Twentysomething: Obama’s salary caps should cap hours too

This is so poorly written. Penelope, I’m disappointed in you for publishing something that isn’t nearly in the same league with what you normally write.
Sure, employees should be properly compensated for their time, skill, and success. Employees should not be exuberantly compensated by the taxpayers for their failure. And I feel no sympathy for someone who knowing entered an extremely time-demanding career. Their salaries still sound like plenty of money to me.

This is a great point, and even though Penelope didn’t write it with her usual style, instead she’s brought in someone directly impacted to make the point – i think we should be congratulating her for that rather than criticizing Bill’s writing style. How capping an industry’s pay is anything but socialist is beyond me – if the market will bear a higher pay rate, the person deserves it…that’s just how capitalism works. It goes to show how propping up the banks was just step 1 in a slippery slope if we’re not careful.

I often hear investment bankers argue that if they worked the same amount of crazy hours at McDonald’s, they would have gotten paid more than they do now…

My question is then why don’t you go ahead and work at McDonald’s? Stop complaining, if the hours are really that bad and the money is not worth the hours, then people would’ve quit.

Investment bankers work crazy hours but are compensated more than enough… NOBODY fresh out of college makes six-figure salaries (including bonus) for doing largely meaningless work, except for investment bankers. And the fact that they are sort of the ones screwing up this market makes me even less sympathetic.

Obama gave top executives a salary cap because those guys do NOT work crazy hours but earn billions of dollars way over anyone’s reasonable comprehension.

And the fact that this investment banker is actually trying to match his work/life balance to that of our President is just shameless, and ridiculous. Next time when you inspire someone like Obama did instead of sitting in your cubicle churning away people’s retirement fund, then you can talk about having a 62 hours week…

I’m not sure that people understand that this salary cap doesn’t apply across the board. It will only apply to certain high-level executives in firms that choose to accept federal funds. And, it’s quite possible that employees below those executives will continue to earn an amount above and beyond the cap. So, this really isn’t consistent with Alex’s example of the system in the USSR. However, neither is it consistent with a 100% free market economy. But there are plenty of Americans who do not feel that the market should be completely free; many believe that the government should institute some controls.

I think it would have been a better idea to introduce legislation that required publicly-traded companies to allow shareholders to vote on the top executives’ salaries. And it seems like it would be consistent with previous court decisions stating that executives owe a duty to run a company for the benefit of the shareholders (i.e., to earn profits for them). So…the shareholders could decide whether they were okay with the executives taking half of the revenues before they saw their part of the profits (example from the article Penelope posted). And the execs could decide whether they were happy to work for the compensation approved by shareholders.

Secondly, I would like to congratulate you on your bold and assertive moves to nip that pernicious weed we call capitalism in the bud. It’s about time somone brought change to the outdated american dream.”

Oh, this is crap. Last I checked, “capitalism” at no point involved queuing up and asking taxpayers to provide a bailout for a failed business enterprise. If anything, the death of capitalism can be laid at the feet of inept bankers and no one else. (As an aside, satire works better with correct spelling and capitalization, avoidance of cliche, as well as understanding that capitalism is well past the “bud” stage.)

True capitalists make their own money and risk their own money. True capitalists wouldn’t be caught dead asking the state to subsidize their inept decision making. If the finance industry starts acting truly capitalist, I’ll be more enraged than anyone at the thought of outside interference in their internal compensation strategies. For the moment, though, the banks are acting like a distant cousin with a gambling problem. As long as my money, taken from me by the government by force, is being used to bail them out, damn right their pay should be limited.

There’s nothing slimier than someone who claims to be a capitalist but who adopts socialist attitudes when it serves the interests of preserving their comforts and social standing.

