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Stumbling on Their Sense of Entitlement
For most of us, it seems inexplicable that a man as smart and sophisticated as John Thain, having been recruited to Merrill Lynch to clean up tens of billions of dollars in losses, could spend $1.2 million to redecorate his office or demand that the board of directors give him a $30 million bonus at the end of the year. Nor, when escalating losses threatened to scuttle the sale of the firm to Bank of America, did it occur to Thain that he might want to set aside his plans to fly off to the annual celebrity gabfest in Davos, Switzerland, until the Bank of America chairman finally ordered him to do so.
This goes beyond mere greed. As with Daschle, it springs from a deeply felt but rarely articulated sense of entitlement that now warps the judgment not just of those on Wall Street -- from top executives to hotshots on the trading desks -- but of those throughout the upper reaches of corporate America. And over time, it has filtered out to law firms and consulting firms, where freshly minted MBAs and legal associates came to expect starting salaries of $150,000 and partners thought it their God-given right to draw $1 million a year.
All that is history. It turns out that those inflated pay stubs weren't really a measure of genuine economic worth but manifestations of the mirage that was the bubble economy. Economically, they are no longer sustainable; socially and politically, they are no longer acceptable.
But it's not only the rich and powerful who are still in denial and need a bit of mental retooling.
Is it too much to ask those college presidents who are about to be the beneficiaries of big increases in student aid and tuition tax credits to use this crisis to finally embrace the productivity revolution and find a way to use technology and new teaching techniques to lower the cost of education?
And if we're going to spend billions to upgrades roads, bridges and public transit and create jobs for unemployed construction workers, what would be so terrible about temporarily suspending the rule requiring that union wages be paid? That way, more jobs would be created and taxpayers would get a better return on their infrastructure investment.
It's also a good thing that Congress is preparing to ship billions of dollars to state and local governments to maintain vital services and forestall layoffs of teachers, police officers, firefighters and social service providers. But in return, shouldn't the governors receiving this temporary relief be required to come up with plans to make the necessary adjustments to balance their budgets over the long term, much as we've already done with aid to struggling automakers? And would it be so terrible if state employees would pitch in by accepting a two-year freeze on wages and a reduction in pension contributions?
It would be lovely if we could get out of this economic mess simply by having the government bail out the banks and spend a trillion more dollars in borrowed money. Unfortunately, it won't be that easy. As Tom Daschle and John Thain have demonstrated, it is going to require fundamental changes in what we do, how we do it, and how the costs and benefits are allocated. It will also require a commitment to shared sacrifice and mutual responsibility that we are only beginning to understand.
Steven Pearlstein will host a Web discussion today at 11 a.m. at washingtonpost.com, where he is also moderator of a new Web site, On Leadership, at http:/