NY Times: Yes, the Wealthy Can Be Deserving

[BrentWil]

Pretty interesting article:

http://nyti.ms/1f4Wbl6

In addition, recent research establishes that those working in finance face particularly risky incomes. Greater risk requires greater reward.

[KG]

1. allow me to regurgitate the gist of this article...

[CJCRANE]

2. The banks and related corporations blew a $10 trillion hole in the global economy

then used our (taxpayers) money to fill it. They need to return the favor.

Great risks come with huge consequences. They need to be reined in before they do it again.

[BrentWil]

3. I agree...

But it is also true that one Elon Musk helped the economy (and was rewarded for it)

[CJCRANE]

4. That's conflating two different things.

I didn't say anything about entrepeneurs like Elon Musk or Bill Gates.

The 1%er bankers can try to hide behind their coattails but I'm not buying it.

[BrentWil]

6. No it isn't...

does one that finances Gates or Musk not also get some return?

I am on your side, but there is some truth in the argument that greater risk does get greater rewards.

[CJCRANE]

8. And catastrophic failure produced massive rewards and unprecedented fortunes.

That's not how it's supposed to work.

It's time for them to return the favor for bailing them out with our money.

[BrentWil]

9. I never made the argument it was NT

[CJCRANE]

10. I just find this article to be unnecessary: it's arguing for something that is already accepted

but doesn't cover the downside of the huge risks taken by the TBTF corporations.

The problem for most is not capitalism but corporate socialism: privatize the profits but socialize the losses.

[L0oniX]

28. They took the risk and we paid for it!

[BlueCaliDem]

37. Yep. Privatized profits and socialized losses.

It's the new American capitalism.

[Fumesucker]

5. How about if you are risking your life on the job?

That seems to me to be the ultimate risk and yet there are many dangerous jobs that don't pay much.

Take garbage collectors for instance, being in the road dodging cars while hauling cans back and forth to the truck is a remarkably dangerous job as well as being a vitally necessary one. Yet garbage collectors don't make much at all for a job that is as unpleasant as it is dangerous.

[BrentWil]

7. Making a reward system based on physical risk seems overall destructive to me.

How would that benefit the whole of society?

[valerief]

13. Combatin' terrrrrrrism. nt

[Fumesucker]

14. How does basing income on financial risk benefit the whole of society?

I don't see the connection.

[Distant Quasar]

19. Guys like Mankiw don't know what a "risky income" is

Who faces real jeopardy: The CEO with a golden parachute, who will walk away with a fortune big enough to last a lifetime if he gets fired tomorrow? Or an employee making $20,000 a year, who will lose her house if she gets "downsized" (maybe to pay for the CEO's severance package)? The answer should be obvious.

[Vox Moi]

11. Baloney, mostly

The article makes a false equivalency between actors, sports stars and businessmen.
It's fairly easy to figure box-office appeal and financial impact for an actor and to a lesser degree, for athletes.
These people can command enormous fees for their services because nobody else can do it. Nobody but John Wayne can make a John Wayne movie. I would ague that many people in high places in business could be replaced tomorrow and nothing would change.
It is a load of BS to say that the value of the assets a person is responsible for should be a basis of what they get in compensation: just ask the Captain of an Aircraft Carrier what he makes as a percentage of the value of the enterprise. How about the President? By the author's logic, he should be the highest-paid person in the Country.
Risk-Reward? This is a typical apology for being greedy, but let's take the logic out a bit.
A few people in business do risk their own, personal assets but most businesses are started - or kept afloat - with other people's money. The risk of losing capital in business is usually the lot of the very small business owner … few of whom are among the ultra-rich. The risk of doing business is reduced by incorporation, which limits the risk to some amount invested, not accountability for how the company operates or claims against it.
Firefighters have risky jobs. So do coal miners.
If I were the editor, I send this article back for a re-write.

[Fumesucker]

15. This is not an article that should be casually tossed aside

It's an article that should be violently flung across the room into the circular file.

