Saturday, March 14, 2009

Teacher Pay for Performance and A.I.G. Bonuses

If anyone thinks teacher (or doctor) pay for performance won't distort education (or health care), consider the curious case of A.I.G. The division, that wrote trillions in risky credit default swaps with no capital reserves, will pay $165 million in bonuses to executives who imploded the firm.

How can anyone get a bonus for digging a $170 billion hole? It's legally required in A.I.G's pay for performance plan. From corporate board rooms to our hallowed halls of government, leaders operate from bad theory.

Don't spread the poison, President Obama. A.I.G. is but the latest gross example.

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