Paying for Others: Austerity verses Privilege and the Composition of the System

Posted: December 15, 2010 in Uncategorized

(Updated below)

Record bonuses are set to be made this month by financial institutions and their CEO’s who brought the economies of the world to its knees just two years ago (and which brought governments to their financial rescue and have keep the majority of these CEO’s in place). Three dozen top banks and securities firms will pay $144 billion in salary and benefits out this month bringing a massive escalation of the bonus culture perpetuated and protected by those who wield the financial instruments markets. This is in counter distinction to the average decline in salaries for the broad-spectrum populace in Western states which clocks in between a 12 to 15% decrease of revenue.

But some good news from a country which may be in the beginnings of attempts to confront this counter-productive alternate economy of instrumentation and the institutions fostering them (other then Iceland). Irelands Finance Minister Brian Lenihan demanded that the Allied Irish Bank stop its record bonuses in “that the payment of the required financial support for AIB will be conditional on the non-payment of bonuses awarded, no matter when they may have been earned.” The Irish Government, as proxy to the general population, has bestowed 3.5 billion Euros in bailout funds upon AIB.  The quite irritating and shocking revelation about the bonuses which were going to take place within the upper management culture of the (once failed) Bank was naturally meet with pervasive resentment and especially so as the general populace, after baling out the failed institution, was asked to carry the burden of the collapse of the economy (perpetuated by the institutional culture of the Banking industry) through a harsh austerity budget that included a vast spectrum of ruthless cuts across the community continuum of everything from minimum wage to a  reduction of the Social Safety net.

The above chart graphs the average inflation-adjusted incomes of  three segments of the population  (US):  The bottom poorest are 20% of the population, middle 60%, and top 1%  — this is since the 1970s.  The results of this separation came into sharp relief this year which saw the upper 1% of the population having a net income more than the entire lower 50% of the population in total.

Love the look of graphs, and gasp at what they mean: the Top 1% triples its income.


Update I

Some bankers seeing the cutbacks imposed on AIB bonuses have attempted the strange ”going Galt” argument which has been used with steadfast repetition by the Bonus Culture recipients in the US.

Going Galt” as described in the words of  Tristero at Hullabaloo: who has been witness to this continued defense of the upper earners:  “John Galt is the copper-haired, white-boy protagonist in Ayn Rand’s Atlas Shrugged. Galt leads a revolutionary movement in which all the top leaders of the banks and corporations forsake their corporate jets and perks to work in diners or as subway repair guys. No they weren’t fired by Galt. Rather, Galt urged them to go on strike and withdraw their expertise from an increasingly socialist world. Deprived of the genius of their genius, the world economy collapses.”

The Bonus Culture guys, now in London. have threatened to replicate the US call and  “have warned time and again that if their bonuses are curtailed, they will move to places where there are no such restrictions – robbing the country of vital income”.

Seems to be the argument that those who created, caused and now perpetuate the problem are also those who not only can solve the problem but even keep the little it is working now in place.  Summary from them: we don’t know how it works, we’ve been wrong about how it works, we broke it, it still doesn’t work (though we say we’re working on it), and you should give me lots of money to do this (incompetence should always be rewarded).

  1. […] has remained at the crisis’s high levels, while the profit of corporations and the salaried packages of CEO’s (Corporate Executives) has reached the highest levels ever, why has there been not been a more urgent direction and call by governments to bring the problems […]

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