We know that Goldman Sachs has recently raised its base rate for CEO Lloyd Blankfein from $600,000 to $2,000,000 and then he gets on top of that bonuses (worth $12.6 million). In investment banking, a First Year Analyst with a Bachelor's degree can earn form $90,000 to $350,000 (including bonuses). A Vice President with a degree and 3-6 years experience can earn from $350,000 to $1,000,000.
Looking at the median pay scale of teachers in the United States, the Median Salary for a High School Teacher was listed as $43,355; for a Special Education Teacher in a Secondary School, the median salary is $43,889. As far as I know, these teachers don't get enormous bonuses for having successfully taught school.
There is something terribly wrong when the making of money by an investment bank that has no clear social value for the whole of society (except to make lots of money for itself) pays more for its employees than teachers who are equally well educated. Teachers are far more important because they pass on the values of the society to the young; they help students to live in the world; they prepare the citizens of tomorrow and yet the pay they receive is far short of the value of the job they do in society.
That pay inequality is the moral and ethical dilemma that most threatens the economy of the US.
Sure It's Legal...But Is It Right?
submitted to ZeroHedge by Phoenix Capital Research
I’d like to ask your indulgence today.
Typically we reserve these pages for in-depth analysis of the stock market and economy. But I’ve grown FED UP with the complete lack of coverage that one area of the current crisis has received.
Ever since the Financial system started imploding in July 2007, I’ve heard countless folks talk about liquidity, bull markets, bear markets, the dollar, bailouts, etc. But there’s one thing I’ve heard virtually NO ONE talk about. That is:
MORALITY or ETHICS.
Everyone’s analysis of this financial crisis is far too complicated. The simple facts are that it was created by complete and utter greed on the part of various regulators and financiers.
In simple terms, the banks (investment and otherwise) lobbied Congress, the SEC, and other regulators to let them engage in business practices that were neither sensible nor responsible (excess leverage, financial wizardry that turned junk subprime assets into “AAA” rated entities, and more). They did this under the pretence that these practices would be good for the market and US economy as a whole.
The reality is that these practices allowed the banks to make ENORMOUS profits: between 1970 and 2003, financial stocks’ earnings as a percentage of the S&P 500’s total earnings rose from less than 10% to 31%. Put another way, by 2003, financials accounted for nearly 1/3 of ALL profits made by publicly traded companies.
Now, THE largest expense for any financial company is SALARIES. So when banks and financial companies lobbied to have their leverage limits increased (or any number of other changes that were made in the ‘90s and ‘00s), they did it for one reason: to collect HUGE payouts.
These folks were driven by greed and nothing more. They didn’t want more people to own homes. They didn’t care if folks lost money buying the AAA rated garbage they pawned off on pension funds and the like. They didn’t care if their OWN balance sheets were cesspools of crap loans no one would ever pay back. Heck, they weren’t even looking after their shareholders (leverage of 50-to-1 makes it extremely likely you’ll end up wiping out ALL equity sooner rather than later).
No, they wanted one thing and one thing only: to make as much money as they possible could.
And boy did they.
In 2007, the average Goldman Sachs pay was $661,000. For Morgan Stanley it was $340,000. Again, these guys were after one thing: BIG PAYOUTS.
Read the entire article here
5 COMMENTS:
"In investment banking, a First Year Analyst with a Bachelor's degree can earn form $90,000 to $350,000 (including bonuses)."
-Noone makes close to that much first year.
" A Vice President with a degree and 3-6 years experience can earn from $350,000 to $1,000,000."
-Goldman employees usually don't hit VP until 10 years on the job.
"Looking at the median pay scale of teachers in the United States, the Median Salary for a High School Teacher was listed as $43,355; for a Special Education Teacher in a Secondary School, the median salary is $43,889. As far as I know, these teachers don't get enormous bonuses for having successfully taught school."
-Goldman guys would make the same money if they quit and worked elsewhere. Raise teachers salaries and maybe they'l work there. Also GS is the major contributor to Teach for America.
"no clear social value for the whole of society"
-You can't really believe this? Didn't you work in finance?
"That pay inequality is the moral and ethical dilemma that most threatens the economy of the US."
-Pay equality = communism. Pay inequality means some people have money to invest into future research, development, growth, etc.
Agreed, there should be more regulation. Finance companies will make money within the bounds of the law. If you don't like the way they operate, change the laws.
I can see that you're trying to get people to influence regulation by creating a big scapegoat, but this is severely distorting the picture. How about looking at all of the things GS contributes to society? Try figuring out a way regulate the industry to use their contribution while removing the negatives you keep talking about.
Dear Reader, the comments are linked to statistics found on the internet to make the case. The pay is still much greater in finance even when the education qualifications are equivalent.
Tell me all the good things that GS has done recently when it wasn't making junk derivatives rated as AAA and selling them to investors who then lost the investment money of pensioners, 401K savings and homeowners. You did not list all the good things that GS has done recently because all the bad things are weighing a bit heavy on their consciences (if they have any). The taxpayer has propped up a bank that would have gone insolvent because of its bad bets and all taxpayers get in return is to see the wonderful bonuses and pay checks of the too big to fail investment banks.
"Agreed, there should be more regulation. Finance companies will make money within the bounds of the law. If you don't like the way they operate, change the laws."
It is difficult to regulate banks which have millions of dollars to lobby for what they want which isn't more regulation; it's hard to regulate banks that are represented in the government by former bankers; it's hard to get the government to regulate banks when politicians are paid huge amounts of campaign money from bankers and politicians then toe the line in return for campaign contributions.
I'm not asking for equal pay for all but for a more equitable distribution of money. Teachers are more important than investment bankers but they will never have the opportunity of being paid like bankers. Recently, banks have not been playing fairly; they have used unethical and immoral means to move the wealth of the middle class to the wealthiest people at the top where the bankers reside.
Do you see what is happening in Wisconsin? The teachers have agreed to help reduce the deficit but still the governor is trying to break the union. I would dearly love to see someone ask all the bankers to pay 90% of their profits to reduce the federal deficit (it has been done before.) That would be a grand thing.
@anon above
change laws?...are you kidding?
no one in the country wanted the weekend bailout designed by insiders via goldman's hank paulson..but it went through anyway...
the angst is not over goldman's pay per se....its that goldman's pay (prosperity) via the bailout is a function of the american's taxpayers bailout of goldman which will lead to each american's new austerity...goldman by many estimates should have failed....not prospered over the crisis!
the laws for fraud are on the books...they are not being enforced .....and we all wonder...why???
goldman's no scapegoat ....they're where the preponderance of the evidence leads any thinking individual to....
Here is what I meant by "inequality" which is not just in terms of "pay" but in terms of "wealth:"
See:
http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
It doesnt look like the administration really gives a hoot...
Barack Obama recently made the following statement to American families that are struggling to survive in this economy: "If you’re a family trying to cut back, you might skip going out to dinner, or you might put off a vacation." A few days after making that statement Obama sent his wife and children off on yet another vacation, this time to a luxury ski hotel in Vail, Colorado...
http://truthingold.blogspot.com/2011/02/gotta-read-this-one.html
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