I've been thinking more about the repeated assertion that attempts to reform executive pay have suffered from unintended consequences. You know the arguments - disclosing more info on executive pay caused it to go up further, a bonus cap would cause rises in base salary etc.
As I've set out before, I think the major conceptual flaw in these arguments is that they suggest (unwittingly or otherwise) that there are only two things to focus on - policy A, and result B. Hence if A in enacted and B is the result, and if B wasn't what we wanted to happen, then we can say "Aha, stupid reformer, there's an unintended consequence".
My point is that there are (at least) four things to keep your eye on - policy A, result C, decision D and result B. In many cases of alleged "unintended consequences" result B actually comes about because of a step in the middle - decision D - not because of policy A. And what is more result B is usually the intended consequence of decision D.
In the unintended consequences version of exec pay disclosure it works like this -
A policy of greater disclosure of executive pay (policy A) is enacted. Executive pay goes up (result B). Therefore greater disclosure of executive pay (A) caused the increase in executive pay (B) to happen.
A revised intended consequences version of the same process would look like this -
A policy of greater disclosure of executive pay (policy A) is enacted. More data on executive pay is disclosed (result C). Companies use the resulting data to propose increases in executive pay (decision D). Executive pay
goes up (result B). Therefore A causes C, and is intended to cause C, but D causes B and, again, is intended to do so. A does not directly cause B. Instead, I think, we have two intended consequences of two separate actions.
What matters in all this is objectives. When policies like executive pay disclosure have been enacted it is quite clear (including to companies) what the objectives of policymakers have been - to restrain executive pay growth. But companies (for a variety of reasons) do not share those objectives and instead have their own