How about capping the amount of money the lobbyists can donate to the Congressmen? How about capping the amount of money the government can loot from the taxpayers and spend on the pet projects of their buddies or the transfers of wealth? I appreciate the satire involved with some of the suggestions but I think we are past the stage of amusement and at the stage of nausea. I’m very concerned about the direction of the country toward socialism in masse and the debt the next 3 generations will inherit for our current spending spree. I think we all should be very worried the country will be broke and powerless in a few short years.

call it what you want…its bs. the issue is not (or at least it shouldnt be) political really its one of accountability and responsibility.

its called pay for performance…commission…whatever have you. if you do a great job, you should be appropriately compensated. if you make billions of dollars for your company (and it’s shareholders) then perhaps millions of dollars is appropriate compensation. seriously. i dont agree with limits and i dont agree with the golden parachutes or the sweetheart severance or the benefit laden employment contracts.

if you run the ship aground and suck badly, then you get nothing. nothing. massive reward carries with it some risk. if you f up you realize the risk, not the reward. its pretty simple. if you cant afford your lifestyle when you realize the risk, then u f’ed up again, deal with it. live within your means. plan for a rainy day.

this s is getting old. own up. be responsible. they are lucky the shareholders arent capping their pay. it’d be 50k, not 500k.

I’m surprised at the knee-jerk hostility here. I would like to propose that the insane hours are actually part of what created this mess, as they lead to what I like to call “entitlement syndrome.”

My brother-in-law is a junior trader with CitiGroup, and from what I can tell, this job entails sacrificing your entire 20s and 30s to the money gods. His goal is to amass a huge fortune by 55; as though retiring early in the lap of luxury will somehow compensate for his lost youth.

There are two ways this type of thinking leads to the crisis in which we find ourselves. First, only the most crazy, money-hungry types would even want a career in investment banking, because most of us are not willing to sacrifice our personal lives. Generally, these folks aren’t known for their stellar ethics or their tendencies to question shady practices, as long as they continue to get paid. So you’ve essentially created a professional monoculture of very selfish, unethical people.

Secondly, these people feel that because they are sacrificing their youth, marriages, relationships with their children, etc., they are “entitled” to all the perks, bonuses and inflated salaries that have come to characterize this industry. Hence John Thain’s $1.2-million office renovation, which included an $87,000 area rug and an antique commode. The guy was probably thinking, “Hey, I spend more time here than at home, so I want to spruce the place up the way I like it. If the company expects me to put in crazy hours, they can pay to house me in the lap of luxury.” Then they’re on the slippery slope of justifying to themselves unethical and even illegal behaviour because “I work hard and I deserve this, and everyone else is doing it.”

I’m not saying that restoring a little work-life balance to this industry will solve these problems, but I think it’s one mechanism for decreasing the sense of entitlement among this people, and recruiting a more diverse staff who may have other ethical perspectives besides “Me first.”

First, I admit that I didn’t read all 47 comments, just the first 10. I didn’t think the letter was poorly written. I thought it was meant to grab the attention of the office of the president and somehow it has succeeded in getting attention.

I have long thought that some formula is needed to apply to salaries. I’m not sure it would be a specific cap. How about if the highest paid person can’t more than 700% the lowest paid person? What if that was then calculated on the amount the company spends on a person including benefits and training? When I worked at Schlumberger (boo!) they paid me $72k/year. They were quick to send out quarterly a notice of what it costs them to employ me with 401K, insurance, training, and potential mobility options (meaning I might be sent to France to work for a bit). That number came in at $160K. I considered this a gross mis-management of my funds. Regardless, would it be so unfair if the CEO could only then take 1.12 million dollars from Schlumberger (of course after they subtracted his 401, retirement, stock options, etc he may have to settle for $500K)? And if he would like to take home $1.5 million next year, I would happy to accept a 33% increase as well.

As for hour caps, I’m all for it. I lived in France for 6 months. I was blown away to find out that everyone wasn’t working 80 hr/week in the world. I was only 21. I didn’t know much. Oh and the author of the letter failed to mention the standard 6 weeks of vacation a year. Sure some people worked more, but there was never a feeling in the office that you were a better worker cause you worked more. You had to be judged on performance cause time was a clean slate. The idea in America that some people collect overtime while another class of people don’t is bizarre. Should we both measure time and not measure time depending on to whom we are talking?

As much as it may be socialist issue perhaps capping hours is also a health issue? Certainly you can get behind better health of the people, since they don’t have insurance anyway.

To everyone decrying the salary caps on TARP fund receivers as a march to Socialism, please, stop engaging the slippery slope fallacies and pull your head out of your rear end. Instead of focusing on raw concepts that historically have never been truly implemented and never behaved as they were expected, let us engage in the truly revolutionary (at least in this day and age) act of analyzing the current the situation based on the facts on the ground. Please bare in mind as you read this that I was never a fan of the TARP program.

