February 2, 2009--Eating What You Kill
I have some friends, self-described “corporate types,” who are as outraged at Barack Obama calling the $16 billion in bonuses in which they shared as he is outraged with the fact that taxpayer money paid for these bonuses.
When I say back to them that no one should be making bonuses when the bank or brokerage firm for which they work is losing billions they shoot back at me that I’m talking socialism—lumping everyone who works for, say Citibank, into the same category, as if no parts of the firm are productive. “I work for a division of the bank that made money last year so why shouldn’t I get my bonus?” A good and fair question. “To say that everyone should be punished, even if they themselves did well, is not in the spirit of capitalism. “It’s . . .”
“I know, I know. It’s socialism.”
But then, I asked, “How is what you do at the bank an example of capitalism? Isn’t it required in capitalism for you to have something at risk? What have you placed at risk? You didn’t invest money in the bank. You just have a job there.”
“Well, I could lose it. That puts me at risk.”
“Yeah, but you chose to work there, not putting any of your own capital at risk, when you could have opted to work someplace else. Even for a not-for-profit.”
“More socialist talk. Work for the government, which is the world’s biggest not-for-profit? Or the ACLU? If you ask me that’s socialism in action. The real action is in the corporate world and if you take away our incentive bonuses you wind up pulling down capitalism.”
“Nonsense. There’s nothing, I repeat, nothing very capitalistic about having a fancy job at an investment bank. What you are objecting to is some of us, including the president, calling into question the sense of entitlement you have that no matter how the bank does you automatically get bonuses. If the bank makes big money then I can see you getting big bonuses. But if the bank loses billions I don’t see anything resembling capitalism for anyone to get a bonus.
“That way,” I pressed on, “in effect, if bonuses are contingent on making a profit there is some semblance of capitalism at work—to get or not get a bonus based on actual performance at least resembles your having something at risk. But only if there is a downside when your company doesn’t do well. And God knows your bank and AIG and the big three auto companies and hundreds of other firms not only did poorly but have contributed to a national economic disaster.”
“OK, you’ve had your say, Mr. Not-for-Profit. Now I’ll have mine. You continue to ignore the fact that even when a Citibank loses billions many working for the bank have had good years. You’re ignoring this reality. I personally did well and so shouldn’t I get my extra compensation? That, by the way, should be what bonuses should be called—‘extra’ or ‘deferred compensation’ or an ‘income credit.’ Because that’s what it is. As we say on the street, ‘You eat what you kill.’”
“I saw that felicitous phrase in a piece in last week’s New York Times.” (Linked below.)
“Since when are you a vegetarian?”
“Touché. But, still, you’re missing my larger point—when you join a large corporation you should thrive or not based on the firm’s bottom, bottom line. You should understand that going in.”
“Well, to quote from that same Times article, ‘Folks come to work for an investment bank because they want to work hard and get paid a lot for working hard.’”
“You’re making my point for me. You get a salary for working hard. Not a bonus. If you did, those autoworkers who got beat up recently for making, quote, ‘so much money’ would get more than you. They really work hard. You should get a bonus when your company makes money and not just for hard work. Sometimes you work hard but not smart and things as a result do not go well. You should be rewarded for this?
“And if your company makes an actual profit the money that’s shared around in bonuses doesn’t come out of taxpayers’ pockets. As it did this time. Your bank’s stock now selling for about three bucks a share has already cost ‘average people’ billions in lost savings. People, by the way, who put actually cash at risk when they bought Citibank’s securities. Some security!”
“Again, you’re avoiding my argument that those of us who did well, even though the bank obviously didn’t, should be compensated.”
“You would have a stronger argument if the bonus money was distributed that way; but most reports indicate that the bonus pool was pretty wide, with lots of folks who weren’t a part of individual profitable divisions also getting their money. In fact, CEOs, COOs, CFOs, and others at the top of the corporate pyramid, senior people without direct profit-making responsibilities, also for the most part got their bonuses. And they were huge. Often in the millions. And these are guys, mainly guys, who when they were hired, before they made or lost anything, were given signing bonuses and from before day one had their golden parachutes already worked out.”
My friend didn’t respond, so I added, “To tell you the truth, if you want to talk socialism, this comes pretty close to my definition of it—a version of from each according to his means, to each according to his needs. In this case, from taxpayers according to their vulnerability, to executives according to their greed.”
