Listening to CNBC this morning and the topic of the AIG bonuses came up yet again for the 50th time in the last 24 hours. I hesitate to comment, but feel compelled because of the not-so-subtle defense by the business media. The arguemtn is that the high salaries are necessary in order to keep the talent on Wall Street in order to clean up the mess. This whole "talent" thing is outrageous. I know "talented" neurosurgeons and ob/gyns who seem to scrape by on a tenth of what the 15th administrative VP of some failed bank or a salesman at an insurance company makes. And there are tens of thousands of these executives who make millions. The average ob/gyn in New York state (to compare more accurately with NewYork bankers who argue about the higher cost of living) makes $174,000 per year, probably works 60 hrs week, on-call 10 times per month, top of their HS and college class, 12 yrs training post-college, no real income until age 33, etc. I'm not whining, just pointing out what it takes to make $174,000 here in the real world. That's a lot of money.
But a bank executive with 2 or 3 years of post-college education can make six figures by age 26 and millions before the average physician has gotten his or her first paycheck. They need a come to Jesus moment here. These negligent executives are now govt employees and where are they going to go? Back to med school?
The world was supposedly on the brink of destruction last fall and these AIG asshats were gaming the system to make sure their bonuses were not canceled... after all, they have "talent.". And the destruction was directly-- directly-- related to their activities and decisions and "talent." The bill had to be passed RIGHT NOW, or else... and the whole time the taxpayers were being played.
The government did not ask to take on all this debt, they were compelled to do it by the guys that drove the economic truck into the mud. In fact, it smacked of extortion at the time, but now it's clearly apparent that the government was played by all this "talent" on Wall Street.
OK, not all the financial executives were complicit or at fault, I understand that item. But let's look at the other industry that I know well. Despite growing a practice by 6-8% in volume every year, physician salaries peaked 10 years ago in real dollars and have dropped versus inflation. Beginning about 2004, real reimbursement levels have declined every year while overhead (mostly employees' health insurance-- how much do health insurance executives make?) has increased dramatically. Regardless of competetence or "talent", doctors have almost universally taken salary cuts. Furthermore, the current economic downturn has put a freeze on educational expense and bonuses at our particular institution. No more conferences for employed physicians! Is the downturn the fault of physicians in Michigan? Hardly, but it seems we have made more of a sacrifice (however small) than the AIG executives! And that say nothing for the millions of folks who have lost jobs over this.
Is the law to tax executive pay Constitutional? No, it's an ex post facto bill of attainder and will likely wither away into the mist. So all the media elite on CNBC can settle down and sleep soundly tonight knowing that their buddies on Wall Street are not going to have their precious bonuses taxed to death. I don't fault Congress for calling attention to this issue even though it smacks of populism and does nothing to directly address the current crisis.
The fact is that it will take time, perhaps a generation, to burn through all this bad debt that has accrued. Wall Street "talent" will have to acclimate to a different paradigm. If you want to make millions of dollars, you won't be doing it with taxpayer money so you better learn a real talent like solving a real problem or performing a real service and not just dreaming up some bogus financial "product" that the world does not need.