You may have seen the letter that appeared in the New York Times from Jake DeSantis, an executive vice president of the American International Group’s financial products unit, announcing his resignation because … let’s all get out our hankies here … he was criticized for being paid a bonus of “$742,006.40, after taxes.” In the letter, he expresses his view of the unfairness of it all: He stayed on after AIG’s collapse, he had nothing to do with the trades that brought the company down, he was working “10, 12, 14 hours a day away from [his] family” for $1 salary per year, just like AIG’s CEO, trying to do the right thing for AIG and the American taxpayers.
Apart from sad laughter at the incredible disconnect between this man’s whining, self-absorbed rant and the position he still retains in American society (as others have pointed out, he is in a position to give all of his bonus to charity and yet go on living comfortably), the thing that really drives me crazy in his letter is this:
You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation.
MIT?!? I thought students who were fortunate enough to be accepted to MIT would do something constructive with their lives — if not engage in basic research for a university or a government, then at least go out and do research for a private corporation and, well … create something. But no. This man took his degree from MIT and became … an “equity trader,” someone who pushes ownership units from one rich person to another rich person, taking a little bit for himself out of each transaction. Then he became a commodity trader, doing the same thing with little pieces of paper representing interests (or future contingent interests) in raw materials, taking, again, a little piece from each transaction and, no doubt, making a ton of dough by leveraging tiny, tiny movements in the commodities market.
So in return for the hard work of his two school-teacher parents, and to repay the “generous financial aid” given to him by MIT to allow him to attend, Mr. DeSantis has accomplished … what exactly? Unlike someone who manages an enterprise that actually produces something, all of Mr. DeSantis’ efforts throughout his whole life have created, net-net, absolutely nothing. He skimmed off tiny pieces of the products of others’ efforts — the miners who mined the copper he traded, the executives who managed the company who mined the copper, the drivers of the trucks who deliver the copper, the workers and executives of the companies who actually provide a market for the (real) copper by using it in things they produce. These latter members of the capitalist, free-enterprise system earn their keep, in my view, because they really do something, unlike Mr. DeSantis, with his MIT degree and his trading programs.
When I hear people say that the present crisis is an indictment of capitalism or of the free-enterprise system, I have do disagree. The structures of the free-enterprise system are imperfect, but basically sound. The problem with the system over the past 15 years is that we have come to believe that the economy can be sustained by people, like Mr. DeSantis, whose efforts don’t actually produce anything; traders and analysts and deal-makers. Mr. DeSantis may tell himself over and over again that “the profitability of the businesses with which I was associated clearly supported my compensation,” but I suspect in his heart of hearts he knows that’s a lie, I suspect that he knows that his empty activity has contributed to the decline of the American economy even as it made him … and I’m going to use an intentionally loaded word here … unjustly rich. Or maybe that escapes him. Wisdom seems to be a characteristic that disqualifies someone from working as a trader at AIG, or Bear Stearns, or Lehman Brothers.
Perhaps Mr. DeSantis will be able some day to be retrained and do something productive with his life.
Categories: Politics