Sunday, February 01, 2009

Cliff Mason's Bogus Bonus Boogie

Justifying the $18.4 billion handed out to Wall Street investment bankers at the end of last year is a tough job. But Cliff Mason apparently feels up to the task of defending the indefensible--because that's what they seem to be paid to do at CNBC:
This isn't a compensation issue, it's a diction issue.

... on Wall Street, and at many law firms as well, a bonus is simply part, often the greater part, of your regular compensation. It may vary from year to year, but when you take one of these jobs, the understanding is that you'll be paid a base-salary and once a year you'll also get a "bonus."

The bonus varies in size from year to year, but it's not actually a "bonus" in the way most people think of the word. It's an expected part of your salary, delivered in a lump- sum near Christmastime.
There are, of course, several problems with Mason's Clintonian word-parsing, and I'll highlight one of them by asking:

Did all the investment bankers who used to work for Lehman Bros. get bonuses around Christmastime? And what is the difference between Lehman Bros. employees and (say) Merrill Lynch employees?

Well, we know what happened to Lehman Bros. and its hapless managers. Other banks, like Merrill Lynch--the banks handing out billions of dollars in bonuses--are (to quote Dean Baker) "bankrupt banks. In other words, they would be shut down and put out of business if we let the market run its course." Bonuses, not to mention the "base salaries" themselves, would be a moot point were it not for government bailouts.

Not content with a mildly stupid argument in semantics, Mason then insists that, by awarding bonuses at 2004 levels, it will convince these souls "to stay at their jobs," that the "base salary is much less than they could be earning elsewhere." Really? If these underemployed bankers don't get their Christmas checks they'll quit and go elsewhere? Is Mason really trying to argue that there is a dearth of investment bankers on Wall Street right now? And does he really think that these bankers--if they manage to remain employed this year at all--will receive similar checks at the end of 2009?

He then sums up by arguing that Wall Street simply needs to adapt a new linguistic strategy: "Call [bonuses] something else. Think of something boring like 'annual performance-adjusted block compensation.' "

As Kagro X (Daily Kos) asks, "Say you're a banker and you flushed $30 million down the toilet, which is the actual scenario we're looking at. When can we expect you to pay a part of that back?"

These banks are still in business and their employees are still employed only because the federal government has handed them hundreds of billions of dollars. And it's a little surreal (but all too predictable) watching these same pseudo-capitalists abandon or contort their Ayn Rand-based principles to justify their newly assumed positions on the government dole.

Mason doesn't need to tax his brain coming up with a "boring" phrase to describe these payments. There's already a word for the compensation given to workers whose underproductive labor is supported by government money: