Defending Wall Street Bonuses
By Alex Gauthier on 03/10/2013 in banks, bonuses, wall street with 2 CommentsRead Time: 1 - 2 minutes
Exorbitant bonuses handed out to big bank executives has seeded the ire of popular perception, which was sparked during the Great Recession. One Minute MBA walks us through the logic behind big Wall Street bonuses and how the practice may not be as sinister as many think.
Industry competition and market norms have dictated a system whereby end of the year bonuses are a critical part of the financial ecosystem. Whether or not the practice appears justified there is an internal logic to big bonuses.
Source: http://www.onlinemba.com/blog/wall-street-bonus
From Online MBA:
It’s 2013, the economy has been struggling for the better part of a decade and most Americans are fed up with hearing about Wall Street fat cats and their extravagant annual bonuses. Everyone is entitled to his or her opinion when it comes to the ‘1 percent’, but these bonuses aren’t as harmful to the American economy as one might think. In many ways, they’re actually a good thing. Seriously.
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2 Comments
Lucas Eaves
03.11.2013
@lucaseaves
Interesting perspective. It will be difficult to convince people about it.
Michael Higham
03.11.2013
@michaelhigham
That was a REALLY good video. Although I’m sketchy on my economic concepts, it was easy to understand. It’s just that the word ‘bonuses’ rubs people the wrong way, and it’ll be pretty tough for a bank to come out and say, ‘we’re compromising base salaries for bonuses that aren’t guaranteed’.
However, I’m always skeptical when scholars say a certain ‘type’ of money will be spent and boost the economy. I do see bonuses being spent more freely than saved, but I wouldn’t rely on that too much.