The Rage of the Privileged Class Article

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MP173
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Post by MP173 »

The meal was great, as was the company.

Regarding the compensation for managers vs entertainers, one could make the same comment for managers...only a few attain the top level.

I am not sure the number of managers compared to entertainers, but my guess is there are far more managers out there. The expectancy at the CEO level is not that long either, particularly the last few years. Most times you get one shot at it and if it doesnt work out...gone.

Hey, I am not automatically for highly compensated managers. They should earn it. This system has gotten out of control in some instances. But, I certainly believe in a system where you can earn as much as your talent level allows you to.

Let me shift slightly in this conversation and simply ask....what is a fair level of compensation and how should it be determined?

ed
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Adrian Nenu
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Post by Adrian Nenu »

http://www.nytimes.com/2009/03/29/business/29gret.html
Shareholders Who Act Like Owners
Gretchen Morgenson is right on the money as usual. Too bad that fund management companies are not as active as pension funds in protecting their clients' interests.

Adrian
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saurabhec
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Post by saurabhec »

Pacific 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. 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.
Last I checked Omaha, NE is not a hotbed of finance activity, so thanks but I think I will try to figure it out here. I'm not asking you, anyone else, or society for anything other than to stop treating someone who might make a household income of > $250K as an ATM machine to fund the government, or assume that you know what I should be paid and how you can tax it.
ETFnerd
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Post by ETFnerd »

grumel wrote:Sorry to hear you lost your drivers license etfnerd.
:D
saurabhec
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Post by saurabhec »

phantom wrote: 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.
The real issue is not whether you can live in NYC on $X. In a free society your definition of what is affordable and proper can be very different from mine. The issue is whether as a society we want the government or a majority vote deciding how much compensation is appropriate for someone in a given profession. There is also this arbitrary, across the board assumption that a couple with a family making $250K is "rich". I am sorry, but if "rich" is going to b defined at such an absurdly low level it is only going to encourage a society that rewards mediocrity and will produce mediocre people. Why go through the trouble of pursuing a demanding line of work when the rewards of the marginal dollar are sub-par?
MrWinky
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Post by MrWinky »

The comments to this article are amazing. If the author wanted to incite populist outrage then he definitely succeeded. This is even better than the 'bitter socialite girlfriends' article in the NY Times.

It makes me sad. It also makes me wonder how far I really am, along with many others here who are not just-scraping-by, from being a target of all the resentment.
ETFnerd
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Post by ETFnerd »

MrWinky wrote:It makes me sad. It also makes me wonder how far I really am, along with many others here who are not just-scraping-by, from being a target of all the resentment.
Did you commit financial excesses that systematically contributed to the financial meltdown?

If you didn't and are just wealthy, I don't really care about you.

If you did, I don't really care if you are sad. You should be held accountable for what you did.
Pacific
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Post by Pacific »

saurabhec wrote:
Pacific wrote:
Quote:
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.


Last I checked Omaha, NE is not a hotbed of finance activity, so thanks but I think I will try to figure it out here. I'm not asking you, anyone else, or society for anything other than to stop treating someone who might make a household income of > $250K as an ATM machine to fund the government, or assume that you know what I should be paid and how you can tax it.
Actually, Omaha, Nebraska is not a hotbed of anything. But, it seems to be okay for Warren Buffet.

I do not see anyone on here saying that someone that makes over $250K should be treated as an ATM machine to fund the government (implying that the government should be allowed to take money from such people any time it wants). Nor do I see anyone stating that we know what YOU should be paid and how much YOU should be taxed. I do, however, see many posts complaining about the inexplicable sense of entitlement that some people have. "I went to a good school, therefore I deserve to be paid well."

My remark was meant to convey the idea that someone should not complain about the hig cost of living in a location if they have chosen to live in that particular location. Obviously, this does not apply to the situation where a child is taking care of an invalid parent.
saurabhec
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Post by saurabhec »

ETFnerd wrote:
MrWinky wrote:It makes me sad. It also makes me wonder how far I really am, along with many others here who are not just-scraping-by, from being a target of all the resentment.
Did you commit financial excesses that systematically contributed to the financial meltdown?

If you didn't and are just wealthy, I don't really care about you.

If you did, I don't really care if you are sad. You should be held accountable for what you did.
Perhaps you could start the lynching with anyone you know in an oversized home and mortgage? Then maybe we can move on to greedy investors, and finally move on to Wall Street. I am only glad that you are operating with your lynch mob mentality in the modern era, who knows what kind of mob you might be leading in a pre-civil rights era?
saurabhec
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Post by saurabhec »

Pacific wrote: My remark was meant to convey the idea that someone should not complain about the hig cost of living in a location if they have chosen to live in that particular location. Obviously, this does not apply to the situation where a child is taking care of an invalid parent.
I hardly complained about the high cost of living in NYC, merely my high tax cost burden, and the desire of "Main Street" to increase this even further, while demanding a reduction of their own already low tax burden. I also pointed out the absurdity of arbitrarily defining 250K as a threshold for rich across the country.

As far as education and income, I agree that merely going to a selective school should not make one feel entitled to anything from society. However, in our society education is the one way in which economic and social mobility can be achieved. There is a high correlation between going to selective schools and getting a chance to earn very high incomes in certain professions.

