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President Obama compares Bank CEO salaries to ballplayer salaries

Feb 10, 2010, 4:12 PM EST

Obama’s smooth. Look how he slams Carlos Zambrano and Vernon Wells without even mentioning their names:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

Paul Krugman predictably goes nuts, arguing that unlike bankers in this day and age, ballplayers aren’t beholden to taxpayers and the government. Krugman lives in New York, I presume. Guess he doesn’t get up to the Bronx or over to Queens very often, because there sit a couple billion dollars worth of public largess that does indeed benefit the ballplayers and the men who employ them. And that’s before you get to the government-granted antitrust exemption.

But that’s a nit, I suppose, because I generally agree that bank CEO pay is horrifying. It’s just that when it comes to criticizing it with baseball analogies I’d take a different approach than Krugman does. For example, I might note that in baseball, unlike in banking, you get punished for gambling.

(thanks to Pete Toms for the links)

  1. Patrick - Feb 10, 2010 at 4:22 PM

    I think the owners would agree with the above sentiment. According to them, baseball players and their salaries, much like the over-leveraging of Wall St., is bring the institution to the brink of financial ruin.

  2. (Not That) Tom - Feb 10, 2010 at 4:34 PM

    Holy crap, I’m using that rationale the next time I go in for a raise:
    “You want a 6% increase in pay?”
    “Well, Barry Zito makes $18MM a year and he’s never even been to the World Series…”

  3. JBerardi - Feb 10, 2010 at 4:45 PM

    The difference between ballplayers and bankers is that ballplayers are actually worth their salaries for the most part. You can’t just cut Ryan Howard and put out an ad on Craigslist for someone who can hit 40 home runs a year against MLB pitching. He’s one of only a handful of human beings in the world capable of doing that. Now, I know bankers like to think of themselves in much the same way, but, to paraphrase Branch Rickey, “We had a massive financial catastrophe with you; we can have a massive financial catastrophe without you”

  4. Rays fan - Feb 10, 2010 at 4:50 PM

    Babe Ruth on why his salary was higher than the president’s: “I had a better year than he did.”
    There are a lot of ballplayers who can now say the same thing in comparison to bank and mortgage company CEO’s, aren’t there?

  5. YX - Feb 10, 2010 at 4:54 PM

    I beg to differ. Failure in spectacular fashion is definitely a talent.
    Like Chernobyl, you know how much IQ is spent to plan and execute that thing? If someone goes to you says “Here is a gazillion dollars, go cause a global catastrophe.” I bet you don’t even know where to start.

  6. Jeff V. - Feb 10, 2010 at 4:56 PM

    I would think the money that Conan O’Brien received for failing at hosting the tonight show would be a much better example to use. I guess the President did not want to take a shot at Hollywood.

  7. Craig Calcaterra - Feb 10, 2010 at 4:56 PM

    We used to have a saying at the law firm after a case went bad: “Hey, anyone can lose a $50K case. It takes a real lawyer to lose $6 million.”

  8. Gary - Feb 10, 2010 at 5:02 PM

    Since Obama has quadrupled the deficit, he can’t really criticize anyone.

  9. BCTF - Feb 10, 2010 at 5:07 PM

    Nick Punto had a better year than Obama

  10. jthewolfe - Feb 10, 2010 at 5:33 PM

    that’s gold, jberadi, gold.
    and Gary, check your facts, dude. obama didn’t give out free drugs to medicare recipients, start two wars, and cut taxes at the same time.

  11. Jack Marshall - Feb 10, 2010 at 6:25 PM

    The significance of Obama’s comment, Craig, which as, by your own admission, an unrepentant Lefty you might be slow to pick up on, is that it reveals the classic Working Class Hero/ economics-ignorant attitude that some salaries are just TOO MUCH and inherently unfair no matter how unique the talent, and no matter how much the individual earns for his or her employer, because, as we all know, school teachers are so much more hard-working and valuable to society.
    Personally, I think this attitude is alarming in a U.S. President rather than, say, the head of the American Socialist Party, and if his reflexive cheerleader, Krugman, thinks so too, that is telling.

  12. Simon DelMonte - Feb 10, 2010 at 7:16 PM

    I don’t know if Krugman has ever addressed the issue of government subsidized ballparks. I would like to see if he agrees with the current conventional wisdom that it’s a bad thing, or if he has a different take.

  13. Craig Calcaterra - Feb 10, 2010 at 7:48 PM

    Jack — I’ll allow the president some populist slop once in a while. He’s got an insanely complicated and often irrational coalition he needs to hold together.
    As for me, I don’t have a problem with people making big money. I have a problem with making far, far more money than they’re worth. I could go on and on about the specifics of some CEO pay, but the short sloppy version is that I think that Tim Lincecum’s skills are far more difficult to replace than the CEO of WhateverCorp’s are, and thus the degree of excess we see in CEO pay and benefits seems out of whack to me.

  14. S Ledet - Feb 10, 2010 at 7:59 PM

    Aren’t CEO’s of major Corp’s, salaries approved by a board which is accountable to stockholders? If the shareholders are satisfied with the compensation paid, shouldn’t that be the test?

  15. Craig Calcaterra - Feb 10, 2010 at 8:08 PM

    Sure, theoretically. But in practice there are huge inefficiencies involved in the process that ends up insulating the board from stockholder ire and/or preventing stockholders from making the board truly accountable. At the same time, boards in major companies have become increasingly deferential to the executives of the company, failing to negotiate with them at arm’s length when it comes to compensation, not demanding or not receiving pertinent information that may affect their decisions with regard to executive compensation and/or allowing incentive structures to be put in place that reward CEOs handsomely for engaging in short-sighted, risky behavior.
    I can’t really do this subject justice — people have written books and multiple law review articles about it — but the practice of corporate governance is way, way removed from the model.

  16. MVD - Feb 11, 2010 at 1:38 AM

    MLB franchises actually make a profit.

  17. cheaters justice - Feb 11, 2010 at 8:40 AM

    The ball players salaries are A truer indication of a free capitalist market in that the individual players are frequently bid on. They get a chance to sell themselves by playing/accumulating the statistics they do.
    Yeah the salaries are out of whack but If you want to lower professional athletes salaries then don’t attend the games and pay 50$ for a ticket or 5 dollars for a Coke. Or pay for the sports package on your tv set. And yes these professional sports leagues are probably violating more anti trust/monopoly regulations but who’s fault is that?-The fans who rather see a roider break home rome records while sucking down his overpriced beer.

  18. Chris Simonds - Feb 11, 2010 at 9:04 AM

    I’m seeing an unusual level of ignorance in these comments. Mr. Marshall especially – I take it you don’t actually read Krugman’s columns or his blog; you just figure hey Obama, Krugman, they’re both liberals, they must agree on everything. Krugman has excoriated Obama, especially lately. Craig – the professor lives in southern New Jersey – Princeton, you know? Also, the ball players didn’t cut the deals for those stadiums, the usual rich guys in suits did, which includes Hizzonner Da Mayuh of New York. Obama’s comment was basically just kinda dumb. And finally, big bankers don’t gamble. How can you call it gambling when you know you won’t have to pay your losses?

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