Greed is Good. Rethinking Wall Street's Incentive System.

A controversial bonus season has ended on Wall Street, leaving behind general disappointment. Disappointed are the public and policymakers, who continue to be outraged over the sums being paid to the financial community. Disappointed are the employees at bailed out banks and other financial institutions, as many of them were not so excited about their bonuses either.

No matter how big their bonus will be, every year most people on Wall Street are likely to remain disappointed. First, after a yearlong wait, expectations about The Number grow high. Second, The Number has to fill a big gap: bonuses are not only meant to reward good performance and retain employees, but to fulfill a need of satisfaction and accomplishment that embraces many aspects of reality behind work, such as social relationships, family life and personal self-esteem. Third, economists have shown that once an individual gets fairly rich (after certain basic needs are met), further economic growth does not seem to make you any happier.

Even for bankers, happiness does not necessarily increase with their wealth, but more from the satisfaction that comes from winning the game. They could be paid in apples, as long as they could get more than last year or more than the other guy. The score, not the dollars, is their primary goal.

The psyche of bankers and the subject of executive pay have been on the examining table in boardrooms and on newspaper front pages since the start of the worst financial crisis in 70 years. From my standpoint, there is nothing I see that gives me the slightest hope these people have learned anything from the recent crisis. Gordon Gekko’s motto greed is good still matches very well Wall Street’s motivational culture. After all, like my boss was used to say: ”we all love cash”.

Greed is good. Gordon Gekko was right. First, making money gives you a clear measurable purpose, and having a purpose makes people happy. Second, being paid is just another way to feel valued and recognized, which also makes people happy. Finally, having lots of money in the Unites States is an efficient way to access many things that generally make people happy: quality healthcare, better education for your children, good food, fine arts, etc. This is simply how a capitalistic system works and it is so much more appealing because it embraces real and rightful needs of every human being. Like my boss said, “we all love…”. Some of us love “cash”.

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