When I say back to them that no one should be making bonuses when the bank or brokerage firm for which they work is losing billions they shoot back at me that I’m talking socialism—lumping everyone who works for, say Citibank, into the same category, as if no parts of the firm are productive. “I work for a division of the bank that made money last year so why shouldn’t I get my bonus?” A good and fair question. “To say that everyone should be punished, even if they themselves did well, is not in the spirit of capitalism. “It’s . . .”
“I know, I know. It’s socialism.”
But then, I asked, “How is what you do at the bank an example of capitalism? Isn’t it required in capitalism for you to have something at risk? What have you placed at risk? You didn’t invest money in the bank. You just have a job there.”
“Well, I could lose it. That puts me at risk.”
“Yeah, but you chose to work there, not putting any of your own capital at risk, when you could have opted to work someplace else. Even for a not-for-profit.”
“More socialist talk. Work for the government, which is the world’s biggest not-for-profit? Or the ACLU? If you ask me that’s socialism in action. The real action is in the corporate world and if you take away our incentive bonuses you wind up pulling down capitalism.”
“Nonsense. There’s nothing, I repeat, nothing very capitalistic about having a fancy job at an investment bank. What you are objecting to is some of us, including the president, calling into question the sense of entitlement you have that no matter how the bank does you automatically get bonuses. If the bank makes big money then I can see you getting big bonuses. But if the bank loses billions I don’t see anything resembling capitalism for anyone to get a bonus.
“That way,” I pressed on, “in effect, if bonuses are contingent on making a profit there is some semblance of capitalism at work—to get or not get a bonus based on actual performance at least resembles your having something at risk. But only if there is a downside when your company doesn’t do well. And God knows your bank and AIG and the big three auto companies and hundreds of other firms not only did poorly but have contributed to a national economic disaster.”
“OK, you’ve had your say, Mr. Not-for-Profit. Now I’ll have mine. You continue to ignore the fact that even when a Citibank loses billions many working for the bank have had good years. You’re ignoring this reality. I personally did well and so shouldn’t I get my extra compensation? That, by the way, should be what bonuses should be called—‘extra’ or ‘deferred compensation’ or an ‘income credit.’ Because that’s what it is. As we say on the street, ‘You eat what you kill.’”
“I saw that felicitous phrase in a piece in last week’s New York Times.” (Linked below.)
“Since when are you a vegetarian?”
“Touché. But, still, you’re missing my larger point—when you join a large corporation you should thrive or not based on the firm’s bottom, bottom line. You should understand that going in.”
“Well, to quote from that same Times article, ‘Folks come to work for an investment bank because they want to work hard and get paid a lot for working hard.’”
“You’re making my point for me. You get a salary for working hard. Not a bonus. If you did, those autoworkers who got beat up recently for making, quote, ‘so much money’ would get more than you. They really work hard. You should get a bonus when your company makes money and not just for hard work. Sometimes you work hard but not smart and things as a result do not go well. You should be rewarded for this?
“And if your company makes an actual profit the money that’s shared around in bonuses doesn’t come out of taxpayers’ pockets. As it did this time. Your bank’s stock now selling for about three bucks a share has already cost ‘average people’ billions in lost savings. People, by the way, who put actually cash at risk when they bought Citibank’s securities. Some security!”
“Again, you’re avoiding my argument that those of us who did well, even though the bank obviously didn’t, should be compensated.”
“You would have a stronger argument if the bonus money was distributed that way; but most reports indicate that the bonus pool was pretty wide, with lots of folks who weren’t a part of individual profitable divisions also getting their money. In fact, CEOs, COOs, CFOs, and others at the top of the corporate pyramid, senior people without direct profit-making responsibilities, also for the most part got their bonuses. And they were huge. Often in the millions. And these are guys, mainly guys, who when they were hired, before they made or lost anything, were given signing bonuses and from before day one had their golden parachutes already worked out.”
My friend didn’t respond, so I added, “To tell you the truth, if you want to talk socialism, this comes pretty close to my definition of it—a version of from each according to his means, to each according to his needs. In this case, from taxpayers according to their vulnerability, to executives according to their greed.”
posted by Steven Zwerling at
7:00 AM
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