The Politics Thread

[thebish]

comparethefatkats. complexses.

[mummywhycantieatcrayons]

The thing that I don't get about the Hester story is why it is so important that he's a 'public sector worker'.

Consider the arguments against giving Hester the bonus: that his performance does not deserve it; that inequality is a problem and this sets a bad example; that it's bad value for the people who have to pay for it (namely the shareholders who are in this case the taxpayers). In each case the fact that he's a public sector worker is neither here nor there. These arguments are no stronger because RBS is in the public sector.

Now consider the arguments for giving Hester the bonus: that it is what was promised to him; that such incentives are vital in ensuring the best person does the job in the long run; that it is important not to cause disruption and risk his resignation in the short run. These arguments are no weaker because RBS is in the public sector.

Anyway, Guido had an interesting view of the real cost of the mob mentality and the pressure not to honour contracts etc... http://order-order.com/2012/01/30/taxpa ... -off-nose/" onclick="window.open(this.href);return false;


Anyway, banking remuneration does fascinate me and I don't even pretend to understand it. I find bare talk of 'ludicrously disproportionate' pay to be boring and unsophisticated, but are lots of things I would like to understand better.

The first thing I'dreally like to know is how much banking is subsidised by the implicit state guarantee they have if everything goes tits up. How much of a role does this play in their making what look like supernormal profits? I'm all for pay being decided by the market, but this is distorted if banks are not allowed to fail and they do not pay the true cost of their activity as a result. This, 'how can we make banks behave more like bailouts are impossible', is one of the key questions of the next ten years and, for me, goes deeper than splitting up retail and investment banking.

The second thing I'd like to understand is why bankers' pay hasn't suffered more. Banks are run by people obsessed with making money - why haven't these people, given that the jobs market in finance is pretty bad at the moment, used this position to drive remuneration down and lower their cost base? It looks like it should be a buyers' market, but my impression is that remuneration has not moved in the way you would expect if that is true. Am I just wrong, and it has, or am I missing something?

My final thought for the day on remuneration is nothing to do with banking, but is from aviation( actually it could be any plc). Read this story about Stelios and EasyJet (he's now just an average shareholder and he wants the board to be paid less). http://www.thisislondon.co.uk/standard- ... stelios.do" onclick="window.open(this.href);return false;

The reaction here should not only be 'good on you Stelios' but it should also prompt the question 'why do all shareholders of all companies not behave like this?'. In other words, how can we improve our corporate rules and structures so that shareholders get better information about what's going on and have more power to hold the people running the companies they own to account, and how can we get them interested in doing it?!

[thebish]

a thoughtful post mummy..

but - really! - most of it is far too complicated for my pretty little head and it's much more fun to shout abuse from the sidelines!!

(I might give it some thought, though - and respond at a later date!)

[The Axman]

The Markets! What a cop out, like they are some God like entity. When you say "I'm all for pay being decided by the market" what you are really saying is "I'm all for a bunch of supercilious super-rich bastards who have been paid an enormous amount of money for doing f*8k all to determine how much the next overpaid banking wanker will get as a bonus on top of the zitty squillions they already award themselves" Arrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrghhhhhhhhhhh (dies frothing at the mouth)

[mummywhycantieatcrayons]

The Markets! What a cop out, like they are some God like entity. When you say "I'm all for pay being decided by the market" what you are really saying is "I'm all for a bunch of supercilious super-rich bastards who have been paid an enormous amount of money for doing f*8k all to determine how much the next overpaid banking wanker will get as a bonus on top of the zitty squillions they already award themselves" Arrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrghhhhhhhhhhh (dies frothing at the mouth)

No, if you read properly, I'd rather they were held to account and prevented from doing this by activist shareholders.

If people in organisations making supernormal profits because of a market failure are allowed to divide up these spoils in an unsupervised and non-competitive way, that is not market-based remuneration.

And if not the market, who would your choice of god-like entity be?

[The Axman]

The Markets! What a cop out, like they are some God like entity. When you say "I'm all for pay being decided by the market" what you are really saying is "I'm all for a bunch of supercilious super-rich bastards who have been paid an enormous amount of money for doing f*8k all to determine how much the next overpaid banking wanker will get as a bonus on top of the zitty squillions they already award themselves" Arrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrghhhhhhhhhhh (dies frothing at the mouth)

No, if you read properly, I'd rather they were held to account and prevented from doing this by activist shareholders.

