When money managers are asked why they deserve tens of millions of dollars for pushing around other people’s money, the answer is always, “the risk.” They took the risk; they made the bet and won. To the victor go the spoils.
That makes a lot of sense. When you take a big risk, you deserve to make a lot of money. You deserve the beachfront house, the private jet, the second home in Aspen. Sure, that’s the same thing drug kingpins say, but there’s one big difference: When drug dealers make the wrong bet, they go to jail. When money managers lose a bet, they get a bonus.
“Oh,” you might say, “but the money managers didn’t break the law.” Really? Who told you that? Oh, the money managers.
I had a friend who chased down a purse-snatcher in Manhattan once and tackled the thief in a busy midtown crosswalk. The first thing out of the purse-snatcher’s mouth was, “I didn’t do anything!” He kept yelling that at the top of his lungs. When the police arrived, they wanted to arrest my thief-tackling friend instead, until the woman whose purse was stolen finally set them straight.
So all the Wall Street money managers are yelling that they didn’t do anything. I keep wondering, when are all the people whose purses were stolen going to set them straight?
It seems to me that if you’re going to be rewarded for taking a big risk and winning, you should be punished for taking a big risk and losing. Even if you’re a banker or a stockbroker. Even if you went to Harvard or Yale.
There’s a reason we don’t give gold medals to the people who come in last at the Olympics. It doesn’t mean they are bad athletes – after all, you have to be pretty good just to compete in the Olympics. But they didn’t win. So why is it that if you’re a money manager, you can come in last place and win a golden parachute?
If risk is the thing that determines how we reward people, why aren’t our combat troops making bags full of money for going to Afghanistan? Aren’t they taking a risk? Aren’t they risking a lot more than any stockbroker or banker? What about our police officers and firefighters? Wouldn’t you say they’re in risky professions? By Wall Street logic, they should all be paid $100 million a year for what they do. Maybe more.
My friend Jack says, “If those Occupy Wall Street protesters are so against money, why aren’t they protesting rich movie stars and rich singers?” Excuse me, but has some rich movie star ever been bailed out of financial trouble with your tax dollars? Has some profligate basketball star been bailed out with the public’s dime? If so, I sure can’t find any news stories about it.
Money-sucking stockbrokers want you to think that the protest is rich vs. poor, that those who object are jealous of the rich. That’s like saying you are jealous of the guy who mugged you because he now has more money than you do. No, you are ANGRY at the mugger for the mugging. And you want your money back.
What if a mugger’s defense attorney argued: “Sure, my client took the money, but that’s the way capitalism works. That’s the risk you take by walking down a dark street. You know you’re going to get robbed someday – what difference does it make if my client robs you or if somebody else does? Besides, my client has these ‘Get Out of Jail Free’ cards that he printed on the back of thousand-dollar bills and sent to all his friends in Congress, so let’s just drop the whole thing.”
If you made money losing your clients’ and your stockholders’ money by taking “legal” risks and you got a taxpayer-paid bonus, don’t call it “capitalism.” It’s something else entirely. Am I jealous of the money that rich stockbrokers made for themselves by losing money for their clients? No. Wall Street wants you to think it’s about money. It’s about justice.
Jim Mullen’s book “Now in Paperback” is now in paperback. You can reach him at jimmullenbooks.com.