Monday, November 17, 2008

Wired-o-Nomics: Wall Street Bonuses and Abortions

Ever since Congress threw $700 billion at financial institutions to help prop up the economy there have been a handful of reports about idiotic corporate expenditures, like $500,000 off-sites. These incidents speak to a massive disconnect with reality and create a public relations challenge but, like congressional earmarks, the money involved is relatively insignificant.

More serious is the question of whether Wall Street Masters of the Universe should get bonuses this year, at least at those institutions receiving taxpayer money. These year-end bonuses involve staggering amounts: in 2006, USA Today estimated that the collective pool was just a hair under $24 billion, which "works out to an average bonus of $137,580 for every person employed in the financial services industry."

In ordinary times we mere mortals may merely be disgusted by this sort of excess. This year, it isn't just about other people's money. Now, it’s ours. And our representatives have a compelling interest to make sure on our behalf that it isn’t spent on $6,000 shower curtains.

But the laws of economics are not suspended even in challenging times. Retaining top talent always requires what the market will bear, not what a politician thinks is fair. Still, the giver (or in this case, conveyer) of largesse ought to have some say in how money can or can’t be spent, right?

(Read the entire post on wired.com's Epicenter blog)

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