I don't know as that there is much of substance on my mind today. I have been mulling over a few thoughts during the recent weeks however, and I thought that I ought to throw some of them down on "paper". The one of which is my theory relating to large financial institution bonuses, why they are paid out, and why certain people get them. If you'll allow me, I'd like to make a comparison to modern sports compensation.
Would you say that currently, professional athletes receive justifiable pay for the service that they perform? Maybe some of them do. I would wager that the majority of players are payed a "reasonable" salary for their skills. They make money for the franchise, and the franchise rewards accordingly. There are a few, however, that are paid far in excess of any reasonable rate. Tiger Woods earned, last year, $110 million, according to Forbes Magazine. 110 million dollars!! Now to be fair to Tiger, much of that was from endorsements and other business deals. But the next down, Oscar De La Hoya earned less than half that: 43 million, and I don't see any Nike Air-De La Hoyas. I could go on but it's more of the same.
Now, to make the comparison, why are these athletes paid so much? Well, the only answer that I can really give is that they are good at what they do. Right? They must be so above the best, that they deserve to be given such amazing returns. I hear very few people decrying exorbitant athletics pay. I can only assume it is just therefore. Now a banker has really one job, much like an athlete does. A banker's job, however, is to make money. A great banker will expend all of his options to make the most money possible off of money that he receives, and we would expect a great banker then to use that money to make...more money. If we apply the model set forth by professional athletes then, a great banker should then be paid very well for doing his job well, correct? So there you have it: a banker who makes money and is paid for making money. The result is money, money, money.
One more point on this topic: Perhaps all of this anger toward Wall street is caused by the fact that they weren't honest. Perhaps it is justified by the fact that the people we once thought were there for us, turned out to have only self interest as motivation. If this is true, then I expect us to apply the societal norms which are applied to professional sports, which are: If you've cheated, lied, run illegal drug rackets, or used drugs yourself, it's ok. We realize that you are the best at what you do, and we couldn't find another to replace you. Therefore, go thy way, and sin no more. Because we need you for next season, otherwise we won't have a chance at the championship.
1 comment:
Good observations. I'll tell you that if you and I could sit down for an evening, we'd have a good discussion about this and the "invisible hand" and consumer sovereignty, and greed and market failures, and ultimately, the corruption of society that will end with the Millennium.
It's a complex set of topics, to be sure. P.S. You should read the book The Armchair Economist. It's thought provoking and comical. I Think you'd like it.
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