The Rage of the Privileged Class Article

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The Rage of the Privileged Class Article

Post by 3CT_Paddler »

Interesting article in New York magazine that gives the perspective of Wall Street tycoons in this mess... http://nymag.com/news/businessfinance/56151/ . I can't say I feel sorry for multi millionaires losing their jobs. Most of those interviewed sound a little arrogant when it comes to how much they deserve to be paid, but I can understand how their world being turned on its head is a tough pill to swallow.
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Post by Kenkat »

Good article - thanks for posting!

Ken
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Post by chaz »

Thanks for the link. Interesting article.
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Post by btenny »

This sense of loss and entitlement is very similar to what happened in San Jose after the tech crash in 2000. All those engineers in Silicon Valley thought they were entitled to huge stock options and free lunches and free back rubs and all the perks that came with a Tech job. They did not care if they created something good or not. They all felt they were required to jump on the latest crazy Dot Com idea irregardless of the profits that could be made. Well then it blew up and the companies went broke and now many of the jobs and companies are gone. Well reality is happening on Wall Street today. Unbounded greed with no social benefit only lasts so long before it implodes.

So the really smart greedy ones recognize there is a bubble in progress and get their money fast and get out and do something else. Look at Mark Cuban as an example of the Internet Bubble Zillionares who got out before the crash. Look at Jim Cramer as a hedge fund guy who got out before the crash. Are they any worse or better than the commodities guys who made $300M at Goldman? Or the gas traders at Enron who made big bonuses before the company crashed? Is Chuck Prince of Citibank any worse than Ken Lay of Enron? Greed is universal and outrage is normal and it will happen again.

Bill
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Post by 3CT_Paddler »

btenny wrote:This sense of loss and entitlement is very similar to what happened in San Jose after the tech crash in 2000. All those engineers in Silicon Valley thought they were entitled to huge stock options and free lunches and free back rubs and all the perks that came with a Tech job. They did not care if they created something good or not. They all felt they were required to jump on the latest crazy Dot Com idea irregardless of the profits that could be made. Well then it blew up and the companies went broke and now many of the jobs and companies are gone. Well reality is happening on Wall Street today. Unbounded greed with no social benefit only lasts so long before it implodes.

So the really smart greedy ones recognize there is a bubble in progress and get their money fast and get out and do something else. Look at Mark Cuban as an example of the Internet Bubble Zillionares who got out before the crash. Look at Jim Cramer as a hedge fund guy who got out before the crash. Are they any worse or better than the commodities guys who made $300M at Goldman? Or the gas traders at Enron who made big bonuses before the company crashed? Is Chuck Prince of Citibank any worse than Ken Lay of Enron? Greed is universal and outrage is normal and it will happen again.

Bill
Good comparison between Silicon Valley engineers and Wall Street finance guys. Of course there is a bit of difference in zeros in the paychecks between the two. I don't know if I would equate Chuck Prince with Ken Lay. I think Ken Lay was knowingly deceitful and crooked... Prince was just willing to ignore risk because of greed. Just my two cents.
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Post by btenny »

I don't know CT. I know one trader from Enron and he was very smart but a very arrogant and greedy guy. He would have done almost anything to make money. He was that driven. So my view of Ken Lay is slanted by that knowledge. I think he was just greedy for a long time and grew the company like crazy into multiple wild trading schemes. Then one of the wildest bets on bandwidth blewup (sounds like the CDS at Citi & AIG to me) and he got caught. So he turned to deceipt because they had no government bailout. Would Prince have let Citibank go bankrupt before he cooked the books like Lay? I think the books are cooked but Uncle Sam bailed them out so we may never know. Plus we also know that the books at Fannie and Freddie are cooked so what makes any of us sure that the other books are OK?

So net net I think that many of the other banks really have "cooked the books" by badly misvalueing mortgages. But they are still lying to everyone because they are getting bailout money. So if and when they finally have to tell the truth about their books things will get worse again.

Bill
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Post by PatrickS »

I don't recall feeling any sense of entitlement during the dot com era working as an electrical engineer. I do recall studying on weekends while the students in easier disciplines went out to party when I was in the university (self paid by the way).

