Wednesday, April 22, 2009
Money is money. Kevin Drum discusses the article-du-jour about Wall Street traders aghast at the notion that they are perceived as greedy or overpaid. The article is full of a lot of guff from the Masters of the Universe about how this is unfair because "we're in a hypercapitalistic society" and nobody minds if A-Rod makes $300 million. And my point isn't necessarily to dispute either of those points. The reason these guys are overpaid, and will never get that, is their entire attitude about their profession.
These folks believe, and have always believed, that they are involved in an independently significant industry, like cars or computers or agribusiness or something. They aggrandize themselves as a "sector" and equate their profits to the profits made by successful companies that retail actual products and services to the public.
However, they are not like these entities at all. They claim to provide "financial services," but what does this really mean? For many, it doesn't mean insurance, or business lending, or any of the other essential risk industries, but rather it means trading, seeking to make money with other peoples money in order to make money for oneself. And these people see this as the highest form of capitalism and further see their own wealth as patriotic, or objectively laudable, as if they have accomplished something, built something permanent besides a large number in their checking account.
Sherman quotes another Wall Streeter who's livid over Obama's plan to raise tax rates slightly on the rich. "He doesn’t want to have any wealth creation," the guy wails, and that really seems to get to the heart of all this. Financial industry players sincerely seem to view all "wealth" as equal. If the market pays you a lot, it's because you're responsible for creating a lot of wealth, and that's that. The fact that the wealth you created was largely divorced from even a notional real-world benefit to the larger economy doesn't matter. Money is money.
This is exactly right. I have had infuriating conversations about exactly this with Republican friends and relations who simply view every tax bill as a crime scene, and believe that any money that is somehow pried free of the market into a form that can be pocketed is "wealth creation," and therefore pocketing it is a moral imperative. In other words, since they became wealthy, they were ipso facto engaged in "wealth creation," and "wealth creation" is good, so they must be good (or, at least, above criticism).
But this ignores the nature of the business, and what they made these fortunes doing. OF COURSE they were able to divert large quantities of money into their own pockets. There is nothing surprising about this - they work at the intersection of all the money in the world. There are not many thirsty people living next to (or standing in) rivers.
But on a deeper level, that metaphor is all wrong. These traders don't seem to realize that this money is not a naturally occurring phenomenon. Nor is this money in its roaring billions something they themselves have made, like a car or a pizza or a clean carpet. Rather, this great tide of money is something to which they have attached themselves, in order to profit. Each and every dollar in the flow comes from somewhere. Each of these dollars belongs to someone until these guys extend their arms and catch a hatful. And the hats are scooping whether the stream grows larger or smaller.
This idea is kind of ripped off from Matt Taibbi's absolutely spectacular takedown of the moronic letter from AIG trader Jake DeSantis published in the NYT whining about how he had been victimized by the change in the political winds. Taibbi just crushes him with a mallet:
He acts like he's a victim because he didn't get to keep his after-tax bonus of $742,006.40 in the middle of a global depression. And he really loses his fucking mind when he writes:
"None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house."
First of all, Jake, you asshole, no plumber in the world gets paid a $740,000 bonus, over and above his salary, just to keep plumbing. Second, try living on a plumber's salary before you even think about comparing yourself to one; you're inviting a pitchfork in the gut by even thinking along those lines. Third, Jake, if you were a plumber, and the electrician burned the house down -- well, guess what? If you and that electrician worked for the same company, you actually wouldn't get paid for that job.
Out in the real world, when your company burns a house down, you're not getting paid by that client. It's only on Wall Street, where the every-man-for-himself ethos is built into an insanely selfish and greed-addled compensation system, that people like you expect to get paid in a bubble -- only there do people expect their performance bonuses no matter how much money the shareholders lose overall, no matter how many people get laid off after the hostile takeover, no matter how ill-considered the mortgages lent out by your division were.
You expect that money because you think it's owed to you. But what money? The money is gone. Your boss, if not you, set it all afire. You want the money, but where exactly do you think it's coming from?
Do you just not understand that that money now would have to come out of someone else's pocket? That it would have to come from middle-class taxpayers, real plumbers, people who didn't make millions over the years in equity and commodity trading?
Here's the real problem with people like Jake DeSantis. Throughout this whole period, they never were able to connect the dots -- to grasp the fact that when they skimmed a million here or a million there off the great rivers of capital that flowed through their offices, that that money came from somewhere, from someone. To them, it wasn't someone else's money, it was just money, and why shouldn't they have it?
It's remarkable that when DeSantis, in his letter, touts the reason he deserves his high compensation, all he can talk about is how much money he made: "The profitability of the businesses with which I was associated clearly supported my compensation."
For a guy like this, his worth as a human being is wrapped up in buying a bag of beans for $10 and selling it for $11. He states this like it's a law of nature: he was a good equities-and-commodities trader, therefore he should make a lot of money.
Only a person with a habitually overinflated sense of self-worth could think he deserves a $700,000 retention bonus, even if it has to be paid by taxpayers, when in reality no one "deserves" that much money. It may be that some people do get paid that much, but most people who make that much money have enough sense to realize their cushy lifestyles are an accident of fate, of birth, of class, not something that is "supported" by some unwritten natural law of compensation.
Hey Jake, it's not like you were curing cancer. You were a fucking commodities trader.
Johnny Cash image stolen from Matt Bors - I didn't come up with it, I take no credit for it. If you like it, go buy the shirt.