[BlueCaliDem]

38. I second that motion. eom

[unblock]

12. gosh, well, let's give 'em even more!

the problem is not one of individual merit based on a narrow set of facts about an economic transaction. sure, one actor or one athlete or one ceo might have been part of a performance that made a whole lot of money for the film, team, or company. but it's hardly fair or reasonable to assume that means that no one else could have done a comparable job or that in any event it's fair for all the other people who worked on the film, aided in its production and distribution, or teammates and team support personnel, or employees and so on.

downey got $50 million for a role? it's hard to believe that anyone who could be gotten for a measly $20 miillion would have led to a loss of revenue of at least $30 million.

and that's a big part of the problem with ceo compensation. companies are set up to have a single person at the top and that then leads to very few people being able to handle it. but they hardly need to be set up that way in the first place.

moreover, even if it did make financial sense, that doesn't mean it makes economic sense. it's still unfair to the many people who helped. the ceo's administration assistant might be making $100,000, which is great for an administration assistant, but paltry compared to the ceo who's making $30 million. and the administration assistant might also be uniquely qualified given knowledge of corporate history, internal and external connections, etc.


additionally, all of these people are in a unique position to make tons of money off the hard work and success of others. downey and lebron and jobs might have all turned in excellent performances, but many stars, athletes, and ceos turn in excellent performances without making a ton of money because the *team* didn't perform well enough.

downey made his money in part because the cameraman, script-writer, supporting actors, sound people, advertising people, music people, wardrobe people, etc., all turned in great performances as well. similarly for lebron or jobs. except for solo sports, athletes aren't much without a solid supporting team. and that certainly goes for ceos.

steve jobs could easily have made far less money if his team had let him down in any of a large number of ways. just imagine if it turned out that iphones leaked cancerous goop or shocked people at random.

[L0oniX]

27. Yes let's make our banksters safe, fuzzy warm and satisfied. They're heros I tells ya.

[hunter]

16. We'd have a much better society without 'em.

Bill Gates, Steve Jobs, Robert Downey Jr., included.

Yes, certain folks do deserve to be very comfortably wealthy, as in a big house on the hill and a fancy car, while their employees have nice houses down the street, but anything more than that and they are just pissing trinkets on us in exchange for power and control over us.

Other celebrated "risk takers" (Mitt Romney, anyone?) are actually little more than embezzlers and destroyers of the overall economy.

Bill Gates and Steve Jobs alone monkey-wrenched the development of computing almost as badly as lizard overlords intent on fucking up humanity's technological progress might have done. I don't think they meant to do it, but as soon as they started listening to their financial advisors, money grubbing zombies were set loose to eat brains.

Immense wealth stagnates and becomes corrupt. One way to prevent this stagnation is a steeply progressive tax code, that would in essence tax the uber-wealthy oligarchs out of existence and hopefully turn them back into ordinary people who are no longer a danger to humane society.

[subterranean]

17. The problem isn't that some people are very wealthy.

The problem is this:



and this:

[Distant Quasar]

18. Of course Mankiw thinks inequality is no problem and loves bankers

He used to be George W. Bush's top economic advisor, and he was also an adviser to the Romney campaign.

Unsurprisingly, the article mainly consists of him beating on a series of straw men. Who is saying people who bring high value to their companies shouldn't get high salaries? Who is saying high risk doesn't justify high pay? Who is saying finance don't need talented individuals? These are just not arguments that most critics of inequality and the financial sector are making.

The most widespread complaint with the financial sector, in fact, is precisely that the big bankers have manipulated the system to reap enormous fortunes while shifting the risks onto the rest of society, and often evading legal responsibility for outright criminal activity. In short, their rewards are completely out of whack with the risks they themselves are running. But Mankiw won't go there, because that would require acknowledging arguments that he has no way of countering.

"Unlike the superheroes of “The Avengers,” the richest 1 percent aren’t motivated by an altruistic desire to advance the public good. But, in most cases, that is precisely their effect."

Yes, rich people are heroes and the market is our god. Let us grovel before them. Revolting.

[jsr]

23. +1

[L0oniX]

26. "high risk" LMFAO yea its real risky alright. You'd think they were on the front lines of some war.

So if you are risking life in prison then you deserve the gold you rob from Fort Knox. What's their greater risk? Falling off a 20 story financial firms roof top?

The terminology here is off the hook!