We're all posting on this site thanks to engineers. The computers you use, the telephones, cell phones, the machines used to save your life in the hospital. Guess who made those? That right, it's the self-entitled dot com engineers.

Let us pray that the US remains the premiere destination for sharp hard-working immigrants, because if they stop coming, or we drastically cut back on H-1B visas, there won't be enough engineers to keep us on the cutting edge of technology. There aren't many American born students willing to work that hard these days. Even back in the 80s when I was studying, I think over half the EE student population were immigrants. Same thing's happening in the medical field I believe.

</rant>
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Post by Pacific »

3CT_Paddler, thanks for the link. Very entertaining article. Maybe the title should be changed to simply Cry Me a River!
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Post by 3CT_Paddler »

btenny wrote:I don't know CT. I know one trader from Enron and he was very smart but a very arrogant and greedy guy. He would have done almost anything to make money. He was that driven. So my view of Ken Lay is slanted by that knowledge. I think he was just greedy for a long time and grew the company like crazy into multiple wild trading schemes. Then one of the wildest bets on bandwidth blewup (sounds like the CDS at Citi & AIG to me) and he got caught. So he turned to deceipt because they had no government bailout. Would Prince have let Citibank go bankrupt before he cooked the books like Lay? I think the books are cooked but Uncle Sam bailed them out so we may never know. Plus we also know that the books at Fannie and Freddie are cooked so what makes any of us sure that the other books are OK?

So net net I think that many of the other banks really have "cooked the books" by badly misvalueing mortgages. But they are still lying to everyone because they are getting bailout money. So if and when they finally have to tell the truth about their books things will get worse again.

Bill
You may be right. I guess I am going off of my perception based on the tons of negative coverage Ken Lay got compared to Prince. Ken Lay was charged with criminal acts and I doubt Prince will be. But the net result of Prince's actions were probably far more damaging to our nation compared with Ken Lay... so I do see your point. I just see a difference between intentionally breaking the law and following the law but causing greater financial harm.
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Post by rich »

Part of the problem, the Goldman vet explains, is that there’s a vast divide between where the public is and where the bankers are. The public registers how fundamentally the system has changed; the bankers are far from getting to that point. “When I talked to my friends in November and December at firms like Goldman, they would tell me, ‘If the government doesn’t bail us out, we’re going down.’ They really thought they were going to zero, and without exception, they all forget that now,” he says. “They forget that their company’s stock was going to zero. It’s a state of delusion; they don’t remember those days. The flip side of that is, every guy except the Goldman guy remembers that Goldman was bailed out.”
Best regards, | Rich
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Post by bigH »

I unfortunately have met some of these people through my wharton friends. They are overpaid, overworked, ego centric, and about to get a rude awakening. Many have a good level of intelligence (not as much as you think though), but many perform just to hit bonuses adding only a little value to the real economy. Since they have some intelligence, my hope is that they go back to school and get trained to do something that really adds something to the country.
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Post by bluemonday »

Bankers and finance in general has taken the mantle from lawyers as perhaps the most despised profession in the country.
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Re: The Rage of the Privileged Class Article

Post by saurabhec »

3CT_Paddler wrote:Interesting article in New York magazine that gives the perspective of Wall Street tycoons in this mess... http://nymag.com/news/businessfinance/56151/ . I can't say I feel sorry for multi millionaires losing their jobs. Most of those interviewed sound a little arrogant when it comes to how much they deserve to be paid, but I can understand how their world being turned on its head is a tough pill to swallow.
I just received the magazine. I have little sympathy for entitled Wall Streeters, but I have even less for Main Streeters who are packing an easy blame-the-bankers-and-traders-and-I-am-innocent attitude, and I have even less for tax policies that sanctify the middle class and reduce their tax burden while taxing the upper middle class and rich. It should also be noted that in NYC hackles have been raised by the planned city income tax increases on higher income earners. My effective tax rate (not marginal) was 42% last year, and 41% the year before (and I am not even counting the employer paid portion of SS and Medicare). That is a pretty progressive tax, one someone who was in the junior ranks on Wall Street. I don't really have a lot of sympathy for further tax increases on me while taxes for the elusive "middle class" are being cut in a time of deficits, underfunded SS and Medicare. --Political remarks deleted--
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Post by Random Musings »

Entitlement is only allowed for the uber-wealthy and the poor.

