The Shallowest Generation

The Shallowest Generation
ritholtz.com

My father's pretty similar to me in worldview, ethics, and politics. When he was growing up, he couldn't have even imagined working at a hedge fund; the concept of working for money was considered crass, if not repulsive. (He was actually quite incensed when I first said I was interested in trying out trading.) In 2007, it was perfectly normal for a liberal, idealistic young person to go and work for an investment bank or hedge fund, because that was seen as the best way to establish oneself and go far later (e.g. Jeff Bezos worked at Shaw before founding Amazon).

I would note that the problem with the Baby Boom generation isn't that they're "selfish". My parents aren't bad people. Nor were most of my teachers; they were great. On the whole, the Boomers aren't worse than the rest of us. The difference between them and us is that the better half of them almost entirely eschewed the career paths that led to power-- finance and corporate leadership-- leaving the shameless and greedy bastards to take control.

Anyway, I'm going to chip in on the issue of CEO pay. Many, including the author, are outraged that they're paid 500 times the wage of the average worker. But the CEO job is generally given to somebody who

a) has proven himself (5mm b) is willing to work 80 hours per week

c) is willing to pick work over family/friends, no matter the circumstances

The CEO must:

a) focus on quarterlies at the expense of long term vision (maximize shareholder returns per quarter)

b) focus on quarterlies at the expense of employees and the company itself

Aside from perhaps the prestige and power that comes with the job, it's not going to be a lot of fun. So why would somebody who's already rich be willing to do this? Money. And lots of it. Does that make them sellouts? I guess. But if working for 2 more years means the CEO can retire and sustain his current lifestyle for the rest of his life it's probably pretty tempting.

You shouldn't ask yourself - does the guy deserve 500 times the average worker's salary? Ask instead - why did it take 500 times the average worker's salary to convince him to take the job?

I think that the CEO should focus on generating true value, both in the short and long term. And I don't think that's possible when you're only held accountable for short term results. Only CEOs like Steve Jobs can work on their vision, short term results be damned. His annual salary is $1. Why? Probably just to prove his independence.

Everything boils down to incentives. Whether it's CEO pay, greed on wall street or credit cards (ab)use. People do what's in their best interest. Fix the incentives, and the rest should fix itself.

His chart doesn't help either:

http://www.ritholtz.com/blog/wp-content/uploads/2008/11/debt...

Yes, if you cut the Y-axis in arbitrary places, you can make small changes seem important. Too bad they aren't.

Here is a chart comparing my apples to oranges:

    1000.0001 -             ******
              -             ******
              -             ******
              -             ******
    1000.0000 -  ******     ******
              ~  ******     ******
              +---------------------
                 Apples     Oranges