I read on BBC yesterday that the richest 62 people in the world now earn as much as the poorest half, which would be about 3.5 billion people! Although there is some confusion about the methodology, it is clear that the wealth and income have been getting more and more polarized. The rich are certainly getting richer. Income inequality is more acute than ever.
回首我的这些著作, 我感觉好像我可能已经有点不公平对我们. 我曾尝试钝我贪婪的指责 (也许颓废) 通过指出，这是我们生活中养育了淫秽的时代贪得无厌的一般空气和麦道夫的喜欢. 但我的确承认贪婪更高层次的存在 (或, 更重要的一点, 更心满意足的一种贪婪) 美国银行家和定量的专业人士. 我不是recanting我的话，在这片现在, 但我想指出的另一个方面, 一个理由，如果不是赦免.
为什么我要捍卫奖金和其他过激行为时，又一波的公众仇恨清洗过的全球性公司, 由于潜在的不可阻挡的漏油事件? 好, 我想我是一个吸盘失去的原因, 就像白瑞德, 作为我们的定量安宁的生活与疯狂的奖金的方法是所有，但随风而逝现在. 不像先生. 男管家, 然而，, 我必须战斗，并揭穿我自己提出的论点以前在这里.
其中，我想戳孔在争论是公平的补偿角. 有人认为我们的圈子的脂肪薪水仅仅为长时间的艰苦工作中，人在我们这行的工作投入足够的补偿. 我推翻它, 我认为, 通过指出其他吃力不讨好的职业，人们更加努力和更长的无报酬写信回家. 艰苦的工作与什么人有资格无相关性. 我取笑的第二个参数是无处不在 “天赋” 角. 在金融危机的高度, 很容易笑过天赋参数. 除了, 有对人才的需求很少，并大量供应, 因此，经济学的基本原理可以应用, 作为我们的封面故事展示在这个问题上.
对于大型补偿方案所有参数, 最有说服力的一个是分红1. 当顶尖人才承担巨大的风险，并产生利润, 他们需要考虑的战利品的公平份额. 否则, 其中是生成甚至更多的利润的激励? 这一论点失去了它一点咬当负利润 (由我的确意味着损失) 需要补贴. 这整个传奇想起什么，斯科特·亚当斯曾经说过：冒险者的我. 他说，风险承担者, 顾名思义, 经常失败. 所以做白痴. 在实践中, 这是很难区分它们. 如果白痴获取丰厚回报? 这是个问题.
说了这么多我在以前的文章, 现在是时候找到我们的防守有些论据. 我忽略了一个重要的论据在我以前的专栏，因为它不支持我的论文一般 — 该丰厚的奖金是不是所有的正当. 现在，我已经转向效忠失败的事业, 允许我提出它作为有力地尽我所能. 为了看到在不同的光线补偿方案和绩效奖金, 我们先来看看传统的任何砖和砂浆企业. 让我们考虑一个硬件制造商, 例如. 假设这个硬件我们的店确实非常好1年. 这是什么与做利润? 肯定, 股东采取健康的咬了一口，它在分红条款. 员工获得不俗奖金, 希望. 但是，我们做什么，以确保持续的盈利能力?
我们也许可以看到员工的奖金作为未来的盈利能力的投资. 但在这种情况下，真正的投资是比这更多的物理和有形. 我们可以投资在硬件制造机械和技术提高生产力几年来. 我们甚至可以投资于研究和开发, 如果我们申请了较长时间的地平线.
展望沿着这些路线, 我们会问自己，会是怎样的相应投资的金融机构. 我们究竟如何再投资，使我们可以在未来获得收益?
我们能想到更好的建筑, 计算机和软件技术等. 但鉴于所涉及的利润规模, 和成本以及这些增量改进益处, 这些投资没有达到. 不知何故, 这些微小的投资的影响并不令人印象深刻，在金融机构的业绩相比，砖和水泥企业. 后面这种现象的原因是，该 “硬件” 我们正在处理 (在金融机构的情况下) 真的是人力资源 — 人 — 你和我. 因此，唯一明智的再投资的选择是人.
所以我们来到了下一个问题 — 我们该如何投资人? 我们可以使用任意数量的委婉称呼的, 但在这一天结束时, 它是计数的底线. 我们投资人通过奖励他们. 金钱. 有钱能使鬼推磨. 我们可以说，我们是奖励业绩打扮起来, 分享利润, 留住人才等. 但最终, 这一切归结为确保未来的生产力, 就像我们的五金商店买一个奇特的新设备.