Since we are all talking in extremes at each other, in that vein there are certain kinds of parents who make great personal and financial sacrifices in getting their kids into selective schools, and certain parents choose not to do so. If we restructure our society in a way that penalizes the strivers vs. the non-strivers (through tax policy, compensation limits), we are ultimately going to encourage mediocrity in our society by decreasing the ambition and drive of the strivers.
ETFnerd
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Post by ETFnerd »

saurabhec wrote:
ETFnerd wrote:
MrWinky wrote:It makes me sad. It also makes me wonder how far I really am, along with many others here who are not just-scraping-by, from being a target of all the resentment.
Did you commit financial excesses that systematically contributed to the financial meltdown?

If you didn't and are just wealthy, I don't really care about you.

If you did, I don't really care if you are sad. You should be held accountable for what you did.
Perhaps you could start the lynching with anyone you know in an oversized home and mortgage? Then maybe we can move on to greedy investors, and finally move on to Wall Street. I am only glad that you are operating with your lynch mob mentality in the modern era, who knows what kind of mob you might be leading in a pre-civil rights era?
You would need to be in a new level of delusion to throw around a racially charged term around to compare what is happening to bankers now to what african americans experienced in this country's history.

Frankly you make me sick.

I called for accountability not lynching, but I guess in your warped sense of reality you're accountable to no one and your trials [paying higher taxes] compare to being strung up on a tree.

But how could you be sensitive to history or another group of people when you've clearly demonstrated in your posts that the world revolves around you and the mediocre, as you call them, do not matter.
saurabhec
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Post by saurabhec »

ETFnerd wrote: Frankly you make me sick.
The only thing that is sick is your assumption that just because someone works on Wall Street they are somehow tainted and you are pristine. Your lust for misguided vengeance is what is truly sick. My "trials" are quite ordinary and common place, but your sanctimonious retributive tendencies aren't.
phantom
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Post by phantom »

From what I recall, there wasn't really much of a "mob mentality" against wall street before the bailouts started. People knew about the extremely high salaries and bonuses that were being made on wall street, but aside from an occasional scandal when a fired CEO would leave with a $200 million severance package, I don't think there were many issues with the high compensation.

I think that the real issue now for the average Joe is the following: wall street guys screwed up big time causing Joe to either lose his job (which has nothing to do with finance) or fear losing his job. Wall street is now getting tax-payer bailouts that are subsidized in part by Joe. The guys on wall street are actually getting bonuses while Joe may still be unemployed or in danger of losing his job because of them. This makes Joe pissed off.

Sure, wall street may be suffering because of the economic collapse, but so is EVERYONE ELSE, and this is what the people who think that they are entitled to $250K salary at the minimum don't seem to get. And I find it a little insulting when finance guys justify their entitlement with the sacrifices they make. A lot of people have made sacrifices in their lives to get to where they are and a lot of them are not making anywhere close to $250K. So if you are making $250K and are going to be forced to pay 50% in taxes... relax... you are still making a whole lot more than almost everyone else.

And on the topic of celebrities making $300 million... well, if the Yankees caused the economy to crash and received a government bailout to stay afloat, then I am guessing that there would have been some complaints about them giving Mark Teixeira $180M. But as far as I know, the US government is not subsidizing the Yankees (nor will they), so they can pay anyone however much they want.
swaption
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Post by swaption »

I could add so much to this. Trained as an electrical engineer in the 80's, I have now been in banking for 17 years. I have worked closely with many who are genuinely responsible for much of what has transpired. There were lots of problems with the overall system, but one of the big ones is that banks have always been very badly managed organizations. Managers are trained as bankers and not managers, so inevitably they do a bad job. Those closest to the revenue (i.e. not management) often times aremore powerful than the people they work for.

In terms of entitlement, I will admit that the perspective of many is warped. It doesn't matter what my cost of living is, if someone in Peoria can do my job just as well from there, then I'm toast. Be it Oprah or a banker, the fact of the matter is you need to produce at a level commensurate with your compensation.

In my case and in the case of the vast majority of my industry, you work the entire year having no idea what your ulitmate compensation will be since the bonus is entire discretionary. It is not unusual to be fired right before bonus time so there is enough money to pay others, so you contributiion in the past not only has to be valued, but also in the future. Sound almost crazy, but after a while you become hardened to it.

But this last dose of populist vitriol went way too far and is truly scary. Over 75% in congress thought it was ok to seize 90%+ of compensation after the fact. The onky phrase that comes to mind is "it can happen here".
phantom
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Post by phantom »

swaption wrote: But this last dose of populist vitriol went way too far and is truly scary. Over 75% in congress thought it was ok to seize 90%+ of compensation after the fact. The onky phrase that comes to mind is "it can happen here".
I agree, imposing arbitrary taxes is getting into a dangerous area. But as the person in the article said, the AIG people would have gotten $0 had the tax-payers not bailed them out. I think the blame here rests with the government officials who were giving out the subsidies because they did not specify the restrictions on the bailed out firms. I think it would have been completely fair for the government to say that if AIG wants to be saved, everyone's salaries and bonuses would be capped. The only problem I have is that they tried to do this retroactively.
brainstem
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Post by brainstem »

Stages of Grief: Denial, anger, bargaining, acceptance
ETFnerd
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Post by ETFnerd »

saurabhec wrote:
ETFnerd wrote: Frankly you make me sick.
The only thing that is sick is your assumption that just because someone works on Wall Street they are somehow tainted and you are pristine. Your lust for misguided vengeance is what is truly sick. My "trials" are quite ordinary and common place, but your sanctimonious retributive tendencies aren't.
I hope that when you do your job, your reading comprehension skills are better than your sense of reality. Now for what I actually said:
ETFnerd wrote:
MrWinky wrote:It makes me sad. It also makes me wonder how far I really am, along with many others here who are not just-scraping-by, from being a target of all the resentment.
Did you commit financial excesses that systematically contributed to the financial meltdown?

