Is It OK Not to Give?

The bonuses for high-level executives at AIG have caused much trouble, and the fat paychecks paid to the big shots in American corporations have given rise to public criticism. It is an issue that developed from the economic tsunami, one that U.S. President Barack Obama had to chastise sternly because saving the market required taxpayer money, but I do not think that he does not understand market principles.

The American market operates in accordance with the law of free buying and selling,and most of the people in charge of the corporations fall into their posts like paratroopers as they are recruited through headhunting companies as well as the open bidding system, which accounts for their astronomical salaries.

And so, the people at the management level are all working kings. Their annual incomes are in the tens or even hundreds of millions. Such a lopsided phenomenon does not reflect the generosity of the shareholders of American corporations, and not every highly-paid executive is money hungry, but this does tell us exactly what the free market is all about.

One of the top economists at the Singapore Monetary Authority of Singapore has recently been snatched by a certain financial institution in the Middle East. This once again shows that the competition for talent knows no boundaries. Real talents are rare commodities to be hoarded, and the poaching of these talents are happening all the time. Monetary compensation is the most standard bottom line. Anyone who says anything without acknowleging this fact must really be out of touch with the times.

Are Astronomical Salaries the Result of the Market’s Operation?

What are the times? The few favored sons of god, like celebrity idols or sports mega stars, need only to be popular for three years to earn enough money to last them three generations (though not many can hold onto that money, but that is another story).

America’s top golfer Tiger Woods commands a fee of over a million U.S. dollars just to appear in a golf competition. This is the result of the commercialization of competitive sports, and has nothing to do with the sportsman’s desire for and his pursuit of money.

A heavyweight boxing champion pockets a few hundred million dollars in a match; the prize money for winning a tennis championship is over a million U.S. dollars. Badminton prize money is merely tens of thousands of dollars. The level of difficulty in becoming the champion is equally high. The size of the rackets have nothing to do with the amount of the prize money. The final key is in the market.

In the same way, the sky-high salaries of management in American corporations is the result of the operation of the free market system where the highest bidders win. The American institution has created a lot miracles, but also a lot of bubbles, and the current financial tsunami is one such problem!

The shared option model has once been followed by the world over. Management has to improve their businesses in order to bring up share prices during their terms, and the inflated share prices would benefit the share options directly.

And the result was that many of these leaders were not able to improve their corporations’ businesses, but they deliberately came up with packages to push up share prices so as to inflate their share options. Such an abuse of authority that created the economic bubble should be censured. The abnormally high salary phenomenon created by the effect of the free market, on the other hand, is a different matter.

Taxpayers’ money is being paid out as fat bonuses, and the U.S. president’s indignant rebuke of this is justifiable, but that does not mean that all the onlookers have to join in the jeering. This is no different from looking at Tiger Woods or other celebrities pocketing a large sum of money. They are products of the free market, where there is no fairness and justice, only prices set by supply and demands.

Recruiting talents with high salaries has become a worldwide trend, and the financial tsunami has triggered an intense demand of justice from the people. The problem is that we do not have a solution to replace the limitless bidding prices in the free market.