[reformist2]

31. I guess we're supposed to understand the pressure on them to bend if not break securities laws daily

[brentspeak]

39. "the article mainly consists of him beating on a series of straw men"

A good summation of N. Gregory Mankiw's entire career. A Harvard economist, he's never done much research, his only real skill ever has been to craft clever logical fallacies in support of the 1% and the conservative policies which have made them richer. Doesn't say much for Harvard as an institution that its wealthiest right-wing alumni have for years strong-armed the university to ensure that Mankiw teaches the school's primary freshman intro to econ course. And when Mankiw retires, they'll make sure that someone just as obliging to the nation's plutocrats takes over so that future Harvard freshmen can be just as indoctrinated.

[DanTex]

20. I take it you agree with Greg Mankiw. Pretty interesting indeed.

Quick question. People who make tens or hundreds of millions of dollars trading, for example, credit derivatives, what exact economic function do you think they provide?

It's always interesting that apologists for wealth inequality choose people like movie stars as examples of "deserving" wealthy, while hiding behind vague statements like this to justify the wealth accumulated in the financial sector:

They decide, in a decentralized and competitive way, which companies and industries will shrink and which will grow.

Translation: even Greg Mankiw has no idea what economic value the financial sector actually provides.

[BrentWil]

21. I don't...

I think venture capital in the old fashion sense (ie. funding a startup), should be rewarded. I think creating ways to make money off of money that has no relation to the underlying business should be discouraged.

[DanTex]

22. I agree with that. But I think venture capitalists are plenty rewarded already.

My problem with the Mankiw article is that it overlooks the fact that large portions of the financial sector (not all of it) are involved in what you describe as making money off of money. Mankiw makes it seem like there are only a few bad apples like Bernie Madoff, but most people who make millions of dollars in finance are actually justly compensated for providing great value. But the problem isn't just the Madoffs, it is the fact that even without breaking any laws, a lot of highly lucrative activities don't really provide much actual value to society.

And this is also true with things like private equity. In theory, they buy businesses and re-organize them more efficiently. In practice, they take advantage of tax and regulatory loopholes and restructure their debt in a way to make themselves more profit without actually providing much if any actual economic value.

[reformist2]

24. What is financial management these days anyway... index funds and government bonds?

It seems as if it doesn't take a genius to invest these days.

[L0oniX]

25. "Greater risk requires greater reward" Epic bullshit!

In that case everyone who goes without health care needs to be more rewarded than the rich. Those working as soldiers deserve more pay than those finance sociopaths. Greater risk my ass!

The terminology here is off the hook!

[Adam051188]

29. lulz

This article, like all others printed in mainstream "news" sources and most internet venues en la estados unidos these days, is pure unfiltered propaganda. What are we now? 40somthing in press freedom? speaking truth has become extremely frowned upon. poor people are poor because they are lazy and stupid. rich people are rich because they work really really hard and are naturally gifted. privately owned banks are a necessity to a stable society. we lock up a higher percentage of our population than any other nation on earth because....(insert b/s propagated by highly paid PR sociopaths here).

[Armstead]

30. Robert Downey's $50 mil does piss me off

If he took a measley, say $8 million the difference could be sread around to cover other costs, like the crew and other actors..

And beyond that ine inflation of salaries at the top add to the inflation in the cist of movie tickets.

That article is a piece if shit.

[HangOnKids]

32. Ahh the POM POMs come out for the rich

Pretty interesting bullshit article.

[PowerToThePeople]

33. No. eom

[WhaTHellsgoingonhere]

34. Remember, they are being compensated for being actors, dishonest, and creative thinkers...

...it's easy to look smart when things are booming. It takes some real acting and creative ways to hide or defer losses to convince others that things are much better than the smile on the face and brashness would portend.

[d_b]

35. damn, homie

couldn't even get a troll rec? times be hard n shit

[KittyWampus]

36. "examples of the tax-dodging wealthy are not at all the norm" What the f*ck?

That essay was such a steaming pile, it's hard to know where to start taking it apart.

I do think the gross ignorance in the author's statement about tax-dodging wealthy not a norm isn't a bad place to start.

[brentspeak]

40. Misleading thread header

Should read:

"N. Gregory Mankiw: Yes, the Wealthy Can Be Deserving"

The article is not the opinion of the New York Times; it's the opinion of the Mankiw, who was granted an op-ed space in the Times.