Contracts are Sacred EDITORIAL
LIBERTY, August 13, 2012 - It is interesting that the very financiers who created the Mortgage Crisis and the Great Recession of late 2007 were paid enormous salaries and when the idea was floated to not pay their enormous salaries it was identified that they in fact had contracts requiring that they continue to be paid those enormous salaries and that the contracts were sacred. The government bailed them out and their salaries were paid.
However, when the auto industry had to be bailed out by the government, the contracts of Union Auto Workers were NOT sacred. They were thrown out and re-negotiated.
Whether or not a contract is sacred must depend on whose contract we’re talking about. Sometimes contracts are sacred and sometimes they are not.
Also before the collapse happened the salaries of Wall Street executives were justified as incentive pay. Their salaries were an incentive to keep them working hard to make huge profits for their companies.
However, as soon at the collapse happened and those huge salaries and bonuses came into question, those very salaries and bonuses were re-characterized as Retention Bonuses that must be paid to them otherwise they would leave.
Retention pay. Don’t forget it!
And we used Government, Tax Dollar Bailout Money to pay them.
You must be kidding me!
Source: The Price of Inequality by Joseph Stiglitz