Saturday, March 09, 2013

Doing God's Work

Lloyd Blankfein has suggested bankers' salaries should not be capped because they are simply doing God's work.

Bankers, more specifically, are serving corporate shareholders, which serves the interest of society at large.

Riding this wave of corporate sloganeering, the Harvard Business Review published a verbally slippery addendum arguing that bankers do deserve their gargantuan bonuses. The author rolled out a mathematical formula for what he called 'return on invested talent' and plugged in dollar values to show, voila! bankers really do deserve to make more money. His reasoning: they deserve to make more because the volumes of capital they handle are larger than the rest of us.

No doubt, he is partially right. Persons who have been given more responsibility--or who have earned the right to take more responsibility--should be compensated accordingly. To my mind, at least, that still doesn't justify paying out gi-normous bonuses to the same sorts of people who constructed financial products that precipitated the destruction, it has been suggested, of more than $50 trillion in wealth around the world.

As a religious studies student, who cannot claim to have more than a curiosity in the wizardry called economics, I am in a position to know when someone is hiding an questionable religious or moral claim behind a smokescreen of bullshit. Doing God's work or deserving to make, not just more money, but exponentially larger amounts of money than the rest of us gets at what a person thinks about the way things are, or at least the way they ought to be. These are absolute claims dressed down in modest banker's attire. The scary part is that both Blankfein and the HBR buy into an economic determinism more deterministic than the dourest of Calvinist predestinarians.

The author from the HBR didn't argue that bankers deserve more because they are responsible for more (as I did above). If they had, then obvious moral questions of why they were responsible and to whom they were responsible would come up. To shareholders? Obviously. To customers? If they want to continue making more money. To employees? Perhaps for the duration of their employment. To government? Well, taxes must be paid and regulations must be abided by. To the wider society? Can businesses be allowed to make money without regard for their neighbours welfare? Good question.

No, the HBR argued that they deserve more pay because they handle more capital, which the financial data easy bears out upon even the most cursory of analyses. Deserving this or deserving that is a consquence of a factually determinable state of affairs. God's will is determined by counting the money and following it around wherever it goes. The argument is not unlike one you would hear coming from the mouth of profit's prophet, Kevin O'Leary.

The author even had the audacity to suggest facts demonstrated bankers deserved their bonuses, and every argument to the contrary was animated by emotions. Now this is true, but every argument, including ones made in the HBR, is animated by some emotion or other. Obviously a smart guy, the author nonethelesslacks the intelligence to differentiate between judgments of fact and judgments of value. The latter don't automatically flow from the former.

If the latter did flow from the former, then Bankfein would be justified in saying the motivations of bankers are unimpeachable because they are doing God's work. But economists weren't trained, last I checked, to speculate about God's will or the nature of morality.

Indeed, there is something self-servingly short-sighted about these sorts of arguments. They treat money as an object to do studied, much like the tides or gravitational forces are studied. But money is a human contrivance, invented to regularize human interactions, especially exchanges of goods and services. Money has no life of its own. It's doesn't move on its own. We, collectively, you and I, individuality, animate it and make it move.

It stands to reason that if money isn't a natural force whose behavior can be predicted apart from basic considerations about human behaviour, which always has a moral dimension, no answer to the question whether bankers deserve their bonuses will be answered with a mathematical formula.

What are they teaching in Business Ethics classes these days?

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