turning on the ever-declining BBC Breakfast News this morning, i was fortunate enough to hear another statement from the banking fraternity explaining precisely why they should be paid on the Croesus scale. they've been doing a lot of this lately. nearly every couple of days, the Brekkie news has some small item on the bankers pay and why it might be alllllll fiiinne. one does rather wonder whether the Beeb might have friends in the community.
today's fatuous argument was that "actually Bankers are paid quite reasonably compared to say film stars or Footballers". the latter grouping bore the brunt of the comparison, unsurprisingly.
Now, few people would disagree that footballers are grossly overpaid. in fact the big similarity between footballers and bankers seems to be how massively unequal the pay distribution is: no-one can seriously argue that Robinho (to give a highly pertinent example) is 100 times better than your average League Two player, and you certainly couldn't argue that he works 100 times harder, and you'd find it just as hard to make a similar argument for the pay difference between your local bank employee and the top investment bankers. The people at the top in nearly all professions are hugely overpaid; perhaps the only exception being public services, where often the wage distribution is a little better (only a few people earn over £150k a year in most councils, and most of the lowest earners earn higher wages than they would in equivalent private sector roles). it's an endemic evil of capitalism, but not an ineradicable one.
anyhow, there are three important ways in which football clubs and banks differ greatly, and thus should not be subject to similar standards:
1) Football clubs generally pay bonuses for Good performances, Bankers appear to expect their bonus as a yearly perk independent of any kind of above-average performance. let's face it, we all know it must be a tax dodge in some way. Darling's one year tax on bonuses isn't gonna change that; the banks will just pay it from their profits this year in the knowledge the tax won't apply next financial year.
2)The fortunes of football clubs do not impact as centrally or seriously on the overall economy: as far as i know no-one (well no normal person) invests their savings in a football club, and even fewer are likely to get their mortgage from one. several football clubs go into administration every year, to much sadness on the part of fans and commentators, but thankfully little financial discomfort to them. Their lack of prudence affects relatively few people. The banks are central and defining to the state of the economy, and their behaviour affects our lives in nearly every detail.
3) Football clubs are not owned substantially, or bailed out by, the British electorate. quite a few of the banks are. So, of course, it seems perfectly reasonable that the banks should be made to behaviour in a fiscally responsible manner that benefits the wider public.
The counter-argument has always been that the market is king: but as Keynes and various others knew, the market is not a divine force, and can, and should, be manipulated and regulated to benefit the wider society. As a few politicians are acknowledging, the riskier activities need to be separated off from the everyday banking altogether, or even cut out completely. It would be far better for the banks, whether the retail or otherwise, to treat consistent long-term small scale growth as the aim, not ludicrous quick term rewards, and expensive payouts to both shareholders and bankers. It is this sort of nonsense that caused this downturn in the first place. That and the linked lack of regulation of the City and its banks.
but what, ask the bankers, of the Footballers, the film stars???!! well, we could always just increase the taxation levels on earnings over £200k for everyone........60%, 70%, say,: that would be a start, wouldn't it?
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