Friday, March 20, 2009

Securities Traders and Science Teachers

Letter to the Washington Post, #17


Stories about bonuses for the "vital employees" capable of unravelling the tangled complex derivatives that have nearly crushed AIG, and about the need to give school districts the right to fire incompetent teachers lead the news in DC (and most of the rest of the country, for that matter). It makes sense that people are deeply concerned about how we preserve businesses that are "too big to fail" and improve public schools that fail too often, but we seem to be drinking a kind of kool-aid here.

Though our public schools and our economy need reform and large infusions of cash, a different perspective on the various problems is in order. The average securities trader at AIG probably makes five to 25 times the salary of the average public school teacher. The proposition that those same traders ought to make, say, an additional million dollars more for untangling the trades that their colleagues made because they are the only ones with the knowledge and skill to do it right is an invoice that I, as a taxpayer, am not willing to pay.

But, assuming that we must fix, and not simply rend, AIG, let's consider recruiting high school science and math teachers, who surely have the requisite smarts, to spend their summer vacations untangling derivatives. They could start the summer at boot camp, getting an immersion experience in complex financial trades, and then work another seven weeks or so getting the job done at AIG and other distressed enterprises that the government is bailing out.

We could pay a substantial premium to the teachers for their summer work and save millions in proposed bonus money for investment elsewhere, perhaps in the school districts where our "derivative disentanglement" teams work during the school year. It may be a stretch to suggest that the unemployed securities traders spend the summer in a reeducation project of their own, maybe in basic ethics or debt counseling, but I'm going to go ahead and suggest it anyhow.

Jeff Epton

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