Americans Still Strongly Oppose Big Wall Street Bonuses

Bloomberg is out with a headline today that suggests that Main Street anger at Wall Street compensation practices remains pervasive in the United States. The article states that more than 70% of Americans believe that big bonuses should be banned this year at Wall Street firms that took taxpayer bailouts. The data comes from a Bloomberg National Poll. In addition, one in six of the respondents were in favor of enacting a 50% tax on bonuses exceeding $400,000. Only 7% of adults said that bonuses are an appropriate incentive in light of Wall Street's apparent return to financial health. Furthermore, a majority of citizens are in favor of taxing Wall Street profits to reduce the federal budget deficit, making this the top choice among more than a dozen deficit-cutting options from which respondents could choose. Seven in 10 Americans were in favor of this proposal. Cash bonuses on Wall Street this year grew 17% to $20.3 billion according to estimates by the New York State Comptroller's office. Last year, the average securities industry wage in New York City fell by 20% to $311,000 or around 5 times the average pay for other private-sector jobs in New York. This poll shows clearly that Americans are still incensed by the outrageous pay on Wall Street in the wake of the 2008 financial crisis. I feel compelled to throw in my two cents on this issue. Where to start? The best place to begin is probably to point out the absolutely blatant perversion of capitalism that the financial crisis has caused. To call this country "capitalist," is a complete and utter joke. America is not a capitalist country. Period. In one way or another, most of the country is now on the dole of the Federal Government whether it be through unemployment benefits, entitlement programs, or being employed by an industry which was bailed out. Making matters worse is the fact that the Treasury and the Federal Reserve are financing all of this through a brazen Ponzi scheme, which I will not get into here. Look at what has happened. We have this industry - Wall Street - that has blown up the American financial system, from time to time, with amazing consistency. This happens over and over again. In 2008, by any rational person's measure, they outdid themselves. Keep in mind that "Wall Street" is supposed to be a symbol of "capitalism" and "free markets." But what happened when the exorbitant risks that these banks and securities firms were taking became a source of enterprise-threatening losses instead of enormous profits? The losses were subsidized by the public of course! What happens when the profits begin rolling in again? They are pocketed by the Wall Street elite of course! What form of capitalism is this? The level of moral hazard that has been introduced into our nation's financial system is appalling. Mark my words, another crisis, of equal or greater magnitude to what we saw in 2008, is on the horizon. The majority of Americans that responded to this Bloomberg poll also are not true believers in capitalism, although I bet many of them would claim otherwise. But you see, they are reacting to the initial perversion of the concept which occurred during the economic crisis, when the government bailed out the entire financial system. Here is my question. For those who admonish the reactionary instincts of the American public and their wish to see big Wall Street bonuses scaled back, what is the alternative? Is a "make millions upon millions when things are good, get bailed out when things go bad" policy better? How in the world can this type of system be justified. It's ridiculous. The Wall Street mantra is "heads I win, tails you lose." The burden that this type of arrangement has on the country is tremendous. Furthermore, the outrageous compensation structure that pervades the securities industry has completely perverted the efficient allocation of talent in this country. Many of the people who work on Wall Street are among the best and brightest that our great university's have to offer. Unfortunately, their contributions to the economic vibrancy of this country are nowhere near proportional to what their collective intellects would suggest it should be. Wall Street is as much a destroyer of value as it is a creator of value - and that is sad. We have seen this time and time again. Unfortunately, I doubt much of anything will change. The billions in bonuses will continue to flow through the canyons of Manhattan, our best and brightest will continue to spurn more value added industries like healthcare, technology, and energy in favor of chasing their fortune on Wall Street, and the string of epic financial crashes in the U.S. will continue for the foreseeable future.