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BY JAMES MAO

In print | Published March 19, 2009

In Japan, the shame of failure is, in the samurai tradition, often enough to warrant suicide. Indeed, the country has one of the highest suicide rates among rich countries (the May 2008 issue of “The Economist,” with statistics from the Organization of Economic Cooperation and Development, published Japan’s suicide rate as nearly 20 per 100,000 population). Japanese society’s relative tolerance towards suicide is fueled by its cultural history.

On Tuesday, Senator Charles Grassley (R.-Iowa) suggested that certain individuals ought to take a leaf out of the Japanese book. American International Group executives have been recently blessed with a combined package of $165 million in bonuses — public outrage included free of charge. Grassley offered the following solution: “I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.”

Predictably, Grassley’s PR staff quickly followed up in a statement to say that their senator didn’t really want the AIG executives to kill themselves, it was just that he was disappointed in the irresponsible manner by which they have utilized the billions given to them in the bailout plan.

Nevertheless, I am sure that Senator Grassley really hopes that some AIG executives will begin jumping out of high balconies. It is sad that his spokespeople felt the need to soften his message (“And in the case of the Japanese, they usually commit suicide before they make any apology,” Grassley had tellingly added), because it’s about time that somebody took a firm stance on these AIG characters. Obviously, the government cannot afford to let AIG fall — in fact, it should never have let Lehman Brothers fall — because once those derivatives (trillions of them) disappear, the economy will sink to depths America has not been to in nearly a century. At the same time, the government has failed to make AIG accountable for its actions even while knowing that all these giant insurance companies are reckless and indifferent to public opinion.

This is the real crisis in the economy today – it’s not that bankrupt (in more ways than one) executives are throwing around taxpayer money like million dollar confetti; it’s that nobody in this country has taken responsibility for any action. Condemn the AIG executives all you want, but none of the executives would have had the freedom to assign such lavish bonuses if then-Secretary of the Treasury Hank Paulson had clearly outlined the specific parameters for bailout money use. The rest of the Bush administration and the Democratic Congress should have spoken up at some point, too. Now the Obama administration is threatening to block the AIG executives’ bonus payments — and still no one in Washington wants to explicitly define the legal way bailout money can be used.

While the uproar descends upon a beleaguered AIG, the Internal Revenue Service is scrambling to help the investors who lost billions in Bernard Madoff’s Ponzi scam. The IRS ruled that some investors are entitled to money from “theft loss,” since they were paying taxes on earnings that did not actually exist in Madoff’s fund. Several investors are trying to recover more money from previous years’ taxes, potentially leading to an estimated $17 billion lost in tax revenue for the IRS.

This is probably not what an economy undergoing recession could use right now.

It is true that Madoff’s investors were supremely scammed and that they probably deserve some sort of compensation as the victims of a malicious scheme. At the same time, investing money is always a high-risk proposition. If we want all people to begin taking responsibility for their actions, then Madoff’s investors should do so too. Just as we rightly lambast the huge insurance banks for being stupid with their subprime deals and derivative trading, we should shake our heads at the gullibility of the Ponzi investors — even if we perhaps give them a modicum of compensation to satisfy people’s sense of fairness.

But I would rather not bow to lofty and hazy ideas about what the “correct” thing to do is. I would rather see an age of accountability in this age of Obama. So while I am glad Senator Grassley is the only one to offer a concrete solution (kill yourselves, AIG guys), I hope it’s not the path taken. Let these executives clean up the mess that they created, but also let there be explicit restrictions on their methods. And guarantee that they pay back the taxpayers and the government.

Let the Ponzi victims receive full sympathy from all of us, but also let them know that they should suffer the consequences of their own complacency. Nobody should invest with anybody without making sure the money is there and legal.

Accountability by itself isn’t going to solve the economy’s problems. Without it though, the economy’s problems can never be solved. There are entities that must be supported in order to right the sinking ship (and AIG is one of them), but that doesn’t mean these entities should be allowed to act freely, and have governmental response come only after the fact. In a similar vein, there are entities that we may want to support, but given the current financial straits we may not currently be able to do so. Sadly, victims of scams everywhere largely fall under this category of people the government cannot currently bail out.

Prudence goes hand in hand with accountability. If neither is present as America tries to navigate its way out of the recession, then nobody wins. Then, this capitalist country that has always rejected the shadow of communism will nevertheless find itself forever in a different kind of red.

James is a first-year. You can reach him at jmao4@swarthmore.edu.

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