Wednesday, March 17, 2010

Salary Caps for Who? Celebrities, Athletes or Bankers?

With the recent scrutiny and criticism of the salaries of investment bankers, I wonder if people look beyond the optics of the profession and understand the operations of such professional services firms. Investment banks along with strategic consulting firms (i.e. McKinsey, BCG, Bain) really don't have R&D or product development to reinvestment their profits into. Their products and assets are their people, so of course they are going to paid them well. I guess an alternative could be to establish huge corporate foundations beyond what we have ever seen, but would that be a good business practice? Maybe.

Another viewpoint to consider is who we, as a society, want place atop of the pedestals of professionalism? Take away the investment bankers and hedge fund managers, then we are left with celebrities and athletes as the profession class that take in large regular paychecks. There are entrepreneurs, but most people are not measured risk-takers. Are these professions the ones we want our children to model themselves after? To envy? To desire? To hard work to be like?

With investment bankers, at least the more studious college students had a goal and outlet. Math geeks have hedge funds driven by quant jocks as an alternative to the ivory towers of academia.

And after reading this article, "Seven costly pro athlete screw-ups" I cringed:

"Almost 80 percent of National Football League players are flirting with bankruptcy two years after they retire, according to Sports Illustrated. NBA players aren’t faring much better. 60 percent of former National Basketball Association players end up broke within five years of retirement. Athletes squander millions of dollars due to bad decisions, lavish spending and poor financial planning..."

Are these really the role models of our society and the dreams to instill in our children? Hell no.

UPDATE: True/Slant's Japhy Grant on celebrities, "Why Shouldn’t We Treat Celebrities as Gods?"

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