The Socialist Bonus

Bonus Season Brings Political Risks For Banks

Federal and state laws actually give regulators relatively little authority over how much bankers are paid. But that’s changing as bank regulators search for ways to clamp down on bonuses.

“The public is so mad about the compensation issue that every player out there wants to show they understand that public anger, so they’re all pushing forward,” says Douglas Elliott, a fellow at the Brookings Institution.

Elliott notes that Congress, the Federal Reserve and the White House are all talking about ways to rein in bankers’ bonuses.

I’m not sure I understand the politics here. “The public is so mad…”–about what? Why don’t they stop using banks if they’re so mad? They don’t give us the specifics on what the public is mad about and why. I think that’s because it is mostly anecdotal, a reflection of the fear felt by certain government employees.

If the public were mad, what would that mean, anyway? Would it foreshadow some kind of Marxist, communist, socialist, or anarchist uprising? There are some idiots who still believe in that; not in causing an uprising, but in the possibility that the masses are seething with class hatred that will boil over in revolution.

It is a Leftist delusion that some people on the Right indulge in vicariously. That is, there is a feeling among some conservatives that even though no one they know actually feels this way toward the financial elites (lower class conservatives only resent the cultural elites, of course), nevertheless there may be enough lower class liberals (if you’re white and middle class, that means blacks and latinos) who are ready for revolution. Shades of Charles Manson!

Either way, the radical proletariat in America is a phantom. It’s been impossible for at least 70 years now. But liberals who work in government still think about it a lot (as do populist demagogues, who may be liberal or conservative). For a liberal, it is part of their rationale for developing programs and regulations that might appease the dragon. Reactionary conservatives like to say that the progressive types want to “impose socialism” on them; but this would only be possible if America had a large radical proletariat or a lot of deluded liberal politicians. OK, so we do have a lot of deluded liberal politicians.

But seriously, what are they trying to accomplish? I think that there are very few true progressives working in the federal government. A progressive is someone who thinks they need to force social progress; a liberal is someone who has no spine and no true beliefs, but merely a condescending attitude toward the unenlightened. The liberal just wants to placate the angry “oppressed” groups and silence the angry “privileged” groups so that he won’t have to think too hard about what is “right” and “wrong.” The American liberal may see socialistic policies as a means toward this end, but he is not a committed socialist in the European sense, and American conservatives who harp on this are simply afraid of their own shadows.

So, I would say the the American liberal politician is just doing a typical CYA PR stunt to make his liberal base happy, and in order to do this he has to bring up the boogieman of the “angry public.” He will surely impose more regulation, but not anything that will turn off the flow of contributions from the financial industry.

Note this other passage:

But with Wall Street profits growing again, banks are also under growing pressure to hire the best employees, and they’re doing that by offering bigger and bigger bonuses.

One bank official noted that some banks are once again offering guaranteed bonuses. They’re promising prospective hires that they’ll get their bonus no matter what happens — even if the person ends up losing the bank’s money.

We aren’t talking about oppressive Socialist policies that destroy a poor little bank’s profitability here. We’re talking about banks who throw money at “geniuses” who don’t deserve it because the banks don’t actually have a coherent business strategy for making an honest profit, and they’re striving to find that magician who will get them another windfall. Another part of this coping strategy is to throw money at sympathetic politicians who will put on a good front for the public while secretly making backdoor deals. Then the politicians might squeeze them for a few extra bucks in one place while making sure that the geniuses have a way out, so that they can make enough money to finance the next election campaign.

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