Tuesday, December 19, 2006

How Much is Too Much?

This is truly 1928 all over again. Dom Perignon at $15,000, Klimt paintings for $78.5 million at Christie's, 50,000 square foot homes.

Florida home
[Thanks to designworksltd.com for the photo.]

Now, don't get me wrong. I'm all for capitalism, and I believe in the free market and competition. I also believe in an open labor market. But what rarified air are those guys in finance breathing, down there on Wall Street?

Their company-sponsored Christmas presents have become the latest bubble in and of themselves. You've all heard about the $53.4 million that went to Lloyd Blankfein over at Goldman Sachs, and the $40 million that went to John Mack at Morgan Stanley. Those are just the bonuses.

Here are some more figures for those of you who haven't heard about this yet:

- Wall Street is expected to pay out $23.9 billion in bonuses this year (17% ahead of last year).

- The upper echelon of Goldman Sachs could get $25 million each.

- Lehman Brothers and Bear Stearns will be paying out about $12 billion in compensation.

- Wall Street accounts for less than 5% of all the jobs in NYC, but 20% of the wages.

As much as I believe in capitalism and in the fairness of these numbers when compared to the competition, I cannot believe that there is this much disparity of income in the US, never mind the world. How can the upper echelon of economists and commentators deny this great income gap? It is unthinkable, even for the free market economist that I believe myself to be.

How do these guys look at themselves in the mirror? I just giggled at my own comment: of course -- they're proud of themselves. I would be; and why shouldn't they? And they'll give half of it to charity anyway.

But something stinks, and I don't think it's just my envy, although I'll admit there's a bit of that involved. (I would try to divide their income by my own blogger pay to give you an idea of how much they're making, but you can't divide by zero.)


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