现在最后一个问题已经被问. 谁在做投资? 谁受益谁当生产力 (是否当前或未来) 上升? 答案似乎过于明显乍一看 — 这显然是股东, 金融机构的业主谁将会受益. 但没有什么是黑色和白色的全球金融的阴暗世界. 股东不只是一帮拿着一张纸人证明其所有权. 有机构投资者, 谁大多是适用于其他金融机构. 他们是谁的人将钱大罐从养老基金和银行存款等，并. 换句话说, 这是普通人的积蓄, 不管是否明确挂钩股票, 网购和销售大型上市公司的股份. 它是常见的男子从谁如技术购买或奖金支出由投资所带来的生产力提高的好处. 至少, 这是理论.
这种分布式所有权, 资本主义的标志, 提出了一些有趣的问题, 我认为. 当大石油公司钻在海底一个不可阻挡的孔, 我们发现很容易直接激怒我们，在其高管, 看着自己的时髦飞机等奢侈品不合情理，他们让自己. 我们是不是方便忘记的是，我们所有的人拥有一块公司? 在一个民主国家的民选政府宣战的另一个国家并杀死万人 (假设说, 当然), 应过失只限于总统和将军, 还是应该渗透下来直接或间接授权的群众，并委托他们集体的力量?
更重要的一点, 当银行多尔斯出巨额奖金, 是不是什么样的回报我们所有的需求，为小投资的反映? 从这个角度来看, 这是不对的纳税人最终不得不买单时，一切都南下? 我休息我的情况.
但, 这一声明在年景不好时否认奖金对整个企业的并不完全正确工作，要么, 对于各种有趣的原因. 第一, 让我们来看看AIG执行副总裁的情况下. AIG是一家大公司, 彼此独立地操作该业务单元, 就像不同的金融机构. 如果我认为AIG的家伙应该得到没有奖金，因为该公司执行一败涂地, 人们可以指出的是，金融市场作为一个整体那样严重，以及. 这是否意味着，在任何银行的任何工作人员应作出任何奖金，即使他们的特定银行那样好吗? 以及为什么停在那里? 整体经济表现糟糕. 所以, 应我们甚至所有绩效奖励? 一旦我们开始走这路, 我们最终在滑向社会主义. 而我们都知道，这个想法没有做成这么好.
关于当前奖金计划的另一点是，它已经在它掩盖了同时段，我在嘲笑我先前的职位. 真, 时间分割是在今年, 而不是由月. 如果一个交易者或行政做得好一年, 他收获的丰厚的奖金奖励. 如果他弄乱了明年, 确定, 他没有得到任何奖金, 但他仍然有他，直到一次他放手底薪. 这就像暗示在所有高空飞行的银行工作的自由选择权.
在生活的所有时间分段的看法存在这样的免费通话选项. 如果你是一个欺诈, 庞氏骗局，计划亿万富翁, 所有你需要做的就是逃避检测，直到你死. 资本主义的祸根是诈骗罪，只有当发现, 而在此之前, 你享受丰富的生活. 这一次的元素铺平了道路另一滑向欺诈和腐败行为. 同样, 它是像无限上攻和下跌看涨期权被莫名其妙地板, 无论是在持续时间和强度.
必须有两个滑的斜坡之间的平衡快乐 — 1朝着社会主义失调, 而对吃人腐败等. 它看起来对我来说，整个金融体系晃晃悠悠地上这两者之间的亚稳定平衡. 它只是滑倒在去年的一个斜坡, 我们都试图拉拢回来到栖息点. 在我看中的浪漫, 我想象一个更快乐，更稳定的平衡存在三四十年前. 在冷战的相对经济的理想是它? 或者是它在欧洲的福利国家理念, 在政府牢牢控制本国经济的制高点? 如果是这样的, 我们可以期待中国 (和印度, 或拉美) 带来了急需的重?
Among all the arguments for hefty bonuses, the most convincing is the one on profit generation and sharing. Profit for the customers and stakeholders, if generated by a particular executive, should be shared with him. What is wrong with that?
