Tuesday, February 10, 2009

Bank Bonuses

Why is it a good idea for banks to pay bonuses to their employees, when there seems to be a severe shortage of funds needed by real businesses to survive?

For many years, the banking industry has attracted many of the cleverest young people from the top schools and universities, and assigned them to playing transiently profitable number games. We are now told that the banks must continue to pay large bonuses to these people, so that their talents are retained within banking.

The apparent purpose of these bonuses is to perpetuate a discredited system, in which a significant pool of intelligence is still being denied to the industries that might actually create real wealth. Where would they go instead? Fields, factories and workshops perhaps?

Some cynics suggest that the current bank employees are so damaged by their experience, that letting their talents loose on wealth-creating industries would cause further economic and social catastrophe.

However, it would be a disgrace if new generations of bright students continued to be lured into gambling with other people's money by the prospect of high bonuses and zero accountability.

Perhaps we should get the bankers to do some real banking - along with hedging and ditching. See Somerset Guide to Restoring Hedgerows (pdf).

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