On November 2 2011, Seattle police detained 5 protestors of the Occupy Seattle movement. The protesters were demonstrating in opposition to a visit from Jamie Dimon the CEO of JP Morgan Chase who was being honored by the University Of Washington Business School. The protestors called for the arrest of Mr. Dimon claiming that he has commited “crimes against the people.” While I am all for the protestors right to demonstrate, I must offer a counter opinion that this is simply displaced anger on the part of the demonstrators. The theory that Mr. Dimon is a greedy over-paid Wall Street Gordon-Gecko like villain is not entirely warranted. One of the reasons that Mr. Dimon and other Wall Street Executives are villainized is that they are part of the wealthy elite, the upper 1% of income earners. The economic reason that Wall Street Executives are paid so much is that they are extremely productive people. JP Morgan Chase is a large and complicated organization the is involved in some of the most complex finical interactions the world has ever known, and there are an elite group of people that are capable of successfully managing such an institution.
If the protestors are correct that Mr. Dimon is over paid then they are also suggesting that anyone can replace him and match his productivity. I find it interesting that laypeople have a tendency to hate successful executives for their wealthy and exuberance, but at the same time laude Hollywood stars and professional athletes for their talents and charity work. So let us compare the two, take Peyton Manning a successful professional quarterback who earns about 20 million dollars a year (which is give or take a few million is on par with Jamie Dimon). This season Mr. Manning suffered a injury that keeps him from performing his role as quarter back; his team the Indianapolis Colts have unsuccessfully replaced him with three other quarterbacks. It seems that like Wall Street executives, successful NFL QB’s are not easy to come by, hence their high pay. With Manning as the Quarterback the Colts had 9 consecutive seasons with 12 or more wins, this season with Manning on the sidelines the Colts have not won any of the 8 games they have played thus far. The productivity and the utility of Peyton Manning is evident in his absents, and his high pay is reflected and justified by his abilities, this means that Peyton’s pay must be judged relative to his productivity and value as an asset. This is how we should think about executives like Dimon, who are on the frontline of the American Economy and lately have been in the weeds fighting to get the US back into gear.
There is also a misunderstanding that this is a zero-sum game, suggesting that because Dimon is paid so much that all his employees are thus under-paid. Again let’s go back to Peyton Manning, by this logic then Reggie Wayne, the Colt leading receiver, would be exploited and under-paid compared to Manning, but Wayne a receiver would not be as productive without Manning throwing the ball to him, case in point this current season is his statistical worst in 10 years. The arguement againts the zero-sum game image is the economic clique that a rising tide will raise all ships. If Dimon does well and is productive then all his employees will benefits as well as those industries and business that work and have accounts with JP Morgan Chase. The Occupy Wall Street and Occupy Seattle crowed tend to portray this as a zero-sum game where people like Dimon and Manning are winning big and everyone else is losing but this is not a factual accurate depiction. Such as when the Colts did well under Manning, attendance in the stadium improved, thus the local businesses around the stadium (such as bars and restaurants) benefited from this, sales of merchandise (Manning jerseys and hats) improved, as well as the boost the City receives from their Super bowl victory.
In sports, this all happens in the public space, but in the business world the benefits of Jamie Dimon’s work happens in the complex unseen, but much talked about, economy. Case in point, when Peyton Manning became injured and unable to play no protestors called for him to be arrested because now the economy surrounding the Colts stadium and merchandise sales will suffer. Give the guy a break and let him get back to work, we need him just like to Colts need Manning.