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.
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.
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.
Read the full column at the Business & Media Institute's Web site.