The last argument for bonus incentives we will look at is this one in terms of profit (and therefore shareholder value) generation. 好, shareholder value in the current financial turmoil has taken such a beating that no sane bank executive would present it as an argument. What is left then is a rather narrow definition of profit. Here it gets tricky. The profits for most financial institutes were abysmal. The argument from the AIG executive is that he and his team had nothing to do with the loss making activities, and they should receive the promised bonus. They distance themselves from the debacle and carve out their tiny niche that didn’t contribute to it. Such segmentation, although it sounds like a logical stance, is not quite right. To see its fallacy, let’s try a time segmentation. Let’s say a trader did extremely well for a few months making huge profits, and messed up during the rest of the year ending up with an overall loss. 现在, suppose he argues, “好, I did well for January, March and August. Give me my 300% for those months.” Nobody is going to buy that argument. I think what applies to time should also apply to space (遗憾, business units or asset classes, 我的意思是). If the firm performs poorly, perhaps all bonuses should disappear.
As we will see in the last post of the series, this argument for and against hefty incentives is a tricky one with some surprising implications.
Even after we discount hard work and inherent intelligence as the basis of generous compensation packages, we are not quite done yet.
The next argument in favour of hefty bonuses presents incentives as a means of retaining the afore-mentioned talent. Looking at the state of affairs of the financial markets, the general public may understandably quip, “What talent?” and wonder why anybody would want to retain it. That implied criticism notwithstanding, talent retention is a good argument.
As a friend of mine illustrated it with an example, suppose you have a great restaurant thanks mainly to a superlative chef. Everything is going honky dory. 然后，, out of the blue, an idiot cook of yours burns down the whole establishment. 您, 当然, sack the cook’s rear end, but would perhaps like to retain the chef on your payroll so that you have a chance of making it big again once the dust settles. 真, you don’t have a restaurant to run, but you don’t want your competitor to get his hands on your ace chef. Good argument. My friend further conceded that once you took public funding, the equation changed. You probably no longer had any say over payables, because the money was not yours.
I think the equation changes for another reason as well. When all the restaurants in town are pretty much burned down, where is your precious chef going to go? Perhaps it doesn’t take huge bonuses to retain him now.
In the last post, I argued that how hard we work has nothing much to do with how much reward we should reap. 毕竟, there are taxi drivers who work longer and harder, and even more unfortunate souls in the slums of India and other poor countries.
但, I am threading on real thin ice when I compare, however obliquely, senior executives to cabbies and slum dogs. They are (the executives, 就是说) clearly a lot more talented, which brings me to the famous talent argument for bonuses. What is this talent thing? Is it intelligence and articulation? I once met a taxi driver in Bangalore who was fluent in more than a dozen languages as disparate as English and Arabic. I discovered his hidden talent by accident when he cracked up at something my father said to me — a private joke in our vernacular, which I have seldom found a non-native speaker attempt. I couldn’t help thinking then — given another place and another time, this cabbie would have been a professor in linguistics or something. Talent may be a necessary condition for success (and bonus), but it certainly is not a sufficient one. Even among slum dogs, we might find ample talent, if the Oscar-winning movie is anything to go by. Although, the protagonist in the movie does make his million dollar bonus, but it was only fiction.
In real life, 然而，, lucky accidents of circumstances play a more critical role than talent in putting us on the right side of the income divide. 对我来说，, it seems silly to claim a right to the rewards based on any perception of talent or intelligence. Heck, intelligence itself, however we define it, is nothing but a happy genetic accident.
One argument for big bonuses is that the executives work hard for it and earn it fair and square. It is true that some of these executives spend enormous amount of time (up to 10 至 14 hours a day, according the AIG executive under the spotlight here). 但, do long hours and hard work automatically make us “those who deserve the best in life,” as Tracy Chapman puts it?
I have met taxi drivers in Singapore who ply the streets hour after owl-shift hour before they can break even. Apparently the rentals the cabbies have to pay are quite high, and they end up working consistently longer than most executives. Farther beyond our moral horizon, human slum dogs forage garbage dumps for scraps they can eat or sell. Back-breaking labour, I imagine. Long hours, terrible working conditions, and hard-hard work — but no bonus.
It looks to me as though hard work has very little correlation with what one is entitled to. We have to look elsewhere to find justifications to what we consider our due.