First, let us remember what the purpose of the TARP was. The whole purpose of the TARP was to “unfreeze the credit markets.” It was supposed to buy “troubled” assets (the “A” in TARP) to help recapitalize these banks and to get them to loan money to allow the real economy to get funds to continue functioning. This bares some consideration. The purpose of the TARP was to save the real economy, not to save the banks. The banks were to be saved with the goal of helping the economy, not simply to make them profitable. It was supposed to make them loan money. Allowing them to survive was a necessary evil under this plan, not the primary goal. This alone nullifies any of the ridiculous arguments that the banks should be allowed to do what is in their best interest with TARP funds. TARP funds were allocated with the interest of the general economy in mind, not the best interest of the banks. Therefore, the banks had a duty to dispense with this money to follow the TARP’s goal, not to do with it whatever they wished.

Of course, we know that the TARP was a massive failure, and possibly even a fraud. First, no assets were bought, and instead the government loaned tax payer (read “our”) money to these banks. Second, and more importantly, the banks did not extend credit as they were supposed to. Instead, they hoarded it, and blew some of our money on things like bonuses, jets, offices, and parties. Remember, this was money that was to be used to provide working capital to the rest of the economy, not to be used to save the banks themselves. In this regard, the banks violated the public trust, and now must have further controls placed on them if they are to continue to be the stewards of public funds meant to help us all.

Now, if you would indulge me a bit further, I’d like to address the raw idea that these banks should have raw control if they receiving government funding. Let’s forget the original purpose of the TARP and assume that it was to save the banks for their own sake. Even in this case, the salary caps are warranted. The argument that the CEO’s should be allowed to “do what is best for the company” is laughable on its face. The reason the banks are on the government dole in the first place is because their leadership was incompetent, and hence undeserving of their salaries. More importantly, though, the government is the one making the loan, and as such the government has the right to stipulate the terms and conditions of the loan to make sure that it is repaid. Allowing CEO’s to shove more money into their pockets is not going to approach that goal, and it is ludicrous on its face to put forward such an argument.. Also, as others have stated, if the banks do not like the terms, they are free to not take the money.

There is one other argument I would like to take on, and that is the argument that the average American has no right to be mad at the banks for what is going on. I will gladly agree with those who said that those who took out more loans than they could afford were irresponsible and have no one else to blame but themselves This in no way resolves the banks of their responsibility in this debacle. The banks are supposed to be the gatekeepers. They are supposed to have the training to evaluate risk when making loans, and it is their responsibility, both to their investors and to the economy at large, to properly evaluate the risk making those loans will pose. It was the banks ultimate responsibility to say no.

Of course, the banks did not say no. Instead, they went a veritable lending orgy, extending credit to anyone and everyone whether or not they could ever hope to repay. If only the banks’ complicity had ended here, though, the damage may have been contained. The banks not only issued bad loans, but then they sold them to the investors with a AAA rating attached. They told investors that these were safe investments. This allowed the banks to unload much of this paper onto unsuspecting investors. This not only allowed them to make more loans further blowing up the bubble, but it spread the damage well past the housing sector. This was fraud.

These people should be in jail, not getting bailouts. We have every reason to be angry, even those who over extended themselves. This is the reason why our retirement accounts have lost 40% of their value. This is why we are losing our jobs. This is why we are facing another depression. It was fraud, and whether or not you over extended yourself, you have every right to be mad. There is no excuse for this behavior, so stop making them.

Penelope,
I’m sorry, but it’s true. When you have a guest writer, you want to bring in someone who writes BETTER than you.

As for the issue of salary cap, yes there should be because it’s my damned money paying these guys, not the shareholders any longer. If you want to borrow money from my $42K gross pay and my government, you play by new rules. My money is to keep the banks afloat, not to cushion a bank exec’s butt. Will the good talent run away because they can’t make megabucks anymore? Come on. Just where are they going to run? To a big bank that isn’t receiving federal dollars? How many are there? There is a glut of well qualified bank execs who’d love to have a job making $500K a year.

Should there be a cap on hours? In theory, there is, the 40 hour work week for non-exempt workers, and I think that’s as good as we’re going to get. I still take home office work and teach part time and grade papers off the clock and and that pisses me off, but there probably isn’t any good way to fix that. We’re not socialist, after all, despite what our ex-Soviet friend thinks.