Thursday, 5 June 2008

First they came for the bankers...

Work means I'm too short of time for big posts at present. So here is a quote from Tom Congdon's article in Standpoint to chew over in the meantime.

"[G]overnment regulation over the pay of individuals — individuals who respect the law, pay taxes and honour contracts — is an abomination in a free society. To point a finger at a particular profession (like ‘bankers’, whatever the word means) is potentially as dangerous as stigmatising racial or religious minorities."

What do you reckon?

11 comments:

Paul E. said...

Dodgy link alert! But when I found it .... well, where to start?

Tom Powdrill said...

ahh... cheers for pointing that out! should be fixed now?

first they came for the bankers, and I did not speak out because I was not a banker...

you know how it ends!

Tom Powdrill said...

actually, that's a better headline!

Paul E. said...

One letter could be changed...

Tom Powdrill said...

W for B by any chance?

Tom said...

Well, if it's not going to be government regulated, put it under the control of the unions. ;o)

Paul E. said...

It may be a bit of a troll-ish thing to say, but....

Bob Crow for Governor of the Bank of England!

I had to say it - the thought made me laugh a bit...

Nick Drew said...

It's not government that should rein back the grotesque - and dysfunctional - excesses, it's the shareholders ...

... who should be given added incentive to act by the certainty that their company will be allowed to go under if it all comes to grief

why anyone would allow an employee to have a vast, no-lose incentive to gamble the shareholders' money is beyond me**. Bonuses should be as big as can be economically justified - but unless being calculated on a cast-iron basis, they should be held in escrow for a Long Time, repayable if the assumptions behind the calculation prove flawed

you will get the behaviours you reward - so reward the right things - simple, really. Greedy, competitive guys will do anything for bonus - including the right thing, if that's what they're set on to do
__________________
** actually, I can: unfortunately a pumper-dumper may have a reason for rewarding the behaviours that make the pumping easier.

tory boys never grow up said...

Ah Nick - but who controls the strings at the institutional shareholders. If you think that the fund managers are totally disinterested and neutral - I suggest you look at some of their accounts - look at the Directors' CVs and the exec directors bonus structures and you'll find that in most cases they are unlikely to say boo to a goose.

If anything the fund management industry often has lower corporate governance standards than UK plc in general - accounting transparency leaves a lot to be desired and how about the general practice of charge a fixed fee based on the value of funds managed - regardless of the level of performance. There are some good guys out there - but they are few and far between.

Tom Powdrill said...

Do you think 'shareholders' really have the incentive to tackle pay though, given that in practical terms we are talking about fund managers who are investing other people's money. Provided the share price is doing the right thing, and exec pay isn't taking too large a slice of the profits, why should fund managers be bothered?

I think I have largely lost faith in the idea that the shareholder-company relationship will ever function in 'ownership' terms. For one there are many owners, and secondly the principal-agent relationship of 'real' shareholders and fund managers means further weakening of the chain.

And that means that managers can skim money from listed comapnies because owners rarely kick up a fuss, and can't do much when they do.

Tom Powdrill said...

tory boys...

absolutely. there are a number of large fund managers who rarely vote against anything. a pay-related resolution would need to say something like 'Approve Authority For Directors To Steal From Company' to trigger a vote against.

there are good ones out there but a) they are small in number and b) you don't win business by being a stroppy voter, trustees (mainly) only look at your performance.