Our best-laid plans often go awry. We see it all the time at a personal level — accidents (both good and bad), deaths (both of loved ones and rich uncles), births, and lotteries all conspire to reshuffle our priorities and render our plans null and void. 事实上, there is nothing like a solid misfortune to get us to put things in perspective. This opportunity may be the proverbial silver lining we are constantly advised to see. What is true at a personal level holds true also at a larger scale. The industry-wide financial meltdown has imparted a philosophical clarity to our profession — a clarity that we might have been too busy to notice, but for the dire straits we are in right now.
This philosophical clarity inspires analyses (and columns, 当然) that are at times self-serving and at times soul-searching. We now worry about the moral rectitude behind the insane bonus expectations of yesteryears, 例如. The case in point is Jake DeSantis, the AIG executive vice president who resigned rather publicly on the New York Times, and donated his relatively modest bonus of a million dollars to charity. The reasons behind the resignation are interesting, and fodder to this series of posts.
Before I go any further, let me state it outright. I am going to try to shred his arguments the best I can. I am sure I would have sung a totally different tune if they had given me a million dollar bonus. Or if anybody had the temerity to suggest that I part with my own bonus, paltry as it may seem in comparison. I will keep that possibility beyond the scope of this column, ignoring the moral inconsistency others might maliciously perceive therein. I will talk only about other people’s bonuses. 毕竟, we are best in dealing with other people’s money. And it is always easier to risk and sacrifice something that doesn’t belong to us.
We are in dire straits — no doubt about it. Our banks and financial edifices are collapsing. Those left standing also look shaky. Financial industry as a whole is battling to survive. 和, as its front line warriors, we will bear the brunt of the bloodbath sure to ensue any minute now.
Ominous as it looks now, this dark hour will pass, as all the ones before it. How can we avoid such dark crises in the future? We can start by examining the root causes, the structural and systemic reasons, behind the current debacle. What are they? In my series of posts this month, I went through what I thought were the lessons to learn from the financial crisis. Here is what I think will happen.
The notion of risk management is sure to change in the coming years. Risk managers will have to be compensated enough so that top talent doesn’t always drift away from it into risk taking roles. Credit risk paradigms will be reviewed. Are credit limits and ratings the right tools? Will Off Balance Sheet instruments stay off the balance sheet? How will we account for leveraging?
Regulatory frameworks will change. They will become more intrusive, but hopefully more transparent and honest as well.
Upper management compensation schemes may change, but probably not much. Despite what the techies at the bottom think, those who reach the top are smart. They will think of some innovative ways of keeping their perks. 不用担心; there will always be something to look forward to, as you climb the corporate ladder.
Nietzsche may be right, what doesn’t kill us, may eventually make us stronger. Hoping that this unprecedented financial crisis doesn’t kill us, let’s try to learn as much from it as possible.
Markets are not free, despite what the text books tell us. In mathematics, we verify the validity of equations by considering asymptotic or limiting cases. Let’s try the same trick on the statement about the markets being free.
If commodity markets were free, we would have no tariff restrictions, agricultural subsidies and other market skewing mechanisms at play. Heck, cocaine and heroine would be freely available. 毕竟, there are willing buyers and sellers for those drugs. 的确, drug lords would be respectable citizens belonging in country clubs rather than gun-totting cartels.
If labor markets were free, nobody would need a visa to go and work anywhere in the world. 和, “equal pay for equal work” would be a true ideal across the globe, and nobody would whine about jobs being exported to third world countries.
Capital markets, at the receiving end of all the market turmoil of late, are highly regulated with capital adequacy and other Basel II requirements.
Derivatives markets, our neck of the woods, are a strange beast. It steps in and out of the capital markets as convenient and muddles up everything so that they will need us quants to explain it to them. We will get back to it in future columns.
So what exactly is free about the free market economy? It is free — as long as you deal in authorized commodities and products, operate within prescribed geographies, set aside as much capital as directed, and do not employ those you are not supposed to. By such creative redefinitions of terms like “free,” we can call even a high security prison free!
Don’t get me wrong. I wouldn’t advocate making all markets totally free. 毕竟, opening the flood gates to the formidable Indian and Chinese talent can only adversely affect my salary levels. Nor am I suggesting that we deregulate everything and hope for the best. Far from it. All I am saying is that we need to be honest about what we mean by “free” in free markets, and understand and implement its meaning in a transparent way. I don’t know if it will help avoid a future financial meltdown, but it certainly can’t hurt.