Another example of the barbell strategy.

RM
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Post by jsnbrnd »

Pacific wrote: Maybe the title should be changed to simply Cry Me a River!
Would you prefer Julie London or Susan Boyle?

http://www.youtube.com/watch?v=ByUOFV5TusE
http://www.youtube.com/watch?v=P8r9lRJ6yHY
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Post by isleep »

PatrickS wrote: There aren't many American born students willing to work that hard these days. Even back in the 80s when I was studying, I think over half the EE student population were immigrants. Same thing's happening in the medical field I believe.
When I was going to uni (south florida in the 90's), pretty much 75% of the computer science upper classmen were from india. Many of them had student visas, and ended up going back home to work. Nowadays, a large number of software jobs are being outsourced to... guess where?

Now who benefits from this? The shareholders, which also means wall street guys...
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Post by fishndoc »

“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
Not much I can add to this...

except maybe that the delivery guy is paying taxes that are helping to pay this jerk's exorbitant salary after he helped bankrupt his company.

Wayne
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Post by Pacific »

Would you prefer Julie London or Susan Boyle?
Looks like Susan has some real competition in the 12 yr old boy Shaheen Jafargholi, though my vote's still with Susan since she is 47. The boy has his whole life ahead of him -- or at least a few more years until puberty!!
http://www.youtube.com/watch?v=yVU4IkzMNIo
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Post by saurabhec »

fishndoc wrote:
“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
Not much I can add to this...

except maybe that the delivery guy is paying taxes that are helping to pay this jerk's exorbitant salary after he helped bankrupt his company.

Wayne
The sentiment might be crudely expressed, but let me help you understand some of the "rage" in that article :-)

What if I told you that the effective tax rate of the "jerk" is 2x that of the "tax paying" truck driver. In terms of actual dollars, the "jerk" is probably paying in a year what the "tax paying" truck driver will pay in twenty. Also note that we are being told that there will be a middle class tax cut while taxes on the wealthy will be raised, so in effect the "jerk" is going to be subjected to an even more progressive tax rate in the future than the "tax paying" truck driver. The "tax paying" truck driver already benefits:

1) A Social Security and Medicare system that favors him thanks to the "jerk"
2) Roth and Traditional IRA limits that favor him over the "jerk"
3) Tax Credits for college tuition that favor his children over those of the "jerk"

I might also add that Main Street greed has as much to do with Wall Street's crisis as much as corrupt or greedy bankers. This is just a repeat of the dot-com and telecom bust where greedy Main Streeters suddenly wanted to pretend virtue and find a villain to blame for their own greed. A lot of Main Street had a get-rich-quick mentality whether it be stocks or real estate, and now that the inevitable bust has occured, they want their slate of virtue washed clean of the sin of their own greed.
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Post by Jack »

Says a Goldman Sachs veteran:
"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."
The median family income in New York City is $49,000. The vast majority of families in New York City live on much less than $75,000.
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Post by xerty24 »

Jack wrote:The median family income in New York City is $49,000. The vast majority of families in New York City live on much less than $75,000.
Not without serious subsidies. Your 1 bedroom apartment in a halfway passable neighborhood will run you $2K/month, $24K/year, and $40K pretax (remember NY+NYC taxes are about 10%, on top of 8% FICA and 25% Fed). Good luck trying to live on the remaining $9K, or having a family and needing to pay double for a 2 bedroom.

Unless you're living in a rent controlled apartment or gov't substandard, er, subsidized housing, you really will probably need $75K to get by, and that's not with any fancy private schools or anything (which you might need since even public schools fill up and you aren't guaranteed a spot unless you're politically well connected).
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Post by redrock »

Thanks for sharing this interesting article. I'm confident most of these people will land on their feet after the initial shock wears off. Some of the people may end up far happier if they retrain for more fulfilling occupations and start enjoying the simple things in life. Hopefully, they saved some of the large bonuses for when the music stopped. Unfortunately, many of the people who got hurt by these corporate failures on Wall Street were support personnel and not the millionaires. I really feel for them.
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Post by saurabhec »

Jack wrote:Says a Goldman Sachs veteran:
"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."
The median family income in New York City is $49,000. The vast majority of families in New York City live on much less than $75,000.
This is silly - looking at medians in a city that is very unique. NYC has a very large population of "young creatives" as well as the urban poor who live in condtions even the lower middle class in most other American cities would not tolerate . The median means nothing in NYC to the white collar middle/upper middle class.

