Money for Nothing

Paul Krugman comments on reports that banking pay has returned to 2007 levels – noting (1) that what they did in 2007 (that earned them their huge payouts) is exactly what got us into this economic crisis, and (2) that now they’re playing with our (public) money and shouldn’t go overboard. He concludes:

In 2008, overpaid bankers taking big risks with other people’s money brought the world economy to its knees. The last thing we need is to give them a chance to do it all over again.

Two further thoughts:

First, I wonder whether we actually want so many smart people on Wall Street.  Shouldn’t bankers be Babbitt-boring?

Second, it seems to me that if you pay enormous, even extravagant amounts of money, you’ll get more people whose primary motivation is money. I’ll accept that most people are moved in some fashion by financial incentives. Should any company structure compensation to attract employees/executives for whom money is the first motivation?

On this score, see the (otherwise teeth-grindingly annoying) New York magazine article on this topic, which winds up with this interchange between the reporter & an ex-Goldman banker:

I asked him what will happen if Congress succeeds in regulating compensation. “These guys will not work on Wall Street,” he says flatly. “People go to Wall Street out of greed. When I was interviewing for jobs, frequently some form of the question came up: How much do you want to make money? If my answer was something like—and it wasn’t—but if my answer was, ‘I’m here for intellectual betterment,’ their response might have been, ‘University is a great place for you.’ They want people who think ‘I’m greedy, I want to be a billionaire.’ That was viewed as a really good thing.”

You get what you pay for, I guess.

via Op-Ed Columnist – Money for Nothing – NYTimes.com, and Cutting back is hard | Free exchange | Economist.com.

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