If people in organisations making supernormal profits because of a market failure are allowed to divide up these spoils in an unsupervised and non-competitive way, that is not market-based remuneration.

And if not the market, who would your choice of god-like entity be?

Me. I'd tell them that Nobody is worth in a month what Albert Einstein got paid in a Lifetime, and that anybody who thinks they are are so special that you need to pay them the equivalent value of thousand workers to go take a running jump before I started to kick them in the bollocks.

If I read it wrong, I apologise. But it makes me mad that there are people out there (& this includes football players and "meeja stars") who value themselves so highly, and those people do exist, and are paid insane sickening amounts of money. Nobody is worth that amount, they aren't doing anything special for *****'s sake.

[Worthy4England]

The Markets! What a cop out, like they are some God like entity. When you say "I'm all for pay being decided by the market" what you are really saying is "I'm all for a bunch of supercilious super-rich bastards who have been paid an enormous amount of money for doing f*8k all to determine how much the next overpaid banking wanker will get as a bonus on top of the zitty squillions they already award themselves" Arrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrghhhhhhhhhhh (dies frothing at the mouth)

No, if you read properly, I'd rather they were held to account and prevented from doing this by activist shareholders.

If people in organisations making supernormal profits because of a market failure are allowed to divide up these spoils in an unsupervised and non-competitive way, that is not market-based remuneration.

And if not the market, who would your choice of god-like entity be?

In a rather worrying turn of events, that's where I'm at with it to.

[Prufrock]

Something that isn't abstract. Something with morals, ethics, and compassion. Slave to the markets (whatever that actually means, other than one human trying to fcuk another over by paying more for something than it is worth, while the other tries to fcuk him over by getting more than his money is worth). Eugh. How civilised.

[Worthy4England]

Something that isn't abstract. Something with morals, ethics, and compassion. Slave to the markets (whatever that actually means, other than one human trying to fcuk another over by paying more for something than it is worth, while the other tries to fcuk him over by getting more than his money is worth). Eugh. How civilised.

It's difficult to get something more abstract than the concept of "worth"

[mummywhycantieatcrayons]

Slave to the markets (whatever that actually means, other than one human trying to fcuk another over by paying more for something than it is worth, while the other tries to fcuk him over by getting more than his money is worth). Eugh. How civilised.

Isn't it precisely these competing forces that provide the balance - in fact, is there a higher example of human civility than the process you have just described so eloquently?!

[Hoboh]

The thing that I don't get about the Hester story is why it is so important that he's a 'public sector worker'.

Consider the arguments against giving Hester the bonus: that his performance does not deserve it; that inequality is a problem and this sets a bad example; that it's bad value for the people who have to pay for it (namely the shareholders who are in this case the taxpayers). In each case the fact that he's a public sector worker is neither here nor there. These arguments are no stronger because RBS is in the public sector.

Now consider the arguments for giving Hester the bonus: that it is what was promised to him; that such incentives are vital in ensuring the best person does the job in the long run; that it is important not to cause disruption and risk his resignation in the short run. These arguments are no weaker because RBS is in the public sector.

Anyway, Guido had an interesting view of the real cost of the mob mentality and the pressure not to honour contracts etc... http://order-order.com/2012/01/30/taxpa ... -off-nose/" onclick="window.open(this.href);return false;


Anyway, banking remuneration does fascinate me and I don't even pretend to understand it. I find bare talk of 'ludicrously disproportionate' pay to be boring and unsophisticated, but are lots of things I would like to understand better.

The first thing I'dreally like to know is how much banking is subsidised by the implicit state guarantee they have if everything goes tits up. How much of a role does this play in their making what look like supernormal profits? I'm all for pay being decided by the market, but this is distorted if banks are not allowed to fail and they do not pay the true cost of their activity as a result. This, 'how can we make banks behave more like bailouts are impossible', is one of the key questions of the next ten years and, for me, goes deeper than splitting up retail and investment banking.
That’s a hard one; the reality I suspect is banks should be allowed to "fail" and Joe public along with sleeping share holders (only interested in quick proffit) took more notice of the use of their investments and how they are managed by such institutions.
Lets face it the banks have had a fairly good ride in the last two decades virtually getting freebies galore in the form of everyone needing to have an account with them due to employers and even the government making it the only way of payment to you, then they charge you for this, add in the card schemes etc and you have a non cash cartel run by them

The second thing I'd like to understand is why bankers' pay hasn't suffered more. Banks are run by people obsessed with making money - why haven't these people, given that the jobs market in finance is pretty bad at the moment, used this position to drive remuneration down and lower their cost base? It looks like it should be a buyers' market, but my impression is that remuneration has not moved in the way you would expect if that is true. Am I just wrong, and it has, or am I missing something?

