Playing with fire

This AIG situation is starting to get out of hand. A Washington Post story this morning describes the firm moving from a state of financial collapse into the beginnings of organizational collapse. Assuming that this reporting is accurate, something very serious is starting to unfold:

 “Hired guards stood watch outside…Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn’t show up at all.”

And then: “It’s a mob effect,” one senior executive said. “It’s putting people’s lives in danger.”… “It’s going to blow up,” said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. “I have a horrible, horrible, horrible feeling that this is going to end badly.”  

The article doesn’t actually technically report anyone outside except the security guards, but the overall sense conveyed is that there are hordes with pitchforks, and it is only a matter of time before molotov cocktails come crashing through the boardroom windows as the frantic AIG employees put out wastebasket fires with their coffees and diet sodas.

There is probably some hype in this story, but there is also real risk that public outrage could turn violent.

Meanwhile, outside the AIG barricades a “tea party” movement has sprung up, with crowds sometimes numbering into the thousands and 115 more parties planned for Tax Day. The media is mostly ignoring it, but the same is not true of blogs like this one.

If you do want a revolution, that’s your business. I can certainly relate to the anger and desire for radical change, and we do have a (long-dormant) tradition of such things. But be very clear about what an uprising means, and be very ready with some plans about how you are going to move forward. And remember that the money is gone. It’s not like we could storm the AIG offices and retrieve our cash from their vault. The money has already been distributed, largely to the people who made the mess, and also to other companies that have received their own bailouts.

As I have said before (repeatedly) the whole system is corrupt and we need to calmly and quietly walk away from it like it is a wounded animal. If we freak out and revolt, there will be a whole additional layer of political repression and property damage that won’t help anyone but arms manufacturers and companies like Blackwater or whatever it’s called. Cleaning up after riots might help the construction industry, but I don’t think that’s the recovery we want.

I’ve already pointed out how much better credit unions are than banks, but that is only part of the equation. There are also a great many cooperative and mutual insurance companies, which redistribute profits back to policy-holders as reduced premiums or outright refund checks. For example, I’m a member of Group Health Cooperative, and over the past several years there has been only one change in my premium – a  permanent (so far) reduction of $4 per month. It’s not much, but it’s the principle.

If you have ever gotten a refund check from State Farm, that’s because it is your share of the profits. This year the dividends are expected to be around $633 million, which comes to an average of $175 per member (although this varies widely depending on your policy). There might very well be overpaid State Farm executives and there have in fact been losses in the last year due to bad investments of their reserves. However, this is a good deal better than the catastrophe at AIG.

I think that if we had had accountability in the firm that essentially insures the world economy, this story would be turning out differently. Or even better, what if we had many firms doing this, in a way that encouraged competition instead of consolidation.

For more information on insurance alternatives, please check out the International Cooperative and Mutual Insurance Federation (ICMIF). Rather than a single “too big to fail” organization, this is a democratic grouping of more than 600 separate insurers with nearly $1 trillion in assets. Oddly enough, State Farm is not a member. Nevertheless, you can find the full list of members (including Nationwide and  Goodville Mutual) here.

They are collectively larger than AIG, and even the Americas Association of Cooperative/Mutual Insurance Societies (AAC/MIS) – one of three member associations that comprise ICMIF – has roughly $100 billion in assets. Rather than loading money onto a sinking ship, we should be urgently exploring the feasibility of  channeling funds into these existing organizations. Existing policies could be shifted into the appropriate members of this federation, with public support offered where they are unable to to pay. 

Not only this, but AAC/MIS  has helped form eight new insurers in the hemisphere. Perhaps they could be recruited to build us a replacement for the now-defunct AIG. Let’s hope so, or we won’t have much of an alternative to the colossal blackmail in which we find ourselves.

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2 Responses to Playing with fire

  1. Pingback: Building an plane in midair (in a thunderstorm) « Cooperate and No One Gets Hurt

  2. Pingback: “Fundamental failure?” « Cooperate and No One Gets Hurt

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