I live in a studio apartment (550 sq ft) with my wife, and we pay $30,000 a year in rent alone in a neighborhood that is not particularly upscale (its the kind of neighborhood where young college kids from out of town move in for their first job in the city). With an effective tax rate of 40%, we would need to make $50,000 in household income just to post rent. If we had two pre-school kids, we would need $50-60,000 in child care expenses alone (and I am not talking hiring an expensive high end nanny or finding some exclusive day care center, which means an extra $85-100K required in income.

$250K in Peoria is not the same as $250K in NYC (not even close) and it has nothing to do with spoilt big city elites.
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Post by Jack »

saurabhec wrote:
Jack wrote:Says a Goldman Sachs veteran:
"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."
The median family income in New York City is $49,000. The vast majority of families in New York City live on much less than $75,000.
This is silly - looking at medians in a city that is very unique. NYC has a very large population of "young creatives" as well as the urban poor who live in condtions even the lower middle class in most other American cities would not tolerate . The median means nothing in NYC to the white collar middle/upper middle class.

I live in a studio apartment (550 sq ft) with my wife, and we pay $30,000 a year in rent alone in a neighborhood that is not particularly upscale (its the kind of neighborhood where young college kids from out of town move in for their first job in the city). With an effective tax rate of 40%, we would need to make $50,000 in household income just to post rent. If we had two pre-school kids, we would need $50-60,000 in child care expenses alone (and I am not talking hiring an expensive high end nanny or finding some exclusive day care center, which means an extra $85-100K required in income.

$250K in Peoria is not the same as $250K in NYC (not even close) and it has nothing to do with spoilt big city elites.
The fact remains that over 10 million people manage to live in New York City on far less than $75,000 per year. To say that you can't live in New York City on less than $75,000 per year is simply untrue. 10 million people prove that it is untrue. Now, if he wants to argue that he can't live in the manner to which he has become accustomed, well then, that is just the point of the article -- his sense of entitlement.
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Post by isleep »

saurabhec wrote: I live in a studio apartment (550 sq ft) with my wife, and we pay $30,000 a year in rent alone in a neighborhood that is not particularly upscale (its the kind of neighborhood where young college kids from out of town move in for their first job in the city). With an effective tax rate of 40%, we would need to make $50,000 in household income just to post rent.
That doesn't sound like a fun place to be in the event you lose your job. :shock:

In contrast, down here in Tampa I'm paying a little under $800/mo (less than 1/3 the NYC cost) for a 900 sq-foot 1-bedroom and it's one of the "better" apartments in the immediate vincinity. I could easily find something for $650/mo if I wanted to move closer to the train tracks (I don't). You can also find RV/trailer lots that charge $250-300/mo within 10-15 miles from here, which is where I'm going once this lease is up.
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Post by INDUBITABLY »

“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
If the sense of entitlement emanating from this quotation doesn't hit you like a ton of bricks, I don't know what will. "I went to an expensive university... so I deserve an outrageous salary even if I screw up." Or that's how I see it.
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Post by ETFnerd »

PatrickS wrote:I don't recall feeling any sense of entitlement during the dot com era working as an electrical engineer. I do recall studying on weekends while the students in easier disciplines went out to party when I was in the university (self paid by the way).
I am sure at some point you will reap the rewards for your efforts.
We're all posting on this site thanks to engineers. The computers you use, the telephones, cell phones, the machines used to save your life in the hospital. Guess who made those? That right, it's the self-entitled dot com engineers.
Let's remember that the education you received, educational institutions, tech companies, tech development, etc were financed by bankers. Even if you paid 100% tuition, your education in the US was subsidized by the government, private entities, others. Tuition on average covers half the cost of educating a college student in major research universities. Everybody lives in a complex interconnected world, and especially engineers accomplish their work in an economy that runs on finance.
Let us pray that the US remains the premiere destination for sharp hard-working immigrants, because if they stop coming, or we drastically cut back on H-1B visas, there won't be enough engineers to keep us on the cutting edge of technology. There aren't many American born students willing to work that hard these days. Even back in the 80s when I was studying, I think over half the EE student population were immigrants. Same thing's happening in the medical field I believe.

