[Economics] Creepy suit-and-tie Wall Street elitist cretins say they deserve their huge bonus checks, even in the wake of multibillion-dollar taxpayer bailouts--simply by virtue of their being "high earners." (Apparently, in this vernacular, being a "high earner" is not the same thing as being "rich." "High earners" are those who fully expect to be rich one day--which means that denying great wealth to high earners is just as wrong as denying housing to the poor, or health care to the middle-class.)Larry Meyers, who is noted for having successfully reached the age of 43, puts it this way: "Say I’m a banker and I created $30 million. I should get a part of that.” This makes some sense, except for the fact that Meyers neglected to mention exactly how he "created" this $30 million or what he means, exactly, by the "creation" of money.
If money is "frozen work"--that is, a symbolic representation of productivity--then we would expect the most productive people in society to earn the most money. Now, of course, sometimes it's hard to gauge relative levels of productivity--if today Peter Potter turns out 13 ceramic vases, five coffeecups and one ashtray by mistake, is he more or less productive than Nancy Nurse, who bandages eight wounds, administers 43 doses of medication and accidentally spreads staph infections to two patients?
Nancy gets paid more than Peter--but if Larry's paycheck is 40 times that of Nancy, does that mean his supposed "creation" of money has the same productivity value as that of somebody who can bandage 320 wounds, administer 1,720 doses and spread 80 staph infections in one day? Or throw more than 520 ceramic vases, 200 coffeecups and 40 ashtrays? What the hell does Larry think he's actually doing all day in that magical office of his? Talking on the phone and typing on a computer, just like the rest of us.
From what I gather, there are folks out there whose sole reading material consists of Forbes and The Wall Street Journal, who wouldn't give the time of day to a starving cat in a lifeboat, and who sneer at those of us who would rather spend our money on art, books and music than derivatives, stocks and mutual funds. Do these people have souls? Are they even human?
But, for some reason, they seem to think that all these multibillion-dollar bailouts--the ones that we, along with the youth of America and generations yet unborn, have somehow "agreed" to foot the bill for--are well-spent on their Hummers, summer homes and impromptu jaunts to Europe.
Perhaps I'd feel differently if I were a Hummer dealer, a Hamptons real-estate agent, or a European. But, frankly, I'm not convinced.
—Brandon Burt
I think it's called issues of entitlement...
ReplyDeleteYet to be fair, we have have it on the low pay scale too.
To pull out of this mess, I think we need to treat the issues, in addition to the symptoms. If not, I believe it will happen again to our chidrens, chidren.... when the opportunity is there again.
What if Larry's firm wasn't bailed out by the government and he made budget? He did his job: Why should he not be compensated as before?
ReplyDeleteMain Street seems to have a misconception about Wall Street bonuses. Bonuses aren't gifts: they are the major part of the overall compensation package and people work very hard for them. Wall Street traders in general are underpaid on their salaries and the firms use the bonuses as both carrot and stick. When you do well, bonuses are up, and vice versa. That is the contract.
The models for payout vary from firm to firm but usually a trader knows what to expect from year to year. Thus mortgage, school, car payments etc are based not on the relatively small salary but the bonus, which can be 50% to 400% or more of the salary.
Traders are under a lot of pressure to not only do well but to increase production by at least 10% yearly. Perhaps a better model would be to increase the salaries and decrease the bonuses so that there is less drama and more stability on incomes. Certainly those in management and risk control should understand the products they are managing.
Everybody wants to punish all the bankers for the current mess, but what people don't understand is that most bankers are decent hard working people who had nothing to do with the sub-prime or CDS fiascos. Usually it was one small desk or group of people within the entire firm who took the bad bets, and they are all gone. Surely upper management needs to be punished, but your average working stiff is as much a victim as anybody else. How many college funds were wiped out when the company stock options were eliminated? How many mortgages are suddenly unmanageable? How many in their forties have to unexpectedly figure out a new career? 99% of Wall Streeters are not John Thain, and they are being hit very hard because of the irresponsible actions of a very few.
Garet Wright
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