If you didn't and are just wealthy, I don't really care about you.

If you did, I don't really care if you are sad. You should be held accountable for what you did.
1. Where do I assume that just because someone works on Wall Street they are somehow tainted and I am pristine?

2. Where do I lust for misguided vengeance? Apparently because I demand accountability from those who caused the near collapse of the financial system?

3. You claim that:"My "trials" are quite ordinary and common place", but you compare your trials to a lynching? Why stop there? Why not claim that you are herded into a modern day concentration camp and are being accorded the modern day equivalent of being gassed? You never retracted your inappropriate comments.

4. You claim that I have "sanctimonious retributive tendencies". Why? Because I demanded that those that contributed to the financial meltdown should be held accountable for their actions? I guess in your world there is no personal responsibility.

Provide one shred of evidence for any of the claims you have made of me above.

I gotta admit that you do have a penchant for hyperbole when something happens to you. Poor you.
xerty24
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Post by xerty24 »

mews wrote:
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....

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.
I should have been more clear that I was addressing my comments to Manhattan rather than the suburbs. Certainly you can trade your 10 minute walk for an 60-90 minute commute and save a bunch on housing.

That said, I'm not sure your "total outlay" is a reasonable comparison since you own your home. It's not exactly fair to say you only pay $100/month in property taxes for housing when you had to put down $500K to buy the place originally. A better comparison would be what it would cost to rent your current accommodations.
Harold
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Post by Harold »

xerty24 wrote:
mews wrote:
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....

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.
I should have been more clear that I was addressing my comments to Manhattan rather than the suburbs. Certainly you can trade your 10 minute walk for an 60-90 minute commute and save a bunch on housing.

That said, I'm not sure your "total outlay" is a reasonable comparison since you own your home. It's not exactly fair to say you only pay $100/month in property taxes for housing when you had to put down $500K to buy the place originally. A better comparison would be what it would cost to rent your current accommodations.
This "can't live on" insistence is so strange. It's all about what lifestyle you want. Of course you can live in Manhattan for less than 2K a month. And of course you can live in Manhattan for less than 75K a year. A 30 second search yielded:

WEST 40'S
$ 1550
WALKUP 1BR
Great midtown area close to restaurants, theatre, and transportation. large 1 bedroom apartment with french doors, separate kitchen, and sundrenched.
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market timer
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Post by market timer »

Harold wrote:This "can't live on" insistence is so strange. It's all about what lifestyle you want. Of course you can live in Manhattan for less than 2K a month. And of course you can live in Manhattan for less than 75K a year. A 30 second search yielded:

WEST 40'S
$ 1550
WALKUP 1BR
Great midtown area close to restaurants, theatre, and transportation. large 1 bedroom apartment with french doors, separate kitchen, and sundrenched.
Link? I'm looking for a $1500-$2000 1 BR right now. Actually, "walkup" kinda sucks. I need a doorman so I can drop off and pick up my dry cleaning, since I'll be working 14-hour days.
Harold
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Post by Harold »

market timer wrote:
Harold wrote:This "can't live on" insistence is so strange. It's all about what lifestyle you want. Of course you can live in Manhattan for less than 2K a month. And of course you can live in Manhattan for less than 75K a year. A 30 second search yielded:

WEST 40'S
$ 1550
WALKUP 1BR
Great midtown area close to restaurants, theatre, and transportation. large 1 bedroom apartment with french doors, separate kitchen, and sundrenched.
Link? I'm looking for a $1500-$2000 1 BR right now. Actually, "walkup" kinda sucks. I need a doorman so I can drop off and pick up my dry cleaning, since I'll be working 14-hour days.
http://www.manhattanapts.com/rentals/dr ... 14&page=35
saurabhec
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Post by saurabhec »

phantom wrote: Sure, wall street may be suffering because of the economic collapse, but so is EVERYONE ELSE, and this is what the people who think that they are entitled to $250K salary at the minimum don't seem to get. And I find it a little insulting when finance guys justify their entitlement with the sacrifices they make. A lot of people have made sacrifices in their lives to get to where they are and a lot of them are not making anywhere close to $250K. So if you are making $250K and are going to be forced to pay 50% in taxes... relax... you are still making a whole lot more than almost everyone else.
I don't think anyone is "entitled" to make $250K just because of their industry. However I certainly think that the decision is best made by their employer and not someone who is ignorant about the industry. If I want to pay 50% in taxes I would rather received more generous benefits ala Europe, Canada etc than the relatively lousy deal upper income earners get in the US.
saurabhec
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Post by saurabhec »