</rant>
I've been to India and China and I do not recall seeing a shortage of the lazy and stupid in either of those countries. Maybe the shortage of American-born talent or enthusiasm exists in engineering because that's not where the best and smartest gravitate towards. Maybe you should pull your head out of the engineering sand and develop a broader view of the world.
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Post by Harold »

Jack wrote:
saurabhec wrote:
Jack wrote:Says a Goldman Sachs veteran:
"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."
The median family income in New York City is $49,000. The vast majority of families in New York City live on much less than $75,000.
This is silly - looking at medians in a city that is very unique. NYC has a very large population of "young creatives" as well as the urban poor who live in condtions even the lower middle class in most other American cities would not tolerate . The median means nothing in NYC to the white collar middle/upper middle class.

I live in a studio apartment (550 sq ft) with my wife, and we pay $30,000 a year in rent alone in a neighborhood that is not particularly upscale (its the kind of neighborhood where young college kids from out of town move in for their first job in the city). With an effective tax rate of 40%, we would need to make $50,000 in household income just to post rent. If we had two pre-school kids, we would need $50-60,000 in child care expenses alone (and I am not talking hiring an expensive high end nanny or finding some exclusive day care center, which means an extra $85-100K required in income.

$250K in Peoria is not the same as $250K in NYC (not even close) and it has nothing to do with spoilt big city elites.
The fact remains that over 10 million people manage to live in New York City on far less than $75,000 per year. To say that you can't live in New York City on less than $75,000 per year is simply untrue. 10 million people prove that it is untrue. Now, if he wants to argue that he can't live in the manner to which he has become accustomed, well then, that is just the point of the article -- his sense of entitlement.
Exactly -- I wish people would just put to rest the "can't live on" talk. (I'm coming from a San Francisco perspective, but many of the same comments are made about this city.)
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Post by saurabhec »

isleep wrote:
That doesn't sound like a fun place to be in the event you lose your job. :shock:

In contrast, down here in Tampa I'm paying a little under $800/mo (less than 1/3 the NYC cost) for a 900 sq-foot 1-bedroom and it's one of the "better" apartments in the immediate vincinity. I could easily find something for $650/mo if I wanted to move closer to the train tracks (I don't). You can also find RV/trailer lots that charge $250-300/mo within 10-15 miles from here, which is where I'm going once this lease is up.
I actually have lost my job already, but my wife hasn't. Between her salary and unemployment we actually manage to save some money as well, but that is because we have cut expenses to the bone, have no mortgage, no kids, and only debt is student loan payments that are reasonable. It also helps that relative to most of our peers, my wife and I are fairly non-materialistic and get by without many things others might consider de riguer. We might move out of Manhattan though if our rent doesn't go down in the summer.
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Post by saurabhec »

INDUBITABLY wrote:
“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
If the sense of entitlement emanating from this quotation doesn't hit you like a ton of bricks, I don't know what will. "I went to an expensive university... so I deserve an outrageous salary even if I screw up." Or that's how I see it.
To paraphrase a brilliant quote I saw on a Boglehead's signature: "The only people who believe in government imposed wage controls are the North Koreans, the Cubans, and angry Main Streeters of newly discovered self-virtue".
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Post by 3CT_Paddler »

ETFnerd wrote:
PatrickS wrote:I don't recall feeling any sense of entitlement during the dot com era working as an electrical engineer. I do recall studying on weekends while the students in easier disciplines went out to party when I was in the university (self paid by the way).
I am sure at some point you will reap the rewards for your efforts.
We're all posting on this site thanks to engineers. The computers you use, the telephones, cell phones, the machines used to save your life in the hospital. Guess who made those? That right, it's the self-entitled dot com engineers.
Let's remember that the education you received, educational institutions, tech companies, tech development, etc were financed by bankers. Even if you paid 100% tuition, your education in the US was subsidized by the government, private entities, others. Tuition on average covers half the cost of educating a college student in major research universities. Everybody lives in a complex interconnected world, and especially engineers accomplish their work in an economy that runs on finance.
Let us pray that the US remains the premiere destination for sharp hard-working immigrants, because if they stop coming, or we drastically cut back on H-1B visas, there won't be enough engineers to keep us on the cutting edge of technology. There aren't many American born students willing to work that hard these days. Even back in the 80s when I was studying, I think over half the EE student population were immigrants. Same thing's happening in the medical field I believe.

