Its time for the quarterly hand-wringing amongst the populace regarding the over-sized bonuses at Goldman Sachs. This Q, its a mere $23B.
The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector — but bonuses are not one of them. [BR: Or, at least not the most important thing to be enraged over]
We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is. You can complain about it, but it is all but pointless. Feel free to pursue a millionaire’s tax of 1% (or 10%) on everyone who earns more than $1m — a super top tier — to pay for health care reform or whatever you want. (Best of luck with that!)
Every few years, we lament overpaid athletes, musicians, movie stars. Bruce Springsteen is going to make $100 million+ this year on tour. While you can complain about it, ask yourself how many people can fill 50,000 seat arenas 200 night a year at $100 a pop. Lebron James, Peyton Manning, and others justify their salaries by generating massive revenue and profits for their employers.
So too it is with Goldman Sachs and others.
The traders who throw off the most profits, the bankers that generate the most lucrative deals are worth tens of millions to their “team owners.” That is how it is, and it is unlikely to ever change.
What should you be upset about?
• Paying people in year one for risks that last years or decades;
• The “privatized gains, socialized losses” of the current system;
• Dramatically reduced competition in the Banking sector;
• The idea that “Too Big To Fail” is now an official policy of the United States;
• The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;
• Bank lobbyists preventing any sort of credible regulation from passing;
• Goldman Sachs wresting $19 billion from AIG;
• The absurd and poorly thought out $750 billion TARP plan;
• The suspension of mark-to-market allowing banks to hide losses and not accurately disclose their bad assets;
• The outsized influence Banks have on Congress and Goldman Sachs has within the Executive branch.
There are plenty of things to be upset about these days. Top performers earning huge paydays at the biggest firms is not one of them . . .
Looking at Wall Street Pay (August 1st, 2009)
Why Financial Reform Died: “Banks Run Congress” (October 12th, 2009)
What’s Wrong With Billionaire Fund Managers? (April 16th, 2008)
Single Best Investment in History = 258,449% (October 12th, 2009)
Derivatives Lobby Corrupts Congress (October 12th, 2009)
Total Campaign Contributions/Lobbying by TARP Recipients (October 12th, 2009)
Top Hedge Fund Earners (March 25th, 2009)