
Why Bankers Would Rather Work for $0.00 Than $500K - peter123
http://www.technologyreview.com/blog/post.aspx?bid=355&bpid=23401
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mynameishere
Because zero is obviously a temporary value, whereas 500K could potentially be
forced into a standard income.

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jcl
Ariely conducted a number of social experiments with unexpected results, as
covered in a summary of his book that was posted a little while ago on HN:

<http://bookoutlines.pbwiki.com/Predictably-Irrational>

The "Cost of Social Norms" section is the one relevant to his points in the
article.

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quoderat
From how eager they are to return the TARP money, it looks like they are more
willing to work for $10 million a year plus stock than $500,000.

Yeah, not quite what the article was about, but it's ridiculous what some
people expect for adding so little value.

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patio11
It is not obvious to me that banking executives add "little value" as a
general proposition. (Sure, a lot of them look like idiots today. I suspect
this state of affairs will not persist to the end of time.)

Most of us here work on the Internet, right? Our businesses are essentially
one big lever to apply intellectual capital, right? And every change is
multiplicatively effective, right? 1% more signups is a 1% increase to the
bottom line. 1% higher average ticket price is a 1% increase to the bottom
line. 1% more traffic is a 1% increase to the bottom line. Each of these
compounds.

Banking is like that, except it is one big multiplicative engine for capital
capital instead of intellectual capital. Sitting at the top of the
$100-billion-in-assets-under-management capital multiplication engine is an
executive or ten. What is the 1% difference in outcomes between candidate A
and candidate B worth to the firm? Well, if its multiplicative... oh, dear. (I
know crony capitalism has caused a bit of the salary inflation -- but don't
assume there is no fire just because you see a lot of smoke.)

Relative income parity, the historical norm for the vast majority of people
for the last several thousand years, is an accident because historically
everyone was operating under the same constraint: you can only labor for 24
hours a day. Some of us no longer operate under that constraint, because our
particular combination of talents, skills, and markets do not measure
productivity in hours. Our skills are super-scalar.

And, in a world with any skills that are super-scalar, income equality is
doomed.

We saw hints of it in the last two bubbles, which might get dismissed because
they were covered up by frothy madness. But I make something approaching the
mean national income _while sleeping_ just because I sell programs and selling
programs scales really freaking well. Far, far better than selling programming
expertise, which is a fairly well-paid field of endeavor to begin with.

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audionerd
Dan Ariely talked about this recently on C-SPAN's Book TV, and I (being a
nerd) watched the entire thing.

 _"[...] if we pay them nothing, people work. If we pay them a little bit of
money, people get demotivated. It switches us from a social domain to a market
domain."_

 _"I actually think the right salary for these bankers should have been
zero."_

[http://www.c-spanarchives.org/library/media/player.php?pid=2...](http://www.c-spanarchives.org/library/media/player.php?pid=284793-1&width=365&height=340&start=1975&);

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benreesman
how about no pay restrictions but put every banking executive's salary on
whitehouse.gov. now shame and pride figure equally.

~~~
likpok
This will not work. As shown by CEO pay, publicizing this data led to people
feeling like they were in competition for higher and higher wages.

CEO wages increased _massively_ as a result.

