The Literary Edition

Journalist Alissa Quart shares her first book of poetry, then chats with Slate Money about Wall Street bonuses and the late David Foster Wallace’s tax advice.

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1 Response to The Literary Edition

  1. John Antweiler says:

    I have always enjoyed your podcasts, but was disappointed in your last offering on bankers and their bonuses. Comparing the totat amount of bankers’ bonuses to the total income of people earning the minimum wage is misleading, yellow journalism.

    First, you should be comparing apples to apples: total income of bankers to total income of people earning the minimum wage. But what does that really tell you? Is it any more relevant than comparing the total income of the Hollywood glitterati to the total income of minimum wage earners? Or the total income of professional sports stars to the total income of minimum wage earners? Or the total income of tech moguls to minimum wage earners? Or the total income of surgeons to minimum wage earners? The fact is, if you are a top banker, a top actor or actress, a top golf pro, an IT rock star, or a top surgeon, you will be paid a lot more for your talents and knowledge than a minimum wage earner. Where I grew up, that was called meritocracy. I trust that if you required brain surgery, you would not be content to have a waitress do that or even a first year medical intern — you’d want the best surgeon you could afford.

    Second, your podcast was filled with demeaning talk about bankers leeching on society, that they are “just middlemen” and only provide a utility that should not extract huge rents. Well, I believe if you go into rural America or even suburban America and check out those “evil bankers” who are processing your mortgage, assisting you with a car loan, or setting up a trust account for your children, you will not find them extracting massive rents — they are likely earning a middle class living and have all of the same worries about financing education for their children and planning retirement that everyone in the middle class has. But, if you are talking about that financial architect that puts two companies together, or takes a company public, or innovates a risk mitigation technology, those are not simple “middlemen” or leeches on society. To do these things well requires a specialized education and experience honed by time. Just as with a top attorney or top surgeon, these specialists command a higher “rent.”

    Third, and you alluded to it in the podcast, banking is an industry where your assets walk out the door every evening. Like an advertising agency, a football club, or a law firm. The fact is, the world is filled with talented, productive people, and there is a market price for that talent and productivity. The world is also filled with minimum wage earners, and the market price for their skills and telants is different and less. I have seen that the defection of nine or ten partners in a law firm or surgical practice or an investment bank can cripple the business; the defection of minimum wage earners, I am sorry to say, won’t put a dent in any enterprise. I would love to pay the minimum wage to attorney to fix my will, but that is a fiction – it just won’t happen. This is not to be callous or cavilier, it is just reality.

    Fourth, I did a quick scan of the Forbes 400, and there are very few bankers in this tally — unless you classify anyone who uses money to make more money as a “banker.” That is, the 400 list has a number of people who made their money through investments (Warren Buffett, for example), hedge funds, private equity or venture capital. Assuming that you are NOT including those categories as “bankers,” then I would assert that bankers are poorly represented in the list of wealthy.

    If the point of your “burning bankers at the stake” discussion is to simply say the minimum wage should be raised, well, I agree with you. But please, be honest about it and don’t shroud your social agenda with suggestions and outright allegations that bankers are overpaid; that they are a common utility; that they are a menace to society. If you want to claim that bankers are overpaid, then I think you have to examine what would happen if someone, God or government, decreed that bankers could not be paid more than a certain amount (10X the minimum wage? 20X the minimum wage?). Why did the ECB, the IMF, and European Commission bend over backwards to bail out Greece’s banks? It is because banks are an essential organ in modern human society, not a utility, not an extravagance, not a leech. And because banking is vital, it commands its own price. So, let us just accept the fact rather than villify the industry or those who work in it.

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