</rant>
I've been to India and China and I do not recall seeing a shortage of the lazy and stupid in either of those countries. Maybe the shortage of American-born talent or enthusiasm exists in engineering because that's not where the best and smartest gravitate towards. Maybe you should pull your head out of the engineering sand and develop a broader view of the world.
I think there has been a "shortage" of Americans going into engineering because the payoff while decent does not compare to the recent salaries of finance grads or MBAers. And personally as an engineer I don't see a "shortage" of engineers. If there were a true shortage of engineers their salaries would be high enough that more people would jump into the major. Supply and demand. I see certain companies complaining about a shortage of really cheap engineers. I don't really understand the complaints because it is not like most engineers make much anyways. I think there has been a boom in recent years in management degrees with no technical background where they are called to manage those with technical degrees. So then we have non technical people making decisions in areas where they don't have any good background knowledge. Look at all the recent blow ups with AIG or Citigroup and how some financial wizard with a PhD came up with a way of automating risk. He may have understood the risk in his assumptions but his manager or the head of the company did not.
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Adrian Nenu
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Post by Adrian Nenu »

http://www.usatoday.com/money/companies ... mori_N.htm
Kyocera founder Kazuo Inamori criticizes U.S. CEO excesses
Good commentary on the lack of good corporate stewardship in the US.

Adrian
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grumel
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Post by grumel »

Adrian Nenu wrote:http://www.usatoday.com/money/companies ... mori_N.htm
Kyocera founder Kazuo Inamori criticizes U.S. CEO excesses
Good commentary on the lack of good corporate stewardship in the US.

Adrian
anenu@tampabay.rr.com

Short version:

USAtoday: "Manchester capitalism is great"
Kazuo: "No"
USAtoday: "Do your really think that manchester capitalism is not great"
Kazuo:"Yes"
USAtoday: "Dont you think that all markets are always efficient"
Kazuo: "No"
Last edited by grumel on Tue Apr 21, 2009 3:48 pm, edited 1 time in total.
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Adrian Nenu
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Post by Adrian Nenu »

I'd like to read Jack Bogle reply to Kazuo Inamori's interview. Jack would probably be in agreement.

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Post by Buysider »

Good commentary on the lack of good corporate stewardship in the US.
Unfortunately, the US is the last best hope for corporate stewardship and Japan is one of the last places in the developed world where I would look towards for a model of corporate governance (separate from stewardship).

Kazuo talks a nice game about CEO comp - that is an easy target - every $ of corporate comp is a $ out of my pockets as a shareholder, not hard to agree with him there. However, no where in this interview does Kazuo mention the owners of the company. Shareholders in Japan are an afterthought to management.

He owns less than 3% of the company's shares and in Japan, company owners interests rank last among "stakeholders" who interests management must "balance". Guess who ranks first - management. The fact that employees rank a close second doesn't make me feel better as an owner of capital in these institutions.
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Post by peter71 »

INDUBITABLY wrote:
“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.
If the sense of entitlement emanating from this quotation doesn't hit you like a ton of bricks, I don't know what will. "I went to an expensive university... so I deserve an outrageous salary even if I screw up." Or that's how I see it.
Yep, given that most every professor in the country is choosing not to maximize their own personal payout I'm sure it's being talked about at many a business school faculty cocktail party :D
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Post by saurabhec »

peter71 wrote:
Yep, given that most every professor in the country is choosing not to maximize their own personal payout I'm sure it's being talked about at many a business school faculty cocktail party :D
The sanctimony of the Professor quoted in the article really managed to annoy me. He should first take a look at his own backyard. Universities benefit from huge government subsidies and yet the cost of education has greatly outpaced inflation. Given that education is perhaps the most important asset the average person can buy, who has been shafting Middle America more? University administrations and compliant tenured Professors protected from the harsh competition of the real world or easy villains like investment bankers and traders?