My final thought for the day on remuneration is nothing to do with banking, but is from aviation( actually it could be any plc). Read this story about Stelios and EasyJet (he's now just an average shareholder and he wants the board to be paid less). http://www.thisislondon.co.uk/standard- ... stelios.do" onclick="window.open(this.href);return false;

The reaction here should not only be 'good on you Stelios' but it should also prompt the question 'why do all shareholders of all companies not behave like this?'. In other words, how can we improve our corporate rules and structures so that shareholders get better information about what's going on and have more power to hold the people running the companies they own to account, and how can we get them interested in doing it?
Ironically the "major shareholder institutions" such as pension funds, the Church of England etc are guilty of supporting the “quick buck” syndrome to enhance the financial gain to their members, the very members who are protesting and anti bank/greedy corporations.
There is no quick fix for greed and until people look to long term medium returns with the “add in” of stability nothing will change.

[Prufrock]

I don't have a problem with 'markets' when talking private finance. My problem is that they are often talked of as the basis for all society, that everything we do should be dictated by them. 'Trust the markets' shite.

[lovethesmellofnapalm]

I don't have a problem with 'markets' when talking private finance. My problem is that they are often talked of as the basis for all society, that everything we do should be dictated by them. 'Trust the markets' shite.

This for me sums it up. There is no alternative???
In the same way there was no alternative to the Divine Right of Kings, feudalism, "aristocratic privilege",20century Liberal economics or if you lived in Eastern Europe before 1989 state control and dictatorship.
There is always an alternative which is why so many people are outraged by the whole rotten edifice that is free market capitalism and why the "occupy" movement and other groups are gaining support. An alternative is however not being articulated by any of the ruling class which is why, folks, revolution is just around the corner.

[mummywhycantieatcrayons]

I don't have a problem with 'markets' when talking private finance. My problem is that they are often talked of as the basis for all society, that everything we do should be dictated by them. 'Trust the markets' shite.

This for me sums it up. There is no alternative???
In the same way there was no alternative to the Divine Right of Kings, feudalism, "aristocratic privilege",20century Liberal economics or if you lived in Eastern Europe before 1989 state control and dictatorship.
There is always an alternative which is why so many people are outraged by the whole rotten edifice that is free market capitalism and why the "occupy" movement and other groups are gaining support. An alternative is however not being articulated by any of the ruling class which is why, folks, revolution is just around the corner.

As I say, I would argue that a failure to protect the principles underpinning properly functioning competitive markets is a big part of what has gone wrong.

Nevermind though - articulate your alternative and show us where the 'ruling class', whatever that is, is going wrong. You too, Pru. At least The Axman has stepped up and has said he is happy personally to take on the remuneration of everybody in the country!

[Lord Kangana]

Keynes remains the better and bigger genius than Friedman.

Because, as has been proven with quantative easing, Friedmans ideas are unworkable outside a philosophical discussion in the classroom. Whereas Keynes'ses'es just keep on getting used.

Plan a bit more, leave it to serendipity a bit less. Case closed your honour.

[mummywhycantieatcrayons]

I've got nothing against Keynes - I think his analysis of the world he inhabited was absolutely spot-on.

In rich economies, with no serious emerging economy competitors, in the midst of a mere cyclical downturn, with 'nothing to fear but fear itself', without a pre-existing mountain of debt, and with many decades of high growth ahead, counter-cyclical investment is EXACTLY the right thing to do.

I've said it before, but we've got plenty more to fear than fear itself and I'm not sure that Keynes, if he were around now, would advocate throwing good money after bad.

[lovethesmellofnapalm]

I don't have a problem with 'markets' when talking private finance. My problem is that they are often talked of as the basis for all society, that everything we do should be dictated by them. 'Trust the markets' shite.

This for me sums it up. There is no alternative???
In the same way there was no alternative to the Divine Right of Kings, feudalism, "aristocratic privilege",20century Liberal economics or if you lived in Eastern Europe before 1989 state control and dictatorship.
There is always an alternative which is why so many people are outraged by the whole rotten edifice that is free market capitalism and why the "occupy" movement and other groups are gaining support. An alternative is however not being articulated by any of the ruling class which is why, folks, revolution is just around the corner.

