Compensation Machine

Analysis of the latest earnings reports confi rms what most believed: Wall Street thrives on bubbles, but not otherwise. In fact, it seems that Wall Street engineers bubbles to redistribute wealth the way no one de fines wealth redistribution, for "it's essentially a compensation machine." On the other hand, scratching below the ethical surface, this, once again, reveals a deeply rooted short-term view. Indeed, given that more and more compensation is tied to their company's stock, bankers would be in better shape in the long run if they reallocated part of their compensation to earnings as David Weidner suggests. Robert Reich has recently argued

The rich are better off with a smaller percentage of a fast-growing economy than a larger share of an economy that's barely moving.

Giving up some compensation for their company's bottom line would be the fi nancial sector's version of that argument. But of course I can't fathom what currency Robert Reich has on Wall St., and long-term thinking doesn't fare much better. Indeed, Wall Street seems the epitome of short-termism. Think about High- Frequency Trading, which operates at the scale of microseconds. If we were all fashioned, we would style this as myopia. But perhaps Wall Street has embraced the awareness of impermanence, the past and the future do not exist, only the present does (barely!), live and profi t in the present (from those who live and lose in the past or the future)!