As far as the great social value of Doctors, theoretically sure I will conceed the point, but in the US overpaid Doctors who are milking the system to pad their pockets (ordering unecessary tests, prescribing unecessary medicines, refusing to see or spend time with patients unless they are paid by the second) is one reason why the cost of Healthcare is so high. Speaking of cartels, the AMA works pretty hard to control the supply of Doctors in this country and prevent global competition from foreign Doctors, which is hardly in the best interest of patients. So before Professors start throwing stones at Wall Street and praising the social value of Doctors - give me a break - look at their own backyard first.
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Post by peter71 »

saurabhec wrote:
peter71 wrote:
Yep, given that most every professor in the country is choosing not to maximize their own personal payout I'm sure it's being talked about at many a business school faculty cocktail party :D
The sanctimony of the Professor quoted in the article really managed to annoy me. He should first take a look at his own backyard. Universities benefit from huge government subsidies and yet the cost of education has greatly outpaced inflation. Given that education is perhaps the most important asset the average person can buy, who has been shafting Middle America more? University administrations and compliant tenured Professors protected from the harsh competition of the real world or easy villains like investment bankers and traders?

As far as the great social value of Doctors, theoretically sure I will conceed the point, but in the US overpaid Doctors who are milking the system to pad their pockets (ordering unecessary tests, prescribing unecessary medicines, refusing to see or spend time with patients unless they are paid by the second) is one reason why the cost of Healthcare is so high. Speaking of cartels, the AMA works pretty hard to control the supply of Doctors in this country and prevent global competition from foreign Doctors, which is hardly in the best interest of patients. So before Professors start throwing stones at Wall Street and praising the social value of Doctors - give me a break - look at their own backyard first.
What shocked me about the quote is that it conflated academic performance with desert, and while the students I've had go on to Wall Street in the past are usually driven, they're no smarter than the law students and they're generally less smart than the med students and the future professors . . . so while we can debate whether there's some optimal combination of smarts and greed that makes a middle-of-the-road Columbia undergrad particularly useful to society, I'd personally argue that a) you can get greed from lots of places and b) there's at least 20,000 current undergraduates in the country who are smarter than Joe Columbia and who aren't going to be as handsomely compensated.
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Post by Pacific »

I live in a studio apartment (550 sq ft) with my wife, and we pay $30,000 a year in rent alone in a neighborhood that is not particularly upscale (its the kind of neighborhood where young college kids from out of town move in for their first job in the city). With an effective tax rate of 40%, we would need to make $50,000 in household income just to post rent. If we had two pre-school kids, we would need $50-60,000 in child care expenses alone (and I am not talking hiring an expensive high end nanny or finding some exclusive day care center, which means an extra $85-100K required in income.
Nothing prevents you from moving to Omaha, NE; Springdale, AR; Enid, OK; etc. Very few people are "forced" to live in high cost of living areas -- they do it by choice.
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Post by MP173 »

The article was well written and no doubt expresses the feelings of those that we seldom hear from in such an emotional state.

It is very easy to dance on the grave of people who have failed in this situation. I just cant bring myself to do it.

The matter of "politics of envy" is very interesting to me. A comment was made in the article about entertainers making big $$$ and no one seeming to care. "No one ever got hurt by Julia Roberts being paid $20million"...unless you invested in a movie that bombed.

We tolerate Ohpra Winfrey making $300 million a year, but rage at a CEO making $10 million. What causes that?

I really feel we have a problem with the "politics of envy" in this country. If a person's income should be regulated...then shouldnt we regulate other important functions in life? Such as the ability to create (and sell) music, entertainment, athletisim? With a regulation in income, shouldnt there also be a regulation in the length a person can serve office? After all, income and elected office are both POWER. If we covet another's income, then wouldnt our own happiness or well being be open game for others?

Extreme comments? Sure they are and I know it. But envy is very very ugly...and it is really a dominant form of emotion that is weaving its way into our society. I really dont have a solution, just comments.

Now, I am going to eat ... and promise that I will not envy meals others are having.

ed
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Post by ETFnerd »

Maybe it's not envy as much as being glad that they are somewhat affected for having almost destroyed the financial system. Glad that they reap what they've sown.

