Money: still fungible

I don't have a huge amount of sympathy for complaints about how much bankers get paid. It is nonetheless annoying to see bankers make extremely silly arguments in defense of how much they are getting paid. And this article in the New York Times contains much silliness. The story about how "a senior Morgan Stanley executive admonished his employees to call the payments 'retention awards'" and not bonuses is distasteful, but only in the sense that Bill Clinton's testimony about Monica Lewinsky was distasteful. This second argument in defense of bonuses is, however, crazy:

James Wiggins, a Morgan Stanley spokesman, said that such payments were necessary and would come out of operating revenue, not government bailout funds.

Some of the CEOs testifying before Congress yesterday tried this one too: "Sure, we took the bailout and we awarded bonuses, but the two pots of money are distinct." And the problem with this argument is that money is fungible: A dollar of bailout funding is a perfect substitute for a dollar of operating revenue. The two pots of money are in no sense distinct.

Presented by

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.

Why Principals Matter

Nadia Lopez didn't think anybody cared about her middle school. Then Humans of New York told her story to the Internet—and everything changed.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A History of Contraception

In the 16th century, men used linen condoms laced shut with ribbons.

Video

'A Music That Has No End'

In Spain, a flamenco guitarist hustles to make a modest living.

Video

What Fifty Shades Left Out

A straightforward guide to BDSM

More in Politics

Just In