ETFnerd wrote: 3. You claim that:"My "trials" are quite ordinary and common place", but you compare your trials to a lynching? Why stop there? Why not claim that you are herded into a modern day concentration camp and are being accorded the modern day equivalent of being gassed? You never retracted your inappropriate comments.
I compared your mentality to that of a lynch mob, didn't say that I was the victim. Focus on your behavior, not what I might be thinking. For the record though, I am not going to respond to anything you say, because to do so would be a waste of my time and energy, it is hard to reason with people like you, best to give you a wide berth.
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HomerJ
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Post by HomerJ »

saurabhec wrote:
Pacific 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. 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.
Last I checked Omaha, NE is not a hotbed of finance activity, so thanks but I think I will try to figure it out here. I'm not asking you, anyone else, or society for anything other than to stop treating someone who might make a household income of > $250K as an ATM machine to fund the government, or assume that you know what I should be paid and how you can tax it.
Although Omaha, NE may not be a hotbed of finance activity, I'm sure you could find a job in finance or accounting in the Mid-west for $100,000 a year...

Considering that you can buy a nice 3000 square-foot house with a backyard for about $250,000, you'll probably be living better than you do on $200,000 in NY in your tiny 550 square-foot apartment.

I have business associates from NYC who come to my house in Kansas City, and tell me my $450,000 house would cost $3 million in NY.... They may make twice as much as me, but I bet my home is nicer, and I'm saving more each month...
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Post by phantom »

saurabhec wrote: I don't think anyone is "entitled" to make $250K just because of their industry. However I certainly think that the decision is best made by their employer and not someone who is ignorant about the industry. If I want to pay 50% in taxes I would rather received more generous benefits ala Europe, Canada etc than the relatively lousy deal upper income earners get in the US.
Agree completely. Unfortunately, once AIG received a 200 billion bailout, the US government (and thus the taxpayers) essentially became the employers of all those working there, and the taxpayers said "no bonuses!"

This reminds me of what happened to the guys running LTCM when it blew up. LTCM caused a financial meltdown and when the other banks were forced to step in and rescue them, the top people working at LTCM, the ones responsible for this whole mess, were told that as a condition for the rescue they had to stay on at LTCM for a few years and work for something like $500K per year. The guys at LTCM responded angrily that this was indentured servitude since they could get much higher paying jobs elsewhere. (I may have gotten a few of the details wrong, but from what I recall this is the gist of the scenario described in When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein). How's that for entitlement and lack of accountability?

I just have to wonder whether wall street makes one lose his sense of decency or whether those without morals are simply attracted to wall street in the first place. (I do realize that there are decent people on wall street like the guy described in the article who quit and donated his bonus to charity.)
saurabhec
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Post by saurabhec »

phantom wrote: Agree completely. Unfortunately, once AIG received a 200 billion bailout, the US government (and thus the taxpayers) essentially became the employers of all those working there, and the taxpayers said "no bonuses!"

This reminds me of what happened to the guys running LTCM when it blew up. LTCM caused a financial meltdown and when the other banks were forced to step in and rescue them, the top people working at LTCM, the ones responsible for this whole mess, were told that as a condition for the rescue they had to stay on at LTCM for a few years and work for something like $500K per year. The guys at LTCM responded angrily that this was indentured servitude since they could get much higher paying jobs elsewhere. (I may have gotten a few of the details wrong, but from what I recall this is the gist of the scenario described in When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein). How's that for entitlement and lack of accountability?

I just have to wonder whether wall street makes one lose his sense of decency or whether those without morals are simply attracted to wall street in the first place. (I do realize that there are decent people on wall street like the guy described in the article who quit and donated his bonus to charity.)
A few comments:

1. One does not make sound policy by focussing on a specific incident or company. I agree that the AIG bonuses were silly, but that should not be an excuse for the politicians to pander to ugly envy-driven sentiments in the population and decide what are appropriate compensation limits in an industry they know nothing about. Governments in North Korea and Cuba know how much workers in different industries "deserve", it is painful to see Americans make the same mistakes.

2. America should never be about punishing what are deemed to be economically greedy or entitled attitudes. Like it or not, that is what makes American capitalism tick. I myself am a fairly non-materialistic person but I know that a society that punishes materialistic attitudes and drive on Wall Street will over the long run make it a more mediocre place. It is the ambitious, driven, and yes sometimes greedy strivers that create economic wealth. Adam Smith covered this hundreds of years ago.

3. A society that defines rich as $250K is a society that has set is sights too low and taken the path of rewarding mediocrity over drive and ambition.

All this energy and focus on attacking attitudes of entitlement and taxing the "rich" would be better directed towards developing a better regulatory architecture for our capital markets to try to prevent financial crises. Executive compensation also needs to be reworked, but I would rather that shareholders and boards take the lead on that then some politician practicing cheap demagoguery to assuage the base envy of a self-righteous mob.
ETFnerd
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Post by ETFnerd »

saurabhec wrote:I compared your mentality to that of a lynch mob, didn't say that I was the victim. Focus on your behavior, not what I might be thinking. For the record though, I am not going to respond to anything you say, because to do so would be a waste of my time and energy, it is hard to reason with people like you, best to give you a wide berth.
This is what I said to prompt you to believe that I have a lynch mob mentality:
ETFnerd wrote:
MrWinky wrote:It makes me sad. It also makes me wonder how far I really am, along with many others here who are not just-scraping-by, from being a target of all the resentment.
Did you commit financial excesses that systematically contributed to the financial meltdown?

