Why would anyone think these guys are worth a tenth of what they’re being paid?
via How obscene Wall Street salaries are proof of market failure – How the World Works – Salon.com.
Who didn’t feel their hackles rise at the mere sight of the headline in the Sunday New York Times business section, “After Off Year, Wall Street Pay Is Bouncing Back”? The notion that “workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began,” is obscene. While the U.S. economy continues to shed up to 700,000 jobs a month, and with trillions of dollars of taxpayer funds keeping the entire edifice of capitalism afloat, those bankers who still have jobs are rolling in the dough, again.
Paul Krugman rages against the Wall Street machine in his Monday New York Times column, making the sensible points that a) the vaunted financial innovations that these high-priced whizzes cooked up did not end up creating net benefits for the U.S. economy and b) that “given all that taxpayer money on the line, financial firms should be acting like public utilities, not returning to the practices and paychecks of 2007.”
The public-utility line sounds like the socialism that the Republicans are always going on about. I don’t disagree with it, but I think it’s more provocative, and perhaps useful, to explicitly argue that outsize banker salaries are a failure of capitalism as it has been practiced in the United States. Viewed thusly, caps on compensation can’t be demonized as “class warfare” but instead are more correctly seen as crucial upgrade to the operating system.
We need common sense regualtion and that includes doing something about the greed as seen in obscene salaries for guys who pushed our economy over the edge. This is not to say I believe it’s all the fault of the bankers. There were and are structural issues with the US economy like trade imbalances, low (sometimes negative) personal savings rates and federal debt that were never sustainable. It has to date been a study in the shibbolith that “there’s no constituency for tough choices”. Props to my New College Poli-Sci professor Gene Lewis for that, it’s as true now as when I heard him say it in classs 15 years ago.
