High salary is the root of all evil

Why are banks going down under so quickly? Greed, in the form of high salaries and high bonuses. Paying the top management a ransom is easy, but finding the money to pay is not. The money must come from somewhere. What business in banking can generate that kind of income to sustain the big pay checks and the big bonuses? Gambling and high risk pursuits, trading and selling dangerous products, encouraging clients to gamble and take risk.

The banks have no choice. Every monkey wants to be paid in golden peanuts. The good old days of slow and steady growth, with decent pay cheques are seen as backward and unprogressive, unproductive. The banks are only doing well if they can perform better than the market. That means if one bank or more banks are doing better or betterer, the market indicators will go up. And banks that failed to keep up are seen as failures. Even insurance and pension funds are in high risk financial instruments.

So, if the shareholders want good results, they need to pay golden monkeys to produce the gold. Really? In most cases the shareholders, mostly minorities, did not have any say. It is left to the top management and their self serving logic, circular logic, which all ended up in paying themselves crazy, at the expense of the small shareholders.

In a way, our little island is also caught in the same mousetrap. The high salaries are unsustainable. The money must come from somewhere, not just a few plates of char kway teow. It is more serious than that. The whole machinery needs to be lubricated with expensive oils. That is why high economic growth numbers are indispensable. That is why high population growth is indispensable. Who really benefitted from this high growth formula?

The little guys are constantly trying to make ends meet, told to tighten belts, while the big guys are crying salary not enough. The $200 pay increase will quickly evaporate by the rising cost of everything. The big guys know, and that is why they are asking for more millions. There is no real absolute gain or improvement for the lower income group. Only the small elite group and the super rich are seeing real growth in income and quality of life with million dollar bonuses and tens of thousands in increments. The cost of living cannot touch them. Their real income accelerates at rocket speed against inflation. Inflation only eats up the income of the average and lower wage earners.

High salaries are not sustainable and will add to a lot of costs to the system, including social and the intangibles. I know that some will disagree and will vouch that high salaries should be the way to go, like we have plenty of land to build more houses and facilities for an unending influx of foreigners, 10m, 20m, no problem at all. The secrets to our success are high salaries and high population growth.

No one will look further down the road to see the disasters that can be wrecked by these two gambits.


Anonymous said...

They may be too high but high salaries are a sure thing to come until the world order collapse.

What PAP can do is to bring them down to the level which they can stay as ruling party in Singapore.

But the trend is irreversible in the world,or else see how the politicians and civil servants in U.K try to make illegal money!

What I am saying is the present world order,rights and wrongs would collapse and be replaced by LAW OF JUNGLE.

When it would happen or would it ever happen this way,I do not know.But I do feel that the world is now moving in that direction.
Just my humble opinion,Thank you.

Chua Chin Leng aka redbean said...

We are at the end stage of capitalism. The system will break down. Destruction is the mother of creation, a new system, new ethos etc will come forward to replace this decadent old system.

Anonymous said...

I agree that the island has a limited capacity to absorb foreigners which is essential due to our extreme population decline.

But whether proposed 6.5 million target is acceptable is up to the citizens themselves.

Therefore I support the idea to make Spore citizenship a tradable item with a market price tag.Existing citizens can make their own decisions whether to stay in a 6.5 million small island or get something out of their citizenship.

Actually I believe the current economic model is not correct but it is not only the sole fault of the ruling party.

so1trg said...

Hi Redbean,

It might take longer than what we believe will be the end stage of capitalism.

We just make see more Arab spring happening throughout the world. And US dollar getting weaker and weaker.

The few days of strengthening of US dollar is good news. Time to position more shorts.
~ Doesnt that sound so capitalistic? :D

Anonymous said...

Uncle is lucky due to the failures of Euro,Jap Yen,etc.

RMB and Indian Rupee are not yet in comfortable position to take over the responsibility,although some may disagree.

End stage of Western capatalism is near,whether we will see a smooth handover is the million dollars question!

My humble prediction.

Chua Chin Leng aka redbean said...

Hi so1trg,

Capitalism taking its last gasp or morphing into centralised controlled capitalism like in Communist China: )

Anonymous said...

High salary is never a problem Brother Redbean.

It is the exploitation of workers; under paying them, long working hours with harsh working conditions, no protection from industrial accidents, in short, slave driving by the employers that is the great sin.

And of course, over rewarding oneself doing little or nothing is equally sinful as bullying and exploiting others too.


Anonymous said...

When workers are justly paid and the olds are adequately care for instead of having to work till 'pengsan'(drop dead) just to afford some medicines for old age problems, who cares how much the greedy leeders want. They can pay themselves with blank cheques and denominations of their salaries can exceed those on hell papers. After all where the hell are they going to find the time and life to spend those sinful incomes.