If you didn't and are just wealthy, I don't really care about you.

If you did, I don't really care if you are sad. You should be held accountable for what you did.
I don't see it, but you replied with this:
saurabhec wrote:Perhaps you could start the lynching with anyone you know in an oversized home and mortgage? Then maybe we can move on to greedy investors, and finally move on to Wall Street. I am only glad that you are operating with your lynch mob mentality in the modern era, who knows what kind of mob you might be leading in a pre-civil rights era?
So a call for accountability in your mind translates to a lynching, which you are very cavalier about throwing out, given that it is a very sensitive subject for a lot of people who find this subject painful. But what the heck, you are the only one who matters and yours is the only view that counts right?

I'm glad you decided to stop arguing. I'm done with you and your incessant wailing at becoming the victim of higher taxes. You are not the victim, you are the problem.
phantom
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Post by phantom »

saurabhec wrote:
3. A society that defines rich as $250K is a society that has set is sights too low and taken the path of rewarding mediocrity over drive and ambition.
Yeah, all those mediocre Nobel-prize, Fields medal, Turing award, Pulitzer prize winning professors earning less than 250K. I tell you, it's just impossible to do anything well unless you are being paid millions.

I don't think that there should be pay caps, but I have to say that if you have a job that pays $250K and you are not happy about the compensation, you should switch jobs since you're clearly in this job only for the money. $250K is not rich, but you can live a whole of a lot more comfortable than most on this kind of a salary, and if your job is something you enjoy, then what more do you need? I actually think that excessive compensation attracts the wrong kinds of people into certain professions.
saurabhec
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Post by saurabhec »

phantom wrote: Yeah, all those mediocre Nobel-prize, Fields medal, Turing award, Pulitzer prize winning professors earning less than 250K. I tell you, it's just impossible to do anything well unless you are being paid millions.

I don't think that there should be pay caps, but I have to say that if you have a job that pays $250K and you are not happy about the compensation, you should switch jobs since you're clearly in this job only for the money. $250K is not rich, but you can live a whole of a lot more comfortable than most on this kind of a salary, and if your job is something you enjoy, then what more do you need? I actually think that excessive compensation attracts the wrong kinds of people into certain professions.
Regarding your first point it is exactly what all non-capitalist societies say in regard to why the wealth of the rich can be expropriated without any loss to society. I actually have lived in two different countries where similar attitudes used to hold sway, and resulted in pitiful economic performance by those countries. One of them shifted course and has seen a huge improvement in the course of a single generation - India (the other was in Africa). It is not like India did not have talented doctors, engineers, scientists and academics before. But what unleashed the economic boom was not the academic or scientific class but the grasping business/commercial class - the same class that was looked down upon earlier on the basis of their pursuit of the profit motive and lack of intellectual motivations relative to economic profit. It pains me that my newly adopted country (American) now wants to where India was in terms of well-meaning but flawed economic theories. If I have to pick between uncouth profit-hungry economic agents or refined intellectuals, I will always hold my nose and side with the uncouth materialists.

Regarding the second point you make, your logic is flawed. People pick professions for many reasons. An interest and ethusiasm for it is important as is the financial compensation it offers. If you reduce the financial compensation through compensation limits and aggresive tax policies, you will see a reduction in people who want to pursue that line of work, regardless of whether they are highly skilled, competent, and interested in that line of work.

You might hold the view that Wall Street is a bloated place and you need to reduce the number of people working there. I don't disagree. However when you do it with blunt instruments like compensation limits and taxation, you cannot avoid impacting other industies too. So over time, these limits will simply reduce the desire to pursue demanding professions which require a heavy investment in education and time, thereby creating a society which is more mediocre than before.

This is not some armchair theory, literally billions of individuals in history have had the misfortune of living in societies that believed that enlightened proletariats, politicians and technocrats could channel and reward economic activity on the basis of fairness. The wreckage of those societies is all over us in the world we live in today. You might not think you are headed down that path, but no one else in those countries did either.

In the end, I have a lot of faith in America's society, economic and political systems. I think we are going through a period of great economic and social distress, so emotions are heated on all sides. I think the class warfare that we find ourselves in today will diminish, the desire for retribution will pass, and policies that are perilously close to economic insanity will not eventually be implemented.
grumel
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Post by grumel »

Die einfachste Beobachtung zeigt, daß bei beliebigen auffälligen Kontrasten des Schicksals und der Situation zweier Menschen, es sei etwa in gesundheitlicher oder in ökonomischer oder in sozialer oder welcher Hinsicht immer, möge der rein »zufällige« Entstehungsgrund des Unterschieds noch so klar zutage liegen, der günstiger Situierte das nicht rastende Bedürfnis fühlt, den zu seinen Gunsten bestehenden Kontrast als »legitim«, seine eigene Lage als von ihm »verdient« und die des anderen als von jenem irgendwie »verschuldet« ansehen zu dürfen. Dies wirkt auch in den Beziehungen zwischen den positiv und negativ privilegierten Menschengruppen. Die »Legende« jeder hochprivilegierten Gruppe ist ihre natürliche, womöglich ihre »Bluts«-Ueberlegenheit. In Verhältnissen stabiler Machtverteilung und, demgemäß auch, »ständischer« Ordnung, überhaupt bei geringer Rationalisierung des Denkens über die Art der Herrschaftsordnung, wie sie den Massen solange natürlich bleibt, als sie ihnen nicht durch zwingende Verhältnisse zum »Problem« gemacht wird, akzeptieren auch die negativ privilegierten Schichten jene Legende. In Zeiten, wo die reine Klassenlage nackt und unzweideutig, jedermann sichtbar, als die schicksalbestimmende Macht hervortritt, bildet dagegen gerade jene Legende der Hochprivilegierten von dem selbstverdienten Lose des Einzelnen oft eines der die negativ privilegierten Schichten am leidenschaftlichsten erbitternden Momente: in gewissen spätantiken ebenso wie in manchen mittelalterlichen und vor allem in den modernen Klassenkämpfen, wo gerade sie und das auf ihr ruhende »Legitimitäts«-Prestige der Gegenstand der stärksten und wirksamsten Angriffe ist.

