Today, over at Huffpo, "serial entrepreneur and second time CEO" Penny Herscher, took it upon herself to patiently explain to the teeming, huddled masses why it is that our friends on Wall Street need their bonues, even if they have to be paid by us simple taxpayers. 

Wall Street will be facing a talent retention challenge very shortly unless the bonus issue is elegantly handled this year.

Over the past week the news has been full of "outrage" and questions about whether bankers should get their bonuses this year. Talk of large chunks of the bailout going to top bankers and class-warfare type language.

But unfortunately this problem is not as simple as the government, or the "public" controlling the pay of an industry they don't understand. I'm a pretty hard-core democrat and yet when I hear talk of the US taxpayer wanting zero bonuses on Wall Street this year -- per a Bloomberg article today -- it concerns me that the public doesn't understand how talent works.

Our best companies are very, very competitive. In all but a very few rare cases, a company is only as good as it's people. And companies, like fish, rot from the head. It's a common adage in my world that A players hire A players and B players hire B and C players. Talent is everything. So, in the competitive world of banking it is essential for the long term health of our institutions that they keep the talent, within the institution if at all possible, and definitely within the country. Our best deal-makers will go where the money is and that had better be in the United States and at the institutions that make our financial systems work.

So while I understand that taking public money and using it to pay bonuses may be optically obscene -- and it is certainly a good idea for the very top management of the institutions to not take bonuses -- if that action is taken too far down there will be a negative backlash -- and the talent which is so critical to long term health will leave. There are too many other firms, and countries, that will be happy to hire them. 

My response was too long for HuffPo's comment system so I'm doing it here. 

Damn, Penny, condescending much? 

Boy was I naive.  I now see that I'm just a complete simpleton, and have so little ability to understand the mind-boggling complexities of personnel decisions in the super-duper complex banking arena, that I should just shut up and let your friends in the banking and investment business do whatever the hell they want with the taxpayers' money. 

Silly me.  I admit that I had this quaint notion that the point of a bonus was to reward success above and beyond what the company expected if people had merely done the job for which they'd been paid their salary.  I also had this misguided notion that another point of a bonus on top of base compensation was to give executives an incentive to try to improve the company's financial performance.  I even had some expectation that one of the criteria used to determine those bonuses would be (though I know I'm really taking crazy-talk, here), whether the employee's actions improved the intitution's long-term health. Indeed, I had actually mistakenly inferred from their use of the word "bonus" that the idea was to create a kind of participation in the company's risk that carried both a positive and a negative incentive to perform. 

Thank you for enlightening me, Penny.  I now see that "bonus" really means "chuck of salary paid out in a gigantic lump sum regardless of whether the employee's efforts helped the company to soar or to punch a gigantic smoking hole into the ground." 

Here's why we naive, child-like taxpayers are pissed, lady. 

You think you live in a world of complexities which you understand, but that are unfathomable to us common folk.  Got that.

We, on the other hand, think your "A Talent" paid Phil Gramm to pay Congress to allow them to engage in utterly incomprehensible parastic transactions with no adult supervision.  For years they, and their mouthpieces like Gramm and Alan Greenspan, assured us that they were all so smart--and therefore worth the mind-boggling amounts of money they were paying themselves--that they could comprend the complexities of these transactions, and accurately assess and manage the risks. 

In fact, however, hardly a goddamned one of them understood, or much cared, what they were doing.  They'd pick up the prospectus for a derivative that amounted to nothing more than a gambling contract on the outcome of an underlying transaction in which had no substantive interest and as they flipped through it, their understanding was limited to "blah, blah, blah, details, details, details, boring stuff, boring stuff, boring stuff, lawyer words, lawyer words, oh, here's what I was looking for--the part describing my vast management fees and commissions if I sell this to one of the funds the rubes are investing in through their 401(k)'s and pension funds." 

We think they're con artists, in other words and you're fronting for them. 

And at this point, now that their your pyramid scheme has met its inevitable end, they really don't have a whole fuck of a lot of credibility when they come to me and say, "hey, we 'A talent' people managed to wreck the economy so we need you to cover our losses and, on top of that, we want to reward ourselves with bonues for the fine job we've done of demolishing your 401(k), forcing you grandmother to postpone her retirement indefinitely, and forcing your kids to pay off the extra public debt you'll run up to keep us from having to trade our fantabulous apartments for a cardboard box on Skid Row and our trendy drinks in martini glasses for Ripple." 

Christ, you really do think we're dumb, don't you? 

Look, maybe Americans don't understand a lot of things they should, but they understand the basics of capitalism just fine.  They are steeped in it from toddler to teen, absorb it by osmosis throughout a succession of chores and summer jobs, are trained in it's principles in school and by life.  And they are smart enough to know that your "A Talent" people are not capitalists.  You want to privitize profit and socialize risk.  That's not capitalism.  That's not even socialism.  That's kleptocracy.  And we say not only "no," but "fuck, no!" 

If there's a company that's good enough to still be in a position to pay obscene bonues out of its own coffers (rather than mine), I suspect, or at least hope, they'll also be smart enough to recognize that all this brilliant fucking "talent" you're talking about are the people who destroyed the companies they're now seeking to leave because they might have to go without a bonus this year.  They are the people who are supposed to culled from the herd by the Darwinian lions of a functional capitalist economy.  We're not going to pay them to perpetuate the dysfunction they've purposfully built into our economy.  If we're going to have to reach into our pockets to cover the inevitable consequences of that dysfunction, we're by-God going to use the leverage that comes with that money to rid ourselves, and our economy, of the dysfunctionality. 

And, btw, if you're  thinking they can just take some of that taxpayer money and using it to buy Congress again, I'd suggest you take a look at both the revolution in campaign financing we just saw and the results of the last election, first.  I know the people in Congress are, and that corporate PAC money isn't looking quite as sweet to some of them as it used to.  The smart ones see the handwriting on the wall, and the dumb ones--i.e. the ones who think we're too dumb to pay attention any longer--will be culled from the herd in 2010.  (Hear that, Congress?  Democracy still has a little Darwin in the tank, too, in case the last three elections haven't made that clear to you yet.)