I have recently been chatting about recent events with some of the people that I live with, namely, the whole fiasco with AIG handing it's executives a massive bonus with the bailout money that came in. They were pretty vitriolic about this move and pointed out that these guys probably have no concept (or more likely, don't care about) the public image that such an action has.

Personally, I can understand why they would make such a move, and it all comes down to incentives. AIG does need to make sure that capable businessmen are in charge, and paying them out is a positive incentive to make sure that those who were there that are good businessmen would stay there. If all the talent ended up leaving the company, like rats fleeing a sinking ship, it would be just as disastrous as not handing them the bailout money in the first place. Of course, understanding this is completely different from supporting it.

The issue that I want to explore is the one of incentives, especially for those who are in power and/or are already wealthy. In this case, we have a business that needs to keep operating, and, more importantly, needs reform. How can we ensure that the management that fucked up in the first place won't continue the same poor practices that cause the difficulties the second time around?

The other difficulty comes in with more with a culture thing. The only real negative incentive that seems to be employed on a professional level is firing or threatening to fire someone from their position, but this doesn't work when you're looking to leave because the company is going to sink. Are there examples where an iron fist has helped solve the problem by forcing those who caused the difficulty in the first place to clean up their mess? How can you enforce this in a culture whose money will easily be moved out of the country, soon to be followed by the owner, free from prosecution for the vast problems caused by them?

So, I would like the heart of this thread to talk about Incentives, and how to effectively apply them.