In The USA: the Next Revolution

[Dayuhan]

Banks were and still are setting aside 50%+ of their revenue for bonuses with a majority going to top management.

Source on that? Seems unlikely.

I really don't see anything that justifies such an increase.

How much of that is actual cash paid by the company, how much is stock options... and how are the stock options valued? n Break the actual cash component down and compare it to the overall company budget and it stops looking so big.

Neither executives nor workers are paid according to anyone's perceptions of how productive they are or how much they "deserve". A rather strange cult of the celebrity CEO has emerged, with companies competing to get "stars" whose record will impress the shareholders. It's almost like rock star or athlete pay in that sense. You've also got a trend of CEOs not lasting long... a few bad quarters and they get the sack, a few good quarters and they want to trade that "success" into a big package elsewhere... likely as a replacement for the guy who got the sack. Again, it's up to the boards of directors and the shareholders to change that, if indeed they want to. Not a terribly positive trend IMO but I really don't see what to do about it that wouldn't be worse.

I assure you I'm aware how the other half lives as I've spent quite a bit of time in East Africa. It is what it is. The American middle class cannot downsize to a Filipino standard of living, just like Filipinos wouldn't want to live like Somalis. Everyone wants to be upward mobile. Otherwise the CEO's would forgo the high pay, bonuses and everything that comes along with it and just live like their employees.

I didn't mean to compare the American middle class to Filipinos or Somalis, but to compare them to the American middle class of 30 years ago. Again, the change is only noticeable if you've been away a long time.

Of course Americans want to be upwardly mobile. I think the American habit of blaming the restrictions on their upward mobility on "wall street" generically, or on overpaid CEOs, or similar internal matters misses the point. The US walked out of WW2 with a staggering economic advantage. Every other industrial power in the world was shattered. Many powers and potential powers spent most of the next half-century either in the grip of a totally self-defeating economic system or being kicked around by the cold war. Americans didn't prosper because they were smarter or better or more efficient, they prospered because they had a huge head start.

The head start is gone. The rest of the world is in play, and they're hungry. That won't be changed by paying CEOs less or regulating banks more. It needs a retooling of American education and a completely new approach on all levels: that's on the part of small institutions and individuals and government as much as on the part of wall street and CEOs. Trying to lay the blame on the latter is satisfying (and advantageous to politicians who would rather have the electorate pissed off at wall street than at them) but it won't solve the problem.