The Lost Competition

clipped from www.forbes.com Nope. Something like 30% to 50% of excess wages was due to rents. Meaning that financial workers enjoyed pay packages that went well beyond what was necessary to keep them in front of their computer screens till dawn's early light. People in the financial sector were, in a word, overpaid. Professors P. and R. end this deeply satisfying paper by pointing out that the gap between the excess wages paid to financial peeps, and the wages paid by regulatory agencies to their minions made it impossible for the agencies to attract people competent enough to understand what was going on. It's a lovely twist; by losing the wage competition, regulators lost a lot of the power that regulation might have had in restraining the wage run-up. Perhaps the best and brightest can find jobs in the government, correcting the mistakes they made in private industry--and at government salaries.