Tuesday, April 21, 2009

Fighter Pilots of Capitalism

You've probably seen this article from New York Magazine titled "The Wail of the 1%"(if not, get reading!), but since everything about it is so jaw-dropping, I still wanted to comment on it. In brief, it's an in depth look at the Wall Street bailouts and the Populist FURY, from Wall Street's perspective. As you may imagine, their complaints and justifications come across as a tad... out of touch.
“Without exception, Wall Street guys have gotten accustomed to not being stuck in the city in August. So it becomes a right to have a summer home within an hour or two commute from Manhattan,” says the Goldman vet. “There’s a cost structure of going with your family on summer vacation that’s not optional. There’s a cost structure of spending $40,000 to send your kids to private school that is not optional. There’s a sense of entitlement, that you need that amount of money just to live, that’s not optional.”

“You can’t live in New York and have kids and send them to school on $75,000,” he continues. “And you have the Obama administration suggesting that. That was a very populist thing that Obama said. He’s being disingenuous. He knows that you can’t live in New York on $75,000.”

That was an argument I heard over and over: that the high cost of living like a wealthy person in New York necessitates high salaries. It was loopy logic, but expressed sincerely. “You could make the argument that $250,000 is a fair amount to make,” says the laid-off JPMorgan vice-president. “Well, what about the $125,000 that staffers on Capitol Hill make? They’re making high salaries for where they live, maybe we should cut their salary, too.”

I was home in Baltimore this past weekend, helping my mom get settled at home after a 2+ week stint in the hospital (she's doing pretty well now), and my dad picked me up from the airport and on the way to my mom's we talked about how the economy was effecting his business. They do environmental chemistry, so a lot of their work comes from construction where you have to test soil or water for contamination or whatever... so naturally their business had fallen quite a bit. He and his partner were paying themselves 6 dollars an hour so they didn't have to lay anyone off.

It seems to me that every anecdote I hear from every industry except Wall Street involves employers and employees making sacrifices i.e. no bonuses or raises for execs... people being forced to take their vacation or take unpaid furloughs... and yet Wall Street guys think a house in the Hamptons is a Constitutional Right? It's hard to wrap your head around... but of course, I knew some of those guys/gals when they were in college, and they were entitled assholes then too, so I guess it's not surprising... but it does help illustrate why populism is so appealing.

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