Bailout EnvySeptember 25, 2008
One game that I often play with executive clients at The Darden School is called the Pepulator Simulation. In this game, participants can do better for themselves by being cooperative rather than aggresively competitive. Sometimes early on in the game that is exactly the behavior I observe, cooperation. But later in the game things often change, tough situations lure participants into an “us versus them” mentality. At the end of the game some executives will take actions which are demonstrably and obviously not in their best interest just so that they can keep another player from doing well. During the debrief of the game, when strategies are discussed openly, they struggle to construct cogent explanations for their self-defeating behavior. The actual explanation is quite simple. They let envy, jealousy and pride cloud their thinking in what amounts to a very low-stakes class exercise. I’ve also run it with run it with non-executive participants and the result is the same.
U.S. Representatives and Senators now find their email and voicemail boxes full of vitriolic opposition to any government bailout package for the financial services industry. There can be no doubt that the vast majority of these individuals who are so adamant in their views have a very thin understanding of what is actually being proposed (This is my profession, and there are parts I don’t understand). There are legitimate areas to be concerned about here, questions of power and oversight. Whether this ends up being good or bad for U.S. taxpayers is debatable, with much of the uncertainty tied to what the government pays for the assets it is buying and what it will receive for those assets when it sells them. But I deeply suspect that the details of the plan are completely beside the point for many Americans.
The strong public outcry against the bailout is about envy, envy of financial services executives who for many years have made incomes that are hard for many of us to comprehend. We would rather see them made low, humiliated and trotted about with scarlet letters than accept policies which might help ourselves but spare them their comeuppance. And some of them deserve just that, but many of them are probably guilty of nothing more than being successful and making a lot of money. Right now that seems to make little difference to a lot of people. As does the fact that many of these individuals, both in firms that are the targets of government actions and those that are not, have seen their own equity positions pummeled of late. The market isn’t capable of throwing them in jail, but it has already exacted a heavy penalty on their wealth and future earnings prospects. But reason has no place when envy and jealousy instruct our thoughts. Get them all!! Get them now!! And to hell with using any taxpayer money to help them out —- no matter how badly it hurts us. We will go down with them, but at least they will go down. Bring on the Great Depression!