the same way, I don't disagree that most of the MSM is left leaning, but it's awfully hard to deny NB is gosh darn "traditionalist" too.
If people want to spend
November 20, 2008 - 15:13 ET by katainkentIf people want to spend this kind of money, more power to them. Seriously! It helps the economy when money is flowing from businesses to service industries and everyone is happy.
However, when you've hit the point in a business financial situation where you have to be taking money from the government to make ends meet, you have to start rethinking your business practices. Corners need to be cut and incentives need to be scaled back. Very soon we're going to be looking at an employers market. The jobless rates are climbing.
Bucking the reality that we're very likely leaving the lavish lifestyle to perhaps a slightly less so (or.. *gasp* frugal) one, doesn't do anyone any good. I mean, if I had to borrow money from my parents to make my bills I sure as heck wouldnt be spending $50 for lunch.
That aside, I think the media hyped it. Scratch that class warfare itch and make it bleed.
member of the Conservative Independant Witness Protection Program since Nov. 5, 2008
They don't need more oversight they need to go bankrupt
November 21, 2008 - 08:46 ET by PopularTechAIG should have went bankrupt. The fiscal socialist policies of Bush are getting embarrassing. Since when did capitalism = nationalization of the financial sector?
I agree more oversight and regulation is a bad idea but that is ignoring the real point, that AIG should have failed.
Censored Global Warming Videos