Friday, March 14, 2014

Bonuses and Bolling

Runaway Wall Street bonuses are something that the average conservative and progressive might generally agree are wrong. Catch this:

Yes, that graph shows that the most recent round of bonuses far exceeds the total amount paid to every full-time minimum wage worker for a whole year of work. $11 billion more in bonuses than for all the wages of full-time minimum wage workers. Just their bonuses.

Alexis Goldstein, a former Wall Street IT worker and now communication director for The Other 98 Percent, was on All In With Chris Hayes last night to talk about the bonuses. The video is here, but I have helpfully transcribed it:

Chris Hayes: We begin with the psychology of bonus time on Wall street. That Jordan Belfort quote is great, because he captures the whole thing: "Too much is never enough." What is the psychology of the bonus on Wall Street?

Alexis Goldstein: You have to understand that the goal of a lot of people on Wall Street is to accumulate what we call "fuck you" money. And fuck you money is basically a sum of money that is so vast, you can go around and you can say "fuck you" to whoever you want, completely without consequences.

CH: That's a perverse desire. I think everyone has had something like that desire, but as a thing to order and structure your life around, it is a bit odd.

AG: It is, and it's very juvenile. Another part of the bonus culture is there's this very strong sense that we deserve this, we earn this, we work harder than everybody else. I studied the right thing in school… you know, maybe these fast food workers, they should have studied harder. And there's this lack of acknowledgement, this judgment, about what hard work is deserving and what hard work is undeserving.

CH: And there's also the aspect to the compensation structure on Wall Street that I think is very important for people to understand. It's a rigged game in many ways in so far as there are ways for Wall Street managers to make money whether the deals they're doing are doing well or poorly…. Even if the deal you created goes bankrupt.

AG: That's right, you get a little cut of commission whether or not your client makes money. I actually had somebody tell me on Wall Street that it didn't matter if you performed as an employee or not, all that mattered was if you had a managing director who had your back. So it's all about kissing the right behind and making sure you rip your client's face off and that you get that commission money regardless of whether or not your client comes out right...

CH: The other thing, and this is true of CEO compensation too, is ... it cannot be the case that everyone is outperforming the mean. There are a lot of people making a lot of money on Wall Street who are performing underneath the average of Wall Street performance.

AG: I think a lot of people believe, genuinely believe, that if they were to go become teachers they would be the best teachers in the world, or if they had to drive a garbage truck, they would be the best garbage truck driver. But it's just not true. They are overpaid for what they do. And there's a subsidy for the biggest banks, $83 billion dollars a year. And what that means is the market still thinks they're too big to fail, so people who loan them money loan it at an artificially low rate. $83 billion a year, and it seems like they're pocketing a lot of that right into bonuses.

While fast food workers have to go on public assistance because they're being paid poverty wages. And, oh, shocker, McDonald's is also getting subsidized in that way too.

As a country we worship the rich and we despise the working poor.

CH: There's a new report today from the IMF, of all people, not a bastion of leftist ideology, saying income inequality is a drag on growth...

AG: This goes back to the "fuck you" money. People who are extremely wealthy tend to hoard their money…
On a similar issue, Jon Stewart had a blistering segment about the duplicity of Fox News covering SNAP abuse (such as the California surfer guy) while not giving a damn about obvious corporate welfare:
Stewart: Congratulations on finding your food stamp abuse Bigfoot. That one guy is certainly not someone the food stamp program itself would probably point to as its greatest success story. But we make fun of you not for finding him, but for pretending that he somehow represents literally millions of Americans. I know I'm being purposely hyperbolic when I say that…

Clip of Fox's Eric Bolling: [surfer dude] is literally representative of millions of Americans.

Stewart: How much is the waste fraud and abuse problem in the food stamp program?

Fox voiceover: More than $3 billion has been lost to trafficking, fraud, and overpayments each year.

Stewart: $3 billion dollars. That's a lot. And I imagine you would agree with me that $3 billion is a lot of money.... So when Congress wanted to end the $4 billion in subsidies that go to already-profitable oil companies, what did Eric Bolling say?

Fox's Bolling: $4 billion is a pittance…

Stewart: $4 billion is a pittance… So what I have learned today from my teacher is that $3 billion of taxpayer money is greater than $4 billion in taxpayer money.
Stewart went on to point out we lose $150 billion a year to tax avoidance through tax havens… and that corporations are using loopholes to pay no tax at all (or even negative).
Stewart: So if surfer guy is a parasite and a rat, I can't imagine what you're going to say about corporations that take advantage of our tax laws and government programs…

Fox clip: It was available, so they took it. Why do we villify companies because they go for the cheap money?

Clip of Mitt Romney saying he pays every bit of taxes that he owes and no more. You wouldn't want a president who overpayed his taxes, right?

Fox clip: If they're doing it legally, what is wrong with it?

Stewart: Just to be clear. So on Bullshit Mountain [Stewart's name for Fox News], this asshole [surfer guy]'s narcissism represents all the Americans who are impoverished and need food assistance. But these asshole's narcissism represents all that is good and decent about America.

Update: I just saw this essay by Robert Reich on Salon about the Wall Street bonuses and the myth that people are "paid what they're worth." Including this quote:
According to the Institute for Policy Studies, the $26.7 billion of bonuses Wall Street banks paid out last year would be enough to more than double the pay of every one of America’s 1,085,000 full-time minimum wage workers.

The remainder of the $83 billion of hidden subsidy going to those same banks would almost be enough to double what the government now provides low-wage workers in the form of wage subsidies under the Earned Income Tax Credit.
That's another way to look at that chart at the top of this post.


Unknown said...

editor's note: billion

"$11 million more in bonuses than for all the wages of full-time minimum wage workers"

Daughter Number Three said...

Thanks... fixed it.