Monday, February 09, 2009

Prémios dos gestores

Everyone seems upset by the prospect of banks paying big bonuses. What they’re not asking is: why have banks paid them for so long?

The popular answer is that banks need to attract the best talent.

Yeah, right. Eric Falkenstein and James Kwak provide the real answer. Traders must be bribed not to plunder the firm. If you don’t pay them millions, they’ll sell the banks’ assets cheaply to rival firms for which they then go and work. They are paid fortunes not because they have skill, but because they have power.

It’s not just bankers of whom this is true. Peter Skott and Frederick Guy show that it is changes in differences in power that can explain a hefty chunk of the rise in inequality we’ve seen since the 1980s.


Could it be, then, that one effect of this banking crisis will be to show that talk of “talent” is just an ideological veil behind which rising inequality has been the result of inequalities in naked power?

1 comment:

João Branco (JORB) said...