Saturday, October 16, 2010

Another Wall-Street Bonanza

by Richard Crews
I guess you heard--Wall Street is straightening its green eye shade, adjusting its armbands, and licking its pencil (and its chops) to start handing out $145 billion in bonuses this year. This represent a new, all-time high, beating the previous record set in 2007 just before the bottom fell out of worldwide financial systems.

And why the hell not? Didn't they earn it?

No, they didn't--and that's problem three (be patient--"one" and "two" are coming). Banking (in the broadest sense) is a service industry. They don't grow or manufacture or even transport anything. They manipulate (ok, ostensibly they "guard") other people's money. You simply don't pay more for the cop on the corner or your home security system or even an insurance policy than you do for food, a safe and comfortable place to live, an education for your kids, or the tools and resources of your trade. It's crazy. It's like "protection" money. It's economics on its head.

But we do. Thanks to historical circumstances such as globalization, exploding information technology, and laissez-faire deregulation (with a healthy dose of ingenuity and normal human greed thrown in), we divert a major fraction of our national wealth to what should be oiling the economic system.

Why is this a problem? Because the extent to which one is paying protection money, one isn't building up ones business--building inventory, trimming prices, tailor fitting customer needs--or securing and enhancing ones lifestyle--living in a cleaner, more comfortable, more secure home; saving for the kids' education and for retirement; etc. Put in national terms, when the money-service industry dines on thousand-dollar wine and butterfly tongues, roads and bridges and power lines fall into decay, the atmosphere gets polluted from archaic vehicles and dirty power plants, scientific research and education founder, health-care and retirement go untended, etc.

So reason "three" is that the Wall-Street bonanza diverts money from healthful and productive uses.

Reason "two" is a little subtler but in fact more important. I won't go into it or argue it in detail, but cultural pay patterns that increase the gap between the very wealthy and the rest of us weaken and undermine our economy--and hence our democracy and in fact our entire network of social systems. They decrease the buying power of the vast middle class and increase the rolls of the even-more-vast impoverished and disadvantaged beneath them. They bring our very beliefs and lifestyles into jeopardy.

But reason "one" is the real killer--one that is often overlooked and underrated. The Wall-Street bonanza drains the best minds as they graduate from college and graduate schools away from careers in science, education, engineering, health, and public service.

Every graduate these days makes a choice about where to apply their energy and talents and learning. And on one side of the balance is the lure to make millions--no, tens of millions--of dollars taking their math, law, science, language, or other skills to Wall Street.

That is the real tragedy of the Wall-Street Bonanza syndrome.