Liquid Lives, Compensation, Schemes and Making of (Unsustainable) Financial Markets

Karen Ho

● The employment habitus of investment bankers impacts how they shape the rest of corporate
America
● Goal: to deconstruct the notion of finance as an abstract, all powerful system and to rather
contextualise it
● Investment bankers see themselves as embodiments of the market: flexible, clever, fast-paced
● The IBs cut their losses as soon as they realise that a certain involvement is no longer profitable.
Everyone working for that sector (in bank as well as many in corporate America) will be
‘downsized’/fired
● IBs are valued highly by banks and bank spends a lot of its money on top-dog salaries
○ Yet they care less about the individuals than the individuals’ brand → where they
went to school eg ivy league, called by that school
● Culture of bonuses/money-centred: ‘pay for performance’ based on amount of deals made, not on
whether the deals create stability of economic growth
○ Bonuses as substance of salary, not just supplement
○ Bonuses are discussed openly by all employees and self-worth is directly linked to salary
○ The workers fiercely compete for bonuses
○ Bonuses are often much higher than actual salary
○ The higher the bonuses, the more frenzier the deal-making tends to be, creating
bubbles and eventual crashes → bonus amounts as indicator of economic bust
○ The bonuses are high only when the bank is doing well; independent of personal
performance, could be cut simply because it had been a bad year. Such cuts are necessary
to uphold bonuses for remaining employees.
● IBs hop from one bank to the next a lot, no loyalty between worker and firm
● Bonuses are unregulated and up to managerial discretion → thus gendered and racialized
discrimination affect pay (if even sub or semi consciously)
● High pay compensates for job insecurity - the IBs are not that shocked about possibility of being
bid off
● Both the banks and the IBs live in a culture of short-term vision, not planning far into the future.
Dynamism, rather than efficiency, at core
● The banks only see loss, no long-term possibilities. I.e pay huge sums to hire new ‘stars’ rather
than training up existing employees
● The short-term view undermines banks’ explicit goal to maximise shareholder value!
● IBs expect busts but choose to ‘ride the wave’ as long as they can keep making money. They
have faith in being able to find other employment should banking fail. No empathy for the
average worker who does not have this power
● Job insecurity fosters short term gain as only focus. They plan on busts and bail-outs
● The IBs see themselves as the market, so they shape it based on their employment habitus
● “Hypercapitalist sense of time” -292