You're currently reading an archived version of Jim Hightower's work.
The latest (and greatest?) observations from Jim Hightower are only now available at our Substack website. Join us there!
There is much gnashing of teeth among top bankers on Wall Street, because Washington is imposing a $500,000 salary cap on executives whose banks are drawing bailout money from us taxpayers.
All together now, let’s say: awwwww, poor babies.
Enjoying Hightower's work? Join us over at our new home on Substack:
The bankers and their apologists have spent the past decade or so carefully constructing the myth that their jobs at the pinnacle of high finance require such expertise (bordering on genius), that they merit more pay than anyone else in our entire society. So, they wail, putting a cap on pay will only drive away the best talent on the street.
A couple of points. First, the “best and brightest” they’re talking about would be the very same geniuses who caused their financial institutions to lose billions of dollars in the past few months, crashing our economy. Second, to where, exactly, would these golden ones flee? All of the giant banks are in the ditch, essentially owned and propped up by taxpayers.
What these overpaid suits still don’t get is that there’s no longer a hot market for their services. In fact, the multimillion-dollar paychecks they’ve been used to pocketing were always artificially inflated. The dirty little secret of bigtime executive compensation is that it’s not set by a free market, but by a closed club of – guess who? – corporate executives.
The pretension has been that corporate boards decide CEO pay levels. But board members are essentially chosen by the CEOs themselves. They are mostly other CEOs who have a self-interest in keeping the entire club’s compensation levels rising. As John Kenneth Gabraith once put it: “The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”
“Wall St. Pay Mover is Cycles. (Guess Where We Are Now.)” The New York Times, February 5, 2009.
“Up Next For Bankers: A Flogging,” The New York Times, February 10, 2009.
“Need a Job? $17,000 an Hour. No Success Required.” The New York Times, September 18, 2008.