Matt Browner Hamlin has a good catch. Compare New York Times columnist Joe Nocera writing about Wall Street contracts last week ...And the American International Group is contractually obliged to make bonus payments of nearly $200 million in March 2010. The company has promised to try to reduce that amount by 30 percent. But once again, there is nothing Mr. Feinberg can do because those bonuses were already written into contracts — and there is a high likelihood that the bonuses will create another furor in Congress, just as they did earlier this year.... and autoworker contracts a year ago ...
For instance, it is critical for General Motors to be able to break its contracts with both its unions and its dealers. It needs to dramatically reduce its legacy benefits, perhaps even eliminating health care benefits for union retirees. It needs to close plants. It needs to pay its workers what Toyota workers are paid in the United States — and not a penny more. It needs to reduce the number of brands it sells — which means closing down thousands of dealerships, which is difficult to do because of state laws that protect car dealers.It's like certain writers hear the word "union" and the lights shut off inside their heads. (Ruth Marcus is also in the club.) In a related phenomenon during the auto rescues, bond holders at both companies accused the government of undermining capitalism itself when GM and Chrysler went into bankruptcy because some of their contracts were abrogated and they took losses on loans, despite the fact that the procedure was entirely legal and the bondholders came out better off through the government process than if the firms had been liquidated. I'll take them seriously when they're defending everybody's contracts, including those of union workers.
-- Tim Fernholz
Image of an ancient Sumerian contract via Wikimedia.