Simple observation shows, that in the case of any eye-catching contrast in the fate or the the situation of two humans, be it in health or economical or social or in whichever regard , no matter how obvious the pure random reason for its existance, the better situated always has the never resting desire to consider his fate as deserved and the others fate as as somehow encumbered by himself. This is also the case in the relation between the positive and negative privileged groups. The legend of every privileged group is her natural, possibly blood supriority. In a situation of stable power distribution, therefore class order, genrally by every low level rationality of thinking over the type of power structure, which is natural for the masses as long its not made a problem through the power of the situation, the negative privileged accept such a legend. In times where the class situation is nacked and unambigously visible for everyone
in contrast, does this legend of the highly privileged about the self deserved fate of the individual impassioante the negativ privileged acrimnisously: in......., and especially in modern class strugles where she (the legend of the self created fate ), became the subject of the most effective attacks.


http://www.zeno.org/Soziologie/M/Weber, ... Herrschaft
thenextguy
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Post by thenextguy »

MP173 wrote:We tolerate Ohpra Winfrey making $300 million a year, but rage at a CEO making $10 million. What causes that?
If I ever had to bail out Oprah, trust me, I'd be pissed.
saurabhec
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Post by saurabhec »

rrosenkoetter wrote: Considering that you can buy a nice 3000 square-foot house with a backyard for about $250,000, you'll probably be living better than you do on $200,000 in NY in your tiny 550 square-foot apartment.

I have business associates from NYC who come to my house in Kansas City, and tell me my $450,000 house would cost $3 million in NY.... They may make twice as much as me, but I bet my home is nicer, and I'm saving more each month...
For a number of idiosyncratic issues my geographic mobility is restricted at present. It will might change in the future, and as someone who lived for almost a decade in the Midwest (and enjoyed it) I am not immune to its charms, although I will tell you that much to my surprise NYC managed to reduce my dear Chicago to "Second City" status in its claims on my heart, although Chicago continues to occupy a warm and pleasant corner.

My point is larger, about the kind of incentives we create in our society through compensation limits, increasing the progressivity of our tax code. So far it is mainly concern about future policy rather than current, but you can see that the public zeit gist has clearly shifted into rewarding the average over the exceptional.
Harold
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Post by Harold »

saurabhec wrote:rewarding the average over the exceptional.
It's a really tough sell branding the guys who steered us in to this economic ditch as "exceptional".

Granted there are subtleties there (profitable divisions, etc.). But that's at the root of this frustration -- not some deeper "pursuit of averageness".
Harold
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Post by Harold »

grumel wrote:Simple observation shows, that in the case of any eye-catching contrast in the fate or the the situation of two humans, be it in health or economical or social or in whichever regard , no matter how obvious the pure random reason for its existance, the better situated always has the never resting desire to consider his fate as deserved and the others fate as as somehow encumbered by himself. This is also the case in the relation between the positive and negative privileged groups. The legend of every privileged group is her natural, possibly blood supriority. In a situation of stable power distribution, therefore class order, genrally by every low level rationality of thinking over the type of power structure, which is natural for the masses as long its not made a problem through the power of the situation, the negative privileged accept such a legend. In times where the class situation is nacked and unambigously visible for everyone
in contrast, does this legend of the highly privileged about the self deserved fate of the individual impassioante the negativ privileged acrimnisously: in......., and especially in modern class strugles where she (the legend of the self created fate ), became the subject of the most effective attacks.


By the way, I thought this was perfect Grumel. I had been thinking of a way to put it, so might as well borrow from one of the great thinkers.
fishndoc
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Post by fishndoc »

Thread is getting nasty...

While I'm disgusted by many of the comments of people quoted in the article --inflamatory remark deleted-- I DO disagree with Congress attempting to reto-actively tax away their bonuses. Even for my brand of extreme populism, this goes to far.

However, Simon Johnson did have an excellent idea to "fix" the banker bonus problem: paying the bankers their bonus with toxic assets held by their institution:

Why not say that all bank compensation above a baseline amount - say, $150,000 in annual salary - has to be paid in toxic assets off the bank’s balance sheet? Instead of getting a check for $10,000, the employee would get $10,000 in toxic assets, at their current book value. A federal regulator can decide which assets to pay compensation in; if they were all fairly valued, then it wouldn’t matter which ones the regulator chose. That would get the assets off the bank’s balance sheet, and into the hands of the people responsible for putting them there - at the value that they insist they are worth.
This way, these guys get what they deserve, and no lynching is involved.

