How bank bonuses let us all down

Nassim Nicholas Taleb Financial Times 02/24/2009 21:41

One of the arguments one hears in the compensation debate is that the bonus system used by Wall Street - as John Thain, former Merrill Lynch chief executive, put it - is there to "reward talent".

While I find this notion of "talent" debatable, I fully agree that incentives are the heart of capitalism and free markets - but certainly not that incentive scheme.

In fact, the incentive scheme commonly in place does the exact opposite of what an "incentive" system should be about: it encourages a certain class of risk-hiding and deferred blow-up.

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Blind Chinese activist gets comfy in NYU home Mary Kennedy Laid to Rest in Bedford, New York Attacks in Yemen Raise Concerns About Qaeda Affiliate Chicago braces for final day of anti-NATO protests as demonstrators vow to march on Boeing HQ Facebook sale glitch embarrassing, says Nasdaq Robin Gibb of Bee Gees dies at 62 Dominique Strauss-Kahn faces new rape investigation Pakistan restores Twitter after ban over 'offensive content'New Serbian president in pro-European pledge 2 Killed in Latest Syria-Related Clashes in Lebanon

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Paralyzed woman moves robotic arm with her thoughts New York cops bust 45 in 'Supreme Team' drug crackdown Romney Camp Tries to Limit Reporters' Access, and Rope Line Ruckus Erupts Part of flight recorder of Russian plane found in Indonesia New York Tattoo Convention lands at Roseland Ballroom with up to 200 artists REVEALED: A look inside Britain's most exclusive apartment block as £65m flat at One Hyde Park goes up for sale Senators take aim at Facebook co-founder, who will skip taxes by renouncing citizenship New York City Plans to Offer Buyouts to Idled Teachers $90M midtown penthouse tops mark for priciest New York City apartment Beastie Boys' Adam Yauch Honored by New York Senate

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God help us get integrity back in our government..appalling! We his salary to preach this?! idiots Get out! I'M SICK OF THESE UNGRATEFUL EMPTY HEADS WITH SH-T FOR BRAINS hello people Georgia and Idiod congresscritters how stupid can one be? justice...

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