Kucinich to Citi: "We Own You."

This morning I would have made my conservative father proud. While getting dressed, I quite literally yelled at Dennis Kucinich, who was appearing on CNN, "What are you, some kind of fucking idiot?" Kucinich was bemoaning the fact that Citi, after accepting bailout funds from the federal government, was applying a portion of those funds ($400 M) to become the name sponsor of the New York Mets' new baseball stadium.

Perhaps speaking as a sports fan, Mr. Kucinich's ire could be somewhat justified. I will be the first to admit that, say, the moniker "Minute Maid Park" lacks the magnetic hubris of the late, great "Astrodome." But do I want the federal government messing around with this stuff? No!



"We own you"? Really, Mr. Kucinich? Is that really what you meant to say there? Maybe people would be less put-off by you if only you were a bit less heavyhanded in your approval of actual, state socialism. I'm not the kind of person to make such a charge lightly; in fact, I don't think I've ever called any American politician a socialist, and where I come from, that's saying something.

Maybe it's worth belaboring the obvious on this point: Fortune 500 companies are not in the business of tossing hundreds of millions of dollars into marketing contracts without the prospect of a sizeable return. A part of any major corporate budget is marketing, and to go around clutching one's pearls because the titans of corporate greed failed to suspend their advertising budgets upon receipt of public funds just shows how ignorant (or vindictive) Kucinich and his ilk really are. Advertising is an easy target for these guys, because there's a popular perception that advertising is frivolous business, when really, I think that the perception of frivolity has more to do with the frivolous nature of the public that the ad business must appeal to, than with anything frivolous in the nature of the ad business itself.

Simply put, the money is not being "wasted" just because it's being spent on marketing. Did anybody accuse Apple of wasting money on advertising in the past several years? There are times when the better investment for the future of a business is advertising rather than maintaining jobs. To my knowledge, Citi has not been nationalized as a provider of unemployment benefits, at least not yet.

I don't want to be heard as saying that the mere fact that a large corporation spends its money in a particular way is evidence in itself that the expenditure is a good idea. After all, banks sank billions of dollars into subprime mortgages, and investment banks spent several billion more on the resulting mortgage-backed securities, and those have proven to be disastrous investments. But I think those cases are distinguishable. The mortgage catastrophe has an element of the sorites paradox: a large number of practically identical transactions, no single one of which would have sunk the ship, but whose aggregate effect was to do just that. Nevertheless, in order to be taken in by the logic that because one bad mortgage doesn't kill you, you ought to risk your entire business on bad mortgages required the banks to cultivate systemic ignorance in their employees and management as to one of the most basic functions of any lending institution: managing risk.

By contrast, Citi's purchase of naming rights is a one-off transaction. Sure, it could spell a net loss for Citi, but that's an inappropriate way to evaluate the wisdom of such a unique transaction on the front end. Citi has to evaluate the expected value of the transaction based on what it knows right now; not upon what it will know after twenty years, when the naming agreement terminates. And with a relatively limited number of similar transactions to draw upon, past performance isn't likely to be particularly helpful in this case. I see no good reason to stifle private investment just because a particular transaction happens to be relatively easy to mock.

I am no raving capitalist, but it seems disingenuous to me for the Congress to fail to regulate what the bailout funds could be spent on, and then fly off the handle, threatening hearings and bad press, when the funds were used to pay for perfectly predictable (if not necessarily palatable) expenditures like executive bonuses and advertising. The proper way to channel the funds as Congress intended would have been to attach the strings to the funds on the front end—take it or leave it—not to stage unwarranted attacks ex post. If Congress wanted to put quotas on the number of loans made by Citi and the rest, or on the number of jobs that corporate America should create, then it should have said so in the first place, and conditioned the bailout funds accordingly, since it has the authority to do so. But I seem to recall that Congress' forays into the home loan business had something to do with getting us into this situation in the first place.