Wayne
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle
Buysider
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Post by Buysider »

It's a really tough sell branding the guys who steered us in to this economic ditch as "exceptional".
But it is easier doing that than blaming the fact that a trillion dollars were given to americans to buy homes, primarily in California, Florida, Arizona, and Nevada - and those Americans just walked away from their obligations. Blaming the banks or by extension the folks who helped facilitate the mortgage lending on wall street is an easy and simple answer to a complex problem.

Personally I have a lot of anger towards California - a state that can't balance its budget, educate its children, refine its own gas, yet wants to set environmental standards for the rest of the US, has an agricultural economy based on federal gov't subsidies and slave-like imported labor from foreign countries ... and has some of the most liberal mortgage default laws - allowing people to rack up this debt and walk away. The result of which will be more expensive mortgages for the rest of us in the future. Harder to blame a state than an amorphous group of "money men" though.
grumel
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Post by grumel »

saurabhec wrote: Regarding your first point it is exactly what all non-capitalist societies say in regard to why the wealth of the rich can be expropriated without any loss to society. I actually have lived in two different countries where similar attitudes used to hold sway, and resulted in pitiful economic performance by those countries. ....

You speak from personal expirience and still you just repeat the newest ideology constructed to justify the ever rising inequality in the developed world. Especially applied to such poor countries, thats makes no sense at all. With such a low basis as the one in India or some poor African country, any halfway working government can create huge growth, be it central planned, mixed economy or solely market based. East Germany in the 70th was a dream place compared to India today. Even Cuba is much richer than India despite its isolation.

One explanation the fall of east German communism is the grab of total power by the polticial system. The same could be said about the US system, just that the economic system grabed total power. Russia became poorer and poorer after the fall of communism, not richer after they tried to force adopted the US system. Manchester capitalism has failed just like communism. Mixed economies dominate all arround the world. The only industrial growth story largely based on markets alone was the British, and the social price was horrible. Brad de long had a nice post on that. Life expectation in Manchester was 17 years, but 34 in the non industrialiced countryside. Almost every other industrialisation growth story was largely based on government influence. Be it Germany, Japan or Southkorea. Every sucesfull economy today is a mixed one. Even the US one, which is the one left that comes closest to a pure market model is far far away from sole uncontroled nightwatch staate capitalism.
FafnerMorell
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Post by FafnerMorell »

It's a shame that the exceptional bankers never considered the possibility of people walking away. I mean, that's complete IMPOSSIBLE CRAZY to consider. And actually verifying their financial info? Impossibly hard - you'd need like 10 PhDs in rocket science to look at a W2 form without your brain exploding. If someone says "I'd like to borrow a million dollars, but I only earn $10k a year", they can pay off the loan in, what, 30 years? Sure, a regular person might try using "math" to see if that was possible, but an exceptional banker wouldn't need to. That's why they deserve the big bucks.

And once they pay back the $787 billion from their own pockets, we can stop lynching them. Why, if they make $500k a year, it should only take them 30 years or so, right?
rich
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Post by rich »

Buysider wrote:
It's a really tough sell branding the guys who steered us in to this economic ditch as "exceptional".
But it is easier doing that than blaming the fact that a trillion dollars were given to americans to buy homes, primarily in California, Florida, Arizona, and Nevada - and those Americans just walked away from their obligations. Blaming the banks or by extension the folks who helped facilitate the mortgage lending on wall street is an easy and simple answer to a complex problem.

Personally I have a lot of anger towards California - a state that can't balance its budget, educate its children, refine its own gas, yet wants to set environmental standards for the rest of the US, has an agricultural economy based on federal gov't subsidies and slave-like imported labor from foreign countries ... and has some of the most liberal mortgage default laws - allowing people to rack up this debt and walk away. The result of which will be more expensive mortgages for the rest of us in the future. Harder to blame a state than an amorphous group of "money men" though.
Great points here. Lots of blame to go around. However, this does not take away from the responsibility of some, not all, companies on Wall Street. Personally, I could care less what anyone makes except for those living on the taxpayer dole. AIG, etc, wouldn't be around without the largesse of the taxpayer. Frankly, I don't see what the uproar is over the salary caps on the companies like AIG. If the employees don't like it, they are free to leave. No one is forcing them to stay. The ones that do stay should be grateful that the taxpayer saved their jobs.
Best regards, | Rich
Harold
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Post by Harold »

Buysider wrote:
It's a really tough sell branding the guys who steered us in to this economic ditch as "exceptional".
But it is easier doing that than blaming the fact that a trillion dollars were given to americans to buy homes, primarily in California, Florida, Arizona, and Nevada - and those Americans just walked away from their obligations. Blaming the banks or by extension the folks who helped facilitate the mortgage lending on wall street is an easy and simple answer to a complex problem.
One might think managing risk effectively is part of an exceptional executive's responsibility. The risk was clear, and the risk materialized. Risk management shouldn't be merely hoping that people do the right thing.
Buysider
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Post by Buysider »

The risk was clear, and the risk materialized. Risk management shouldn't be merely hoping that people do the right thing.
When the next big, predictable earthquake hits the bay area, I'll be sure to point that out ;-)
Pacific
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Post by Pacific »

3. A society that defines rich as $250K is a society that has set is sights too low and taken the path of rewarding mediocrity over drive and ambition.
It is clear that you and I live in parallel universes.
Harold
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Post by Harold »

Buysider wrote:
The risk was clear, and the risk materialized. Risk management shouldn't be merely hoping that people do the right thing.
When the next big, predictable earthquake hits the bay area, I'll be sure to point that out ;-)
I guess you really are anti-California. That's okay, I'll still be sympathetic towards tornado victims in Kansas, hurricane victims in Florida, flood victims in Minnesota, blizzard victims in Vermont, etc.

