Video podcast on financial crisis

Posted by: Michael Mandel on October 27

Here is the first in a series of video podcasts I am doing on the causes of the financial crisis.

The Real Cause of the Crisis

TrackBack URL for this entry: http://blogs.businessweek.com/mt/mt-tb.cgi/

Reader Comments

CT

October 27, 2008 07:27 PM

Mike,

First off, I'd like to thank you for maintaining this blog. Its from your insight and comments from this board that gave me a better understanding of what ails/drives the economy.

Good video podcast. In fact, I'll add to this, which hopefully gives you more color. I do not presume that my example is representative of the entire US economy, but the firm I work for is a Fortune 500 firm.

For the sake of this discussion, I'll leave out the name of the company involved. I was an engineer in 2000-2007 time frame. During that time, I started my MBA and that led me to question my wages and that of my fellow workers. During those years, the education in finance rubbed off on me and I calculated that our wage (mine and our fellow workers) increases barely kept up with inflation (7 year average, CAGR). The assumption here is that I'm the average worker (not a sub par performer), which was accurate since I did fairly well in my reviews. At the same time, comparing my CEO's and his fellow C suite companions wages through the SEC filings was a huge shock. In years where the rank and file got bonuses, they gained RSUs that were, in some cases, 50% above what they had received the prior year.

Needless to say, I've left the firm and am in the midst of a career switch in the perfect storm :P.


With regards to productivity, I agree that it increased. We busted our tails trying to eke out efficiencies and improve the revenue streams in that period.

dnelon

October 27, 2008 09:34 PM

This stuff (the comment not the podcast) is beating me down. Salaries are a function of supply-and-demand. If you believe that your skills are worth more to someone else then make a move, the market will prove you right or wrong. Whiny comparisons to one's peers are mind-numbing. A graduate degree is cute (like pigtails on a child) unless it brings more skills that actually make a difference to your employer. WRT the executive salaries they are also a function of supply-and-demand. Your former BOD may have been poor negotiators but that is beside the point.

CT

October 28, 2008 01:00 PM

I am sorry you misunderstood the intent of the post, it was not supposed to come across as whining. It was to illustrate the fact that wages have not kept up. I was not comparing with my peers; I was trying to understand if our wages kept up with the cost of living.

As far was supply and demand, I totally agree. But there in lies the problem. The global outsourcing strategy that firms have employed have changed the supply side of that equation. Our firm removed the entire R&D group and moved it offshore. Folks who spent years laboring in their art and education suddenly had to scramble. I am not advocating protectionism; but the excessive use of this method has had its damaging effects on the worker.

I am not sorry for myself; in fact I'm glad I got out of it. Tech (semiconductor, which I was in), is a commodity; the science is complicated, but there are far far more willing minds in the East who will accept less for the work.

C suite fellows? Supply and demand? My subtle point is that there is something fundamentally broken with executive compensation and unless that is changed, the needs of a few will outweigh the good of many.

CT

October 28, 2008 01:01 PM

BTW, let me be clear on this. The graduate degree educated me. I never did assume that it would lead to higher wages in my prior role; that would be naive.

Dominic

October 28, 2008 06:48 PM

CT

Your comment was crystal clear from the beginning and it is an interesting piece of anecdotal evidence that corroborate what Michael Mandel is finally saying in his blog and articles.
If you ask me, what was going on in the economy was very clear since many years, you didn't need advanced degrees, just good spirit of observation and common sense...several people were saying it and were largely ignored by the pundits and experts...
Do no worry about Dnelon, his understanding of the real economic environment is at 8th grade level at best...

CT

October 31, 2008 02:34 PM

Dom,

Thanks for the support. I read Mike's latest article and it was on point. The issue really is, can we trust the powers that be to see the light and implement the correct actions?

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

BW Mall - Sponsored Links

Buy a link now!