Yesterday evening the Wall Street Journal reported that total compensation and benefits at Wall Street firms totaled a record $135 billion in 2010. Mind you, this is just for the publicly traded firms, there are many other Wall Street firms that are not publicly traded.
Let’s put this outrageous figure into perspective shall we?
Last year, according to the Bureau of Economic Analysis, total gross domestic product (GDP) for the entire United States (see page 3) was $14,870.4 billion. That’s a very fancy way of saying $14.9 trillion.
Now let’s compare the Wall Street pay to total economic output:
$135 billion ÷ $14,870.4 billion = 0.9% of total GDP in 2010!
In other words $9 out of every $1,000 earned in the United States last year was earned by these fortunate few. In fact, it’s very, very close to being fully $1 of every $100 earned in total.
Let’s look at this in yet another way, by comparing the total compensation and benefits at these Wall Street firms to the total population of the U.S.:
$135 billion ÷ 308,745,538 (source: U.S. Census Bureau) = $437.25 for every man, woman, and child!
Let me ask you a question, do you feel that you got $437.25 worth of benefit from the collection of Wall Street firms in 2010? Because effectively that’s what this level of pay is saying. It’s saying that these folks deserved this amount of money because of what they did for the economy. If someone came knocking on your door to collect this money to be paid to these folks, would you?
Let me ask you another question, as a criticism of capitalism, did 2010 feel like the sort of year as an investor that would warrant a record level of pay at Wall Street firms? I feel, clearly not.
Back in the early days of this blog I wrote quite extensively about the fact that the people that got us here (meaning: that steered us into the Great Recession) had to change. Now I didn’t necessarily mean they had to be fired, I meant that substantive change in their attitudes had to change.
These attitudes toward money ultimately are the seeds of economic corruption and ultimately, of capitalism’s failing. Why? Because capitalism has to work for the majority of participants otherwise less efficient alternatives, like socialism, look very attractive. As a capitalist I have to decry what I feel is the unwarranted advance of executive pay at Wall Street firms.
Jason
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