The observation doesn't have much to do with risk management of a corporation though (except for insurance companies who have an obligation to collect appropriate premiums to ensure solvency when hit by claims from such disasters).
saurabhec
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Post by saurabhec »

[quote="grumel"]

You speak from personal expirience and still you just repeat the newest ideology constructed to justify the ever rising inequality in the developed world. Especially applied to such poor countries, thats makes no sense at all. With such a low basis as the one in India or some poor African country, any halfway working government can create huge growth, be it central planned, mixed economy or solely market based. East Germany in the 70th was a dream place compared to India today. Even Cuba is much richer than India despite its isolation.

[quote]

Disagree on both East Germany in the 1970s and Cuba today. I would much rather live in the India of today than in either society. If you are educated and middle class Indian society today is a more exciting place to be both culturally and economically, to say nothing of political and personal freedom, which one cannot put a price on.

I see that you are an ideologue, and frankly I don't have the patience to debate with you, especially when you come up with absurd analogies like the above.
Buysider
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Post by Buysider »

guess you really are anti-California.
I'm not, which was why the ;-) was there, but little emoticons don't translate well ... I am from New England, so I assure you, no Vermonter would characterize themselves as a "blizzard victim", but I'll leave it at that.

As for
The observation doesn't have much to do with risk management of a corporation though
I think it does - California real estate had never gone done anything like what is has done in the past 12-18 months. Why was that predictable? It had never happened before, which is more than I can say about earthquakes, tornados or hurricanes. Who do you blame for taking out a mortgage that they won't pay - the person who signs the mortgage, the loan originator who got paid a commission to make the loan, the wall street investment bank that linked savers in Europe with real estate investors in california, or gov't officials who were pushing ever higher levels of "homeownership". Blaming wall street is easy and simple, but not complete.
PatrickS
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Post by PatrickS »

Buysider wrote:Personally I have a lot of anger towards California
- a state that can't balance its budget, educate its children, refine its own gas, yet wants to set environmental standards for the rest of the US, has an agricultural economy based on federal gov't subsidies and slave-like imported labor from foreign countries ... and has some of the most liberal mortgage default laws - allowing people to rack up this debt and walk away.
I'm angry too, and I live here! I only disagree with one point. I don't think we have a problem educating our children. I think we have a problem parenting our children that shows up in school.

By the way, I know a guy who makes around $150k who's underwater on a mortgage by over $100k and is walking away. He simply decided that damaging his credit rating for a while was worth $100k to him. We need to get rid of non-recourse mortgages IMHO.
phantom
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Post by phantom »

saurabhec wrote:
Disagree on both East Germany in the 1970s and Cuba today. I would much rather live in the India of today than in either society. If you are educated and middle class Indian society today is a more exciting place to be both culturally and economically, to say nothing of political and personal freedom, which one cannot put a price on.
Of course if you are educated and middle class, then India is better. And if I am to be king, then perhaps I would choose to live in some African country where being king entitles one to a harem.
The better question is, if you were to be born to a random family in either India or Cuba, what would you choose? I would certainly choose Cuba before India ... political freedom or not.
grumel
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Post by grumel »


Disagree on both East Germany in the 1970s and Cuba today.

Before you disagree, just look up the numbers. For Cuba vs India, its 1 minute work:
http://en.wikipedia.org/wiki/India (just look right)
http://en.wikipedia.org/wiki/Cuba

With east Germany in the 70th vs India today, the difference is even much bigger, so admitly i cant give a source for that.



Speaking of perceived ideology. The person i quoted above was Max Weber. Not only a well known scientists but also the co founder of a bourgeois party the ddp.

But sure, everyone that speaks out against inequality or for higher taxes is a communist.
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craigr
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Post by craigr »

phantom wrote:Agree completely. Unfortunately, once AIG received a 200 billion bailout, the US government (and thus the taxpayers) essentially became the employers of all those working there, and the taxpayers said "no bonuses!"
You don't have to be in favor of big bonuses for AIG personnel to realize that having the government coming in and forcibly re-writing contracts and imposing ex-post taxes is dangerous.
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craigr
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Post by craigr »

Re: India and E. Germany.

I'm not from India, but my understanding is they still have a deeply entrenched caste system that seriously hampers economic progress for much of their population. This is not a feature of German culture.

Sociologists are well aware of the dangers of cross-culture comparisons. The better comparison is that of West Germany vs. East Germany. Clearly there is a difference in systems of government and prosperity. Ditto that for South Korea vs. North Korea.
grumel wrote:But sure, everyone that speaks out against inequality or for higher taxes is a communist.
When framed in terms of class struggle and the idea that government can spend money better than the people who earned it to bring about this nebulous "equality" concept, yes it is communist.
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