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During the crisis, bonuses continue

While Western economies experiencing its worst recession in 70 years and the States indebted to the tune of billions of euros to ensure the recovery, the banking sector, which is the cause of this disaster, has again become profitable in part.

More surprisingly, the banks pay bonuses to their employees the best paid, usually working in high risk activities at the origin of the crisis are poised to exceed record levels yet in 2007: they will be approximately 140 billion dollars U.S..

The economic crisis has nothing changed in a fundamental trend: the explosion of salaries in the financial sector, partly due to the bonuses.

A study showed that this tendency was a product of financial liberalization, and could not be fully explained by a change in the characteristics objective of workers in the financial sector, particularly by increasing their relative qualifications. A significant proportion (30 to 50%) of the explosion corresponds to a pure rent that these employees receive the rest of the economy. But

bonuses this year occur in such shock they to The Economist : even banks that are losing money paying them. The U.S. banking sector is, in fact, far from being out of the crisis: Many major players are still in deficit. In particular, 4 of 10 merchant banks of Wall Street bonuses have distributed the more important will not be profitable this year, including Citigroup and Bank of America.

And this is shocking The Economist: while shareholders are losing money, the best-paid employees receive bonuses, expected to reward their performance. In other words, whatever happens, there is or not performance bonuses are there.

Everything happens as if capitalism was walking on its head: the shareholders are losing money, partly because their companies pay substantial bonuses to employees not fully effective. And that is what The Economist is unbearable, raising the good question: why shareholders do not say anything?

This crazy situation where shareholders divest themselves to secure the lifestyle of traders, calls for responses "sociological" to this question. In this type of explanation, which gives Godechot Olivier version more sophisticated, there is simply a hold-up. Traders ownership of the assets of their bank (mathematical models, collaborative teams, etc..) And are able to create a favorable balance of power by threatening to leave with these assets.

This reminds us that the issue of economic inequality does not arise longer exclusively or even primarily, in terms of share of value added between capital and labor, but even within the work. Here, the huge economic inequalities that are created by opposing end them employees: employees with very high fees and others who can not make that kind of "hold up". This brings us back

mostly obvious: nothing fundamental has changed in the world of financial activities. It must indeed be naive to believe that we can stop a "hold-up with codes of good conduct and other proclamations solemn. In economics, ethics exists only when embodied in incentive structures, which are still completely lacking here.