Life is usually not fair, but it's satisfying when incompetents get what they deserve.
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Post by grumel »

Hollywood/tv Star pay falls incredible fast. Those few high pay outliners hardly matter.

http://www.forbes.com/lists/2008/53/cel ... ear_4.html

The last person on the forbes top100 celebtrities list already earns only 1,5 million.

The 100th highest earning manager is still far above 10 million. Worse, star pay is usually concentrated in short sucess periods. So Lifetime earnings for upper top managers are much higher for a nicer job.
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Post by Harold »

MP173 wrote:We tolerate Ohpra Winfrey making $300 million a year, but rage at a CEO making $10 million. What causes that?
This one seems obvious to me -- Oprah's the product, the CEO's not.

I know some argue otherwise, but to an average person who doesn't put a lot of thought into it, that's the clear first impression.
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Post by phantom »

I find it absurd that the bankers who received bonuses from AIG were getting death threats. It's as if the people who were sending the death threats would not have taken the money had it been offered to them instead. Having said that, I do believe that there is something seriously wrong with the fact that they were given the bonuses. I am guessing that because their job entails them to shuffle around billions of dollars on a daily basis has somehow given many wall-streeters the sense that their job is the most important in the world. And naturally being so important, should entitle one to a seven-figure salary and bonuses. But I think that once their illusion of self-importance goes away, so will their sense of entitlement.

And by the way, it is very easy to live in New York on a 75,000 dollar salary. Both my parents have done it on much less than that. Maybe you have to live in Brooklyn where you can get a nice one-bedroom in a safe neighborhood for around $1200. So I find it a little ridiculous when people complain about not being able to live on that much.
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Post by ETFnerd »

MP173 wrote:Now, I am going to eat ... and promise that I will not envy meals others are having.

ed
Have a good meal. I promise I won't envy you when you are parking my car at the country club.
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Post by grumel »

Sorry to hear you lost your drivers license etfnerd.
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Post by mews »

xerty24 wrote:
Jack wrote:The median family income in New York City is $49,000. The vast majority of families in New York City live on much less than $75,000.
Not without serious subsidies. Your 1 bedroom apartment in a halfway passable neighborhood will run you $2K/month, $24K/year, and $40K pretax (remember NY+NYC taxes are about 10%, on top of 8% FICA and 25% Fed). Good luck trying to live on the remaining $9K, or having a family and needing to pay double for a 2 bedroom.

Unless you're living in a rent controlled apartment or gov't substandard, er, subsidized housing, you really will probably need $75K to get by, and that's not with any fancy private schools or anything (which you might need since even public schools fill up and you aren't guaranteed a spot unless you're politically well connected).


Well, I own my own place, and my TOTAL cash outlay last year in (a good part of Brooklyn) NYC, after taxes, including vacation, was about 24k. Children would increase this :) but having a second wage earner in the family could offset it. I make about the median. (have to talk to the boss about this - I'm from Lake Woebegon, ya'know)

Non-Public Schools - There is the Catholic school a few blocks away, and the Greek Orthodox school a few blocks the other way. There are also veeerry expensive private schools in the area.

The public schools range from horrible to really good. (The NY Times did an article on this a week or so ago. )

It is a choice - no one is guaranteed everything they want. Lots of the suburbs have good schools. Spend some time on the LIRR, or MetroNorth, and have a more spacious livestyle.

No one is beating folks over the head, screaming "Und you vill spend $500 per sqare foot for housing, schwein!!"

ta,
mews
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Post by btenny »

We shall see how salaries and bonuses work out in the academic world over the next year. In Nevada and Arizona and California the university budgets from the states are being cut back drastically, like 30% or more in many cases. So the schools are facing huge funding shortfalls.

At this time the college administrators solution to these big problems is just raise student tuition and fees. No faculty or admin salary cuts, no layoffs of profs, in general no significant impacts to college staff. Just pass the bill down to the customer, the student.

Well if they implement this we will kill our golden goose, the US College system. This GIANT cost increase will ripple thru campuses like a time bomb by year end. Student will revolt and picket and cause all kinds of havock. I think they have a good case of discrimination. Wall Street gets bailouts, Administrators keep their CEO like pay and the faculty keeps their "tenured" salaries but students who cannot vote and have little money are getting scre*ed.....

Bill
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