23 March 2009

Bonuses, Bailouts, Social Media and Anger

President Obama's communications people are making the argument that the AIG bonuses issue is an obsession for the Beltway chattering class but little more than a distraction for the rest of us. So just for kicks, I went over to Blogpulse to track mentions of "AIG" in the blogosphere over the past six months - as well as mentions of AIG and "bailout" together and AIG and "bonuses" together. Here's what I saw:

Not surprisingly, online chatter about AIG spiked when news broke about the company's "retention bonuses." The smaller blue spikes coincide generally with news about more taxpayer dollars going to bail out the company, as the yellow lines tend to show. But since the blogosphere tends to extend beyond Washington DC, I'm thinking it's a fairly major topic of discussion these days. Nearly one percent of all blog posts Blogpulse monitors mentioned AIG on a single day.

Looking at the chart it's easy to assume, though perhaps not conclude, that people are not necessarily angry about AIG getting bailed out, but they're angry about AIG getting bailed out and AIG employees making large sums of money in the process.

But there's more to it than that. To me, the anger is so strong because people feel this information has been intentionally hidden for so long, and because people don't feel they have any ability to correct a mindnumbingly obvious problem. And more importantly, developments in both mainstream and social media over the past few years have given people the expectation of more access and control.

The development of the 24-hour news cycle by cable networks such as CNN conditioned consumers to expect news as it happened. As other networks and news outlets were forced to compete, consumers were literally inundated with information. They remain so to this day.

As social media technologies developed and matured, consumers began to share their own voices and created a new set of expectations. Consumers often want news to fit their own world view, so they go to the outlets that suit their ideology or interests. They helped shape the news by providing faster and more powerful feedback. Finally, consumers started reporting the news themselves - we hear about earthquakes and terrorist attacks via twitter before any news network can even get the sattelite truck in place.

These developments have created a cultural shift and have altered our expectations for information. While it's never really been acceptable to cover up injustice, it's easy to argue the frustration is amplified today.

This cultural shift remains at odds with some of America's most venerable and powerful institutions. Wall Street, certainly. Many corporate board rooms. The halls of Congress. And yes, at times, the traditional media.

The AIG situation is just the latest example. Look at the relatively slow pace information has been released and the questions that remain unanswered - who are the 11 people who received "retention bonuses" but are no longer with the company? Who negotiated the bonus agreements? Who rejected the Senate provisions capping executive pay in the bailout legislation?

To be fair, I think it's understandable at times to want to resist providing this kind of information. But this isn't one of those times, and there's been a profound cultural disconnect between the Washington-Wall Street axis and the rest of the country - and that disconnect has played itself out through social media channels.

Bloggers call you out when you call a cap of $500,000 on annual executive pay "draconian." Or when you call struggling homeowners "losers." Or when you ask for only half of the bonuses back. People see the hypocrisy of railing against "socialist" healthcare or insisting on "merit pay" for people like schoolteachers - all while threatening armageddon if trillions in public funds aren't handed over to banks without strings, and then given away in annual bonuses for an underperforming derivatives trader worth more than a schoolteacher will see in several lifetimes.

But what really sets people off is when you try to hide it or, when discovered, spin it. Some advice: bottom line, the public is going to find this out eventually. Don't prolong the agony - come clean, say you're sorry, and show how you won't do it again. Subpoena-driven drip, drip, drip stories like this one will kill you. Further, don't insist that the people who caused the problem are the only people who can fix it. It's just not true.

In my career in politics and communications, I've heard the same refrain from corporate execs, lobbyists, and politicians more times than I can count - "it's not our ideas or our actions that are the problem - we're just not explaining them very well."

In this case, actually, the people understand you just fine. The solutions are obvious. That's why they're so mad.


Prometeo said...

A whole nation can't be fooled. The AIG mess has sparked an outrage because bloggers and other alternative media have spread the word and created a general knowledge about the problem. Something that the mainstream media can't do because of space-time-liberty to report limitations.

Tim said...

The Obama folks seem to be ignoring the truism that perception matters. For this reason, the argument that the AIG bonuses amount to only one-tenth of one percent of the total bailout package is of no comfort at all. The bailouts are symbolic of a corrupt and broken system. The guy most responsible for the AIG mess, Joseph Cassano, has raked in $280 million in his 8 years at the company. We now know that money was undeserved, but will Cassano be required to return any of it? Not likely. The bonuses are just shit icing on a crap cake.

mothergoosemouse said...

Thanks for calling out Washington for their role in this mess, both sides of the aisle. As infuriating as the news has been regarding AIG, it really makes me angry to see Congress all up in arms, full of righteous indignation.

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Anonymous said...

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.