Friday, April 8, 2011

Greed Is Good, For Some Guys

In 1989, Goh Chok Tong was explaining to parliament why it was difficult to attract talented youngsters into politics. Senior bankers make about US$60,000 a month, he claimed, while the Prime Minister himself made only about $10,000 a month. Singapore would be in trouble, Goh said, if ministers could not equal the pay of bank directors. (Derek Davies, foreword for "Confucius Confounded: The Analects of Lee Kuan Yew).

Fast forward to 2011, when PM Lee Hsien Loong quoted Chief Justice Rehnquist as supposedly having said, "You are going to have a very serious constitutional problem because the senior judge sitting on the bench hearing the case with junior lawyers arguing in front of him is paid less than the junior lawyers on Wall Street. Where do you think the talent will go and what do you think the consequences will be for our system?"

Frankly, Wall Street bankers, or lawyers, are hardly the role models for young, idealistic youths starting out on a career. Unless the intent is to groom a generation of Gordon Gekkos, the junk bond trader who's best remembered for his infamous mantra, "Greed Is Good". Wall Street lawyers, and their ethics, were also richly featured in the collapse of Enron.

Lee Kuan Yew had problems figuring out Paul Volcker (former chairman of The Federal Reserve, 1979-1987, chairman of the Economic Recovery Advisory Board under Obama administration). By Lee's own assessment, he's a very able man. He had a very small salary. Lee once asked him, "Why do you do this?"  He said, "In Princeton we were nurtured to be of value to our society." ("Hard Truths", pg 123)

Apparently even when Volcker retired, he didn't go and make money (write books, lecture circuit, all the things that PM said Americans do after office). He's on the board of the LKY School for free. In Indonesia he was on the advisory council, chairman, with Lee, for free. (Lee did not disclose how much he himself was paid)

Paul Volcker must be an enigma for characters like the Father, Son and holy(cow!) Goh. They probably won't be inviting him for tea any time soon. His principles could be more contagious than H1N1.

Paul Volcker commenting on atrocious Wall Street pay checks


  1. Typo: shld read "Volcker"

  2. Oops! "I stand corrected."

  3. "Frankly, Wall Street bankers, or lawyers, are hardly the role models for young, idealistic youths starting out on a career."

    Actually, most of my peers in their early 20s are like that. Their ambitions is to become successful in their careers and make lots of money. People like Paul Volcker are in the small minority, and their idealism and passion to serve usually comes only after a successful and profitable stint in the private sector (see e.g. Chen Show Mao).

    I agree with PM Lee that we have to be practical. We can't expect everybody to join politics out of passion and patriotism. For many of the top talents out there, money is still a big concern for them, and Singapore would lose out by letting them stay in the private sector.

    If you read analyses about the US financial crisis, many commentators have said that a key reason why regulation failed was because the brightest graduates went to Wall Street, while the regulatory agencies were staffed by less intelligent people. We can't have afford to have a similar situation in Singapore where the smartest people stay in the private sector, while the public sector is filled with mediocre bureaucrats who constantly get outsmarted by the people they are supposed to regulate.

  4. If most of our peers are driven by money, that's because society and schools pointed them to that direction. Might partly explain why PM Lee said that it's so difficult to find men of talent unless we pay them the market rate.

  5. anon@ 7:59
    We can't expect everybody to join politics out of passion and patriotism, but the tragedy here is that only the exception join politics out of passion and patriotism. And the public sector is already filled with mediocre bureaucrats who constantly juggle the GDP statistic to inflate their paycheck.

  6. It is very easy to expose the hypocrisy of the system. Ask all the PAP candidates to disclose their list of assets before and after joining parliament.

  7. Woah, I'll be careful about the point on where intelligent people goes due to pay. Are you saying that majority of this so call intelligent people are also greedy buggers? What makes that of Einstein? Stupid?

  8. I do not mind if our leaders are paid adequately for their work. However, there is no check and balance and they stayed on in their ministries even after repeated goof offs and stupid excuses for mistakes made. They would not have survived in the corporate world. It operates more like the Mafia.

  9. Is it fair to index the Ministers' pay to the highest paid professions which change every year? Note that many highly paid hedge fund managers take home little to no pay during the down years but not the Ministers. Further, how can anyone justify the world's highest pay for the group of 20 or so local politicians. This talk of paying for talent is simply hogwash to justify their worth.

  10. “All of us do not have equal talent, but all of us should have an equal opportunity to develop our talents.” John Kennedy

    PAP said
    "All of us do not have equal access to talent, but all of us should have equal opportunity to pay, artract and retain top talents (esp from private sector).

    PAP then said
    "All singaporeans do not have same talents, but all singaporeans should have equal opportunity to compete with equally cheap talents."

    So the same arguments that are deemed good for the government to benefit is best. The same arguments for the citizens are bad and should be made worse for the people to suffer. In short, the handful elites benefits, the rest of the mass suffer. Who wins?

  11. Apart from greedy bankers, so are the rich bureaucrats who are foreigners. This is what will happen if a nuclear plant meltdown were to happen in SG. History always repeat themselves.

  12. Interesting note...

    Suddenly when election is coming around...PM Lee and daddy lee suddenly come out and say everyone you can come & raise questions/concerns etc etc...or even "meet up" in a public forum!

    Excuse me...for the past 5 years where were these "gentlemen" when there were so many issues to address? Now it is okay to "talk" about it/alternative views/concerns?

  13. Dear anon 12:54

    You have captured in essence the problem we face.

    At the end of the day meritocracy is a relative concept which is associated with the elite and the prevailing consumerism in society.

  14. Tattler,
    i cannot help wondering about Paul Volcker, whether this exemplary gentleman is aware of the humongous pay LKY and son are giving themselves and to their stooges, the HDB conveyancing revenue to mdm kwa all those years, and of course spore turning into Sin Inc to benefit mostly the familee and their stooges.

    it just does not make sense for Volcker who takes pride in public service to be associated with LKY school of public policy...
    and surely he must know about the illgotten billions from indonesia that is being parked in spore.

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