As I say, I would argue that a failure to protect the principles underpinning properly functioning competitive markets is a big part of what has gone wrong.

Nevermind though - articulate your alternative and show us where the 'ruling class', whatever that is, is going wrong. You too, Pru. At least The Axman has stepped up and has said he is happy personally to take on the remuneration of everybody in the country!

Socialism- just because the Soviet Union fecked it up doesn't make it a worse model for the common good within society than what we have at the moment.
there - i've "articulated" it

[mummywhycantieatcrayons]

This for me sums it up. There is no alternative???
In the same way there was no alternative to the Divine Right of Kings, feudalism, "aristocratic privilege",20century Liberal economics or if you lived in Eastern Europe before 1989 state control and dictatorship.
There is always an alternative which is why so many people are outraged by the whole rotten edifice that is free market capitalism and why the "occupy" movement and other groups are gaining support. An alternative is however not being articulated by any of the ruling class which is why, folks, revolution is just around the corner.

As I say, I would argue that a failure to protect the principles underpinning properly functioning competitive markets is a big part of what has gone wrong.

Nevermind though - articulate your alternative and show us where the 'ruling class', whatever that is, is going wrong. You too, Pru. At least The Axman has stepped up and has said he is happy personally to take on the remuneration of everybody in the country!

Socialism- just because the Soviet Union fecked it up doesn't make it a worse model for the common good within society than what we have at the moment.
there - i've "articulated" it

You were the one who started the talk of 'articulating' alternatives!

So that's it is it - you just want someone from a group you call the 'ruling class' to stick their hand up and say 'let's have a crack at socialism'?

[mummywhycantieatcrayons]

David Miliband... how on earth did he not beat his brother?

http://www.newstatesman.com/uk-politics ... ment-party" onclick="window.open(this.href);return false;

I am a partisan, but I can't help but look forward to higher standard of political discourse when he, the far stronger candidate, takes his place as the top of the Labour party.

[Prufrock]

As I say, I would argue that a failure to protect the principles underpinning properly functioning competitive markets is a big part of what has gone wrong.

Nevermind though - articulate your alternative and show us where the 'ruling class', whatever that is, is going wrong. You too, Pru. At least The Axman has stepped up and has said he is happy personally to take on the remuneration of everybody in the country!

You'll not catch me talking in the rhetoric of 'ruling classes' and 'revolutions', not anymore, anyway. I was a member of the Revolutionary Socialist Club at uni. It was interesting, but also awkwardly detatched from reality. I don't foresee any major shift away from capitalism it our lifetime, but I don't think the idea of limits on the markets running 'free' has, or will die. As I understand it, the idea behind a 'free' market is a giant bazaar where human self-interest from all parties competes to give things a value appropriate to their worth. Bad products die out, and new innovative products win through. They begin highly priced, then supply starts to meet demand as competitor products force the price down to what it is 'worth', everybody has an iPad, and everybody is happy.

This works when we are talking about parties of equal or equivalent levels of power and resources. It means everybody can afford cheap telies, but ones which don't break cost a bit more. As such everybody is encouraged to work harder, to earn more moeny, to get that better telly. Yay for society. However, the banking crisis demonstrated perfectly well what happens when one party has dissproportionately more power than others, in this case human greed, a synonym for 'markets' means they take advantage, unchecked, and make short term profits leaving everybody else fooked. Then, whilst everybody else 'tightens their belt' (ghastly phrase) they go back to their old ways of awarding themselves massive bonuses. That's what the markets have left us, and the argument is 'well, the markets dictate we have to pay them huge salaries, plus gigantic bonuses or they'd....' *threatening silence*. Well, are we really saying the markets dictate you have to pay the top dogs 75 times the average wage of a company to get them to not go and move to, I don't know, France, or Germany? 50 times the average salary wouldn't be enough? 10? What we said was the markets would set it, left them unchecked, and then were surprised when they awarded themselves massive pay. My problem is the concept that the unconscious markets, with no ethics or morals, ought to be left to decide everything. In a wide range of circumstances, with proper supervision to prevent power imbalances being exploited, that may be the best scenario. I have no problem in principle with the bureucracy side of the NHS being subject to market forces, whose purpose is to drive down costs. I'd be appalled at their introduction to the healthcare side, where cost-cutting should never be a primary factor.

I have no problem with the concept of markets, I just fail to see why they have to be 'free', why regulation is so awful.