The New York Times recently reported that $18.4 billion was paid in bonuses to employees of financial companies in New York in 2008, despite a loss of 38% in the Dow Jones Industrial Average. That was the most severe loss since the stock market crash of 1931.
In comparison, the entire 2008 budget for the National Endowment for the Arts was a total of $144.7 million. Yes, you read that right. The entire budget for the NEA was less than 1/100th of what Wall Street used to pat itself on the back for a job well done in 2008.
See how that compares:
The Times article notes that it is unclear whether or not federal bailout money was used in the bonuses. Yet – it fails to explain how exactly the bailout money wouldn’t have been used in the bonuses. What other money was used? Does that mean that the banks had enough money for optional bonuses, but not enough to stay in business? That’s like lending your friend money for rent and food while he spends his own money on designer clothes and sports cars.
That money would have been better spent on arts and education – in industries that are in desperate need of extra funds.
Have you read about the budget cuts happening to arts organizations and art education in NY state recently? No? Allow me to list some articles.
I could list citations all day. And that’s just in New York. We write articles on this site all the time about the current trouble that musicians and arts organizations are having with the economic crisis. It is, without a doubt, an global catastrophe for the arts.
Who started this mess? Who is responsible for shows being canceled, ticket sales dropping, budget cuts, deficits, the re-opening of orchestra contracts, the closing of theaters, the thousands of artists left without a gig? Most reports point to two sources: a lack of oversight by the federal government, and the greed of Wall Street. Somebody should have been regulating those credit default swaps, and somebody should have put a stop to the toxic loans that were flying out of mortgage offices.
These financial firms in New York had a direct hand in ruining the economy of the entire world. They should all be fired and required not to live within a 1/2 mile of elementary schools(!) - yet, instead, they are given the 6th largest Christmas bonus ever recorded. That is absolutely unacceptable. There is no excuse for that. People are losing their jobs, homelessness is up, and Bloomberg recently reported that in Japan, on the other side of the planet, the suicide rate is rising as more and more Japanese workers are being laid off. People are killing themselves over this, and Wall Street has the audacity to hand out bonuses.
There is a MoveOn.org petition circulating that speaks to this issue. Personally, I find the fact that my only recourse in a situation like this is to type my name into a little box on a website is totally pathetic. Clicking a little button that says “Sign the Petition,” then being asked for a donation makes me feel almost more helpless than not doing anything at all. There should be marches! There should be outrage! Where is the outrage?!
But I did it anyway. I signed the petition to limit salaries at all banks taking taxpayer dollars. It can’t hurt. MoveOn.org does have some power of perception, and it’s worth showing support for something that is right and decent.
I agree 100% with Dave’s outrage. In New York City, the imbalance of money and power is blatant.
But we all have a voice for this outrage through our art. Make music that makes a point. Somebody will hear it. Somebody will listen.
Great article! I would encourage people to also sign the petition establishing a cabinet level position in the federal government for Secretary of the Arts. It can be found at: http://www.petitiononline.com/esnyc/petition.html
This is obviously from someone who does not understand the financial industry. Bonuses are not “pats on the back”. Rather, they are expected as part of the overall compensation package. Salaries on wall street are typically slim. Additionally, to place all of the blame on the financial industry is careless and myopic at best. Everyone who leveraged themselves with credit cards, Home Equity products and mortgages that could not be afforded are also to blame. Who belongs to that group? Practically everyone.
Hi Frank,
You’re right. The salaries are relatively low and the bulk of the compensation comes in the form of the bonus, which is based on job performance. Do you believe the CEO’s of the financial industry deserved $18.4 billion plus their slim salaries as their collective compensation packages? Will it all make sense to me once I have a better understanding of the financial industry?
I actually believe I have a better than average understanding of the financial industry. And because of that, I don’t belong to the “practically everyone” group. Even so I’m feeling the down economy much like everyone else in the middle class–my 401k took a hit, my Grandma’s once plentiful nest egg isn’t going to last the rest of her life, and many of my friends have been downsized as a direct result of the failing credit markets. Why should these people suffer while $18.4 billion goes to the people that helped create this mess? If “practically everyone” else is being punished for taking on loans they couldn’t afford, shouldn’t the guys that created the loans also take a hit?
The purpose of this article is to demonstrate a contrast between a bloated financial sector and a struggling cultural movement. Music and the arts don’t need much money to survive, but it could use more. Creativity is healthy for humanity in the same way greed is harmful.
Read it again, Frank. I place the blame not just on the financial industry, but also on a lack of federal oversight. Secondly, putting the blame on everybody that owns a credit card is considerably more myopic. When Enron went under we didn’t blame the people working in the mailroom, even if they were part of the company. Not everybody that uses money is equally to blame for the fall of the financial markets.
And I don’t buy it that financial workers in NY are poorly paid. Accoridng to the Boston Globe, the average Goldman Sachs employee makes $622,00 a year. That is no meager salary. $622,000 is nearly $2,400 each day, assuming a 260 workdays in a year. That is an incredible amount of money.
Furthermore, as the Times article points out, the purpose of bonuses is to a.) reward workers for a job well done and b.) ensure that the company retains talented people. 2008 was not just a bad year for financial companies, it was also a year that saw the number of unemployed workers grow by 1.2 million. There are 165,00 private sector jobs that are expected to be lost in New York City alone over the next 2 years. There is no shortage of talent in the job market, and there is no reason to incentivize these finance workers to stay, especially when their industry is running on federal bailout money.
I know that this is going to sound like more socialist rhetoric but once again this is an area where other countries have stepped it up. The traditional model of patron-artist seemed to cross over into the US as “hey you’re on your own to figure it out” – where as countries abroad (Holland and Canada come to mind) have government funding to support artists including CREW people at clubs! And they pay well! It’s appalling to me that the diversity of this country that everyone’s so proud to wave a flag about is exactly what’s getting squashed under all these wall street handouts. It was bad enough under Bush. It’s time to remember what people go to a place like New York to see, not to mention the thousands of music and arts scenes in the rest of the country that struggle every year to keep it going. The culture war continues.