Bible Studies
Written by Jim Jordal   
Tuesday, 10 March 2009


By Jim Jordal

But those who are determined to be rich fall into a temptation and a snare and many foolish and harmful lusts, such as drown men in ruin and destruction. For the love of money is a root of all kinds of evil. Some have been led astray from the faith in their greed, and have pierced themselves through with many sorrows.

I Timothy 6:9-10 (WEB)

The excuse used again and again by top Wall Street firms to defend their obscene executive compensation packages is that they must pay high salaries and even higher bonuses and stock options to attract top talent. Without such remuneration they claim to be unable to compete with companies in other fields for what they see as a very rare commodity—top executive talent.

It’s rapidly becoming clear that this is a myth of no small significance. In 2007 the total remuneration packages of the top five Wall Street hedge fund managers totaled $13 billion. Did this cornucopia of wealth guarantee that these plutocrats would foresee the financial disaster to come and protect their investors against catastrophic losses? Not at all! These astronomical rewards had little or no relationship to how their various financial institutions fared.

Sports teams use the same reasoning to justify paying multiple millions to what sometimes turn out to be prima donnas of high athletic ability, but hampered by monstrous egos and a tendency to pout and under perform if they don’t get their way. The web site Too Much for Feb. 16 reports that University of Notre Dame business school management expert Matt Bloom subjected almost the entire 1990s Major League baseball salary and performance data to analysis. His findings as summed up by the Wall Street Journal were somewhat shocking to baseball fans and to all of us concerned with excessive compensation: "The bigger the pay difference between a team’s stars and its scrubs, the worse its record."

So if paying astronomical salaries doesn’t work in baseball, does it work on Wall Street? Is it really necessary to pay hundreds of millions to get top executive talent? Can’t anyone of lesser rank do the job? Couldn’t it be that there are scores of unemployed executives who could efficiently manage banks and investment houses? Common sense gives the answer to this one!

Too Much puts it this way: "In Corporate America, top executives don’t have to take drugs [as do some professional athletes] to score windfalls. In their chase after the golden ring, they typically engage in more socially destructive behaviors. They downsize and outsource jobs to boost their quarterly bottom lines. They wheel and deal companies, creating workplace chaos as they go. They even, at times, ship out tainted peanut butter."

So, what do grossly excessive compensations achieve? Not excellence, but a willingness to bend every rule and take every risk to achieve the prize. Take a look at the rogue’s gallery in Time for Feb. 23 picturing the 25 people most to blame for the economic mess we’re in. They all reaped big rewards for their shenanigans, but that in no way prevented economic meltdown.

The excessive compensation packages widely available in the financial sector of our economy resulted in and rewarded risk-taking behavior far beyond any seen in most of our lifetimes. The gigantic edifices of highly-leveraged debt and fictitious wealth resulted in unstable, Ponzi-like structures ready to collapse at the any downturn in the economy. And that downturn arrived in the form of the sub-prime debacle of last year. Once the house of cards begins to fall there is no saving it because investors (gamblers, really) immediately want their money back, thus creating further pressure on the already-shaky edifice.

So, maybe it’s time to think about building economies on Main Street that create real wealth in the form of factories paying living wages, banks run as community services; stores selling goods people need rather than baubles they want, hospitals providing care for all, schools with sound educational standards, public transportation facilities replacing automobiles, cities friendly to people rather than cars, and entertainment suitable for the entire family.

Such a culture is not only desirable, it’s inevitable. What we’re doing now is unsustainable for people, animals, and the earth.