Do Yourself A Favour - Get Rid Of The Bonus System

Image by Barrybar via Flickr

First, let me make a few things absolutely clear.

• If you are a fully private company, and you deem an employee worth trillions of dollars and are willing to pay that employee trillions of dollars in any shape or form - as long as you and your company are not infringing upon society - then I support the right of PRIVATE COMPANIES to pay their employees as much and in what manner they see fit.

• If you - as an individual - are some kind of specialist, I support your being worth more than mere mortals like me. So, for example, if you are an oncologist who has never lost one single cancer patient, I say you deserve the world. Not being sarcastic, you do deserve the world. Not to equate a human life with money, but if you are a specialist in the financial sector - like say a derivatives trader - and you make lots of money for the system so we can all have more money, then sure you deserve to make lots of money. But all professions have sanctions. Doctors lose their licenses because of malpractice, accountants lose their licenses because of irregularities, lawyers get disbarred over ethical issues, etc. And mere mortals like us, lose our jobs. NOW: Who makes more money and get "bonuses' when they destroy their own company, their own industry and the entire global financial system and the entire global economy? People in the financial sector, that's who! Is there something not radically wrong with that?
  

I am insulted to hear anyone say that this matter of bonuses is a "perception" problem and immaterial in the scheme of things. Oh no - I beg to differ. It is the very HEART of the problem.

• Make tons of money, please do. But if you make a mess, you have to pay for it. The rest of society is structured that way.
  

• Make lots of money in a private company, please do. But when taxpayers funds are involved, the rules are different. Taxpayers need healthcare, roads, education etc. There is not enough money for the things taxpayers funds are supposed to do. There is record deficit and record debt. So where is the money to reward people who made a mess? Sorry, that is not on!

Now, I've heard some things today that warrant comment:

• "The only people can fix this mess are the ones who made it, so you can't afford to lose the talent". Rubbish. This is a perverse incentive. You want someone to fix something, you pay them on the basis of how long they take to fix it. The longer they take, the less they make. And they definitely don't make a "bonus"

• "A bonus is just the way it is". Wrong again. A bonus is defined - as in the dictionary - as extra, something earned. The very first synonym listed is "reward". You cannot make a mess and be "rewarded" for that. Have we all lost our minds?

• "These are contracts". Now I am a stickler for the law. If these are contracts, and they are so airtight that they cannot be broken, then these lawyers are the most valuable legal minds in the world. They should be the ones who sue the AIG recipients for a share of the "bonuses" because this legal work requires real talent. If these contracts were entered into after bailout funds were provided, then someone has done something really wrong - they have broken the public trust. And that should be exposed. Even if the "bonuses" are lost. Regardless, no more money for anybody without conditionalities - are the government lawyers sleeping?
  

Please, financial engineering is critical for a functional market. But if those who financially engineer don't try to meet us mere mortals - who cannot comprehend your value system - halfway, then the people and the Government are going to force a solution. And that means restrictions and over-regulation. And then everyone will lose. But at least, we, the mere mortals, won't be insulted, offended and outraged.