Tuesday, November 28, 2006


Can 'Fat Cats' be Curbed?

I know it's too literal an image but my picture is intended to convey the sense of 'fat cats'(sorry, but I am a cat lover and I do have a fat(tish) cat myself). I was moved to address the subject by Dave Cameron's favourite columnist in her piece today. In lambasting the growing gap between boardroom and average staff pay-currently a ratio of 76:1- she draws on the recent work of Nick Isles of the Work Foundation. He has already exploded the myth that such highfliers will be spirited away overseas by the global market if any curbs on their greed are attempted:

'our CEOs are mostly not only homegrown, but promoted from within their firms, and no global market clamours for their talent.'

He goes on in his latest research to rubbish the idea that these fat cats 'suffer more risk than others, either to their income, jobs, health or mental health', concluding with the recommendation that a High Pay Commission be set up to match the Low Pay Commission, 'to set suggested pay rates for the top'. The idea is that those companies which wildly exceed such norms would have some tough explaining to do to shareholders at AGMs.

The sentiment underlying such a proposal is impeccable from a left of centre standpoint- such inequalities are nothing short of obscene- but I'm dubious if any such HPC would have any real effect. Just as criminals always manage to stay a few steps ahead of the law, so do the rich find ways to keep accumulating more and more than they can possibly need. Any norms produced would end up as purely nominal as CEOs negotiated packages involving yet more additional bonuses, share options, medical care, vast pensions and the rest. Until shareholders are finally revolted by the salaries of their board members and resolve to take action, I fear repulsive 'fat cat' greed will continue to be a feature of our modern western societies.

Pay rates are set by the market. Thanks to the Government in the 80's, shareholders can hold their boards accountable. If the owners of the companies(ie the shareholders) wish to spend their company's money on the salaries of executives they have selected, then it is no one else's damned business. No amount of moralising by the bitter left will change this simple fact. Any view on the morality of the level of these salaries is just not relevant. It is not your money. The reason these people have come to own companies is because they have earned a lot of money and invested it wisely. I am quite sure they know how to recruit and retain the best executives. And if they don't then they will lose their investments. It is called market economics. Get over it.
Spoken, as so often, like a true heir of Josiah Bounderby...
I would rather be heartless than brainless. Hard Times come to brainless people...
What perplexes me about neocons like Oakeshott is that they think there should be no state moralising in the economic sphere (probably legitimately), but continue to affirm their own morality in the social/private sphere (to quote Oakeshott, "supposed equal rights for homosexuals"). And it is my humble opinion that, in our age of post-affluence (perhaps a complacent analysis, but generally correct nevertheless), getting things right in the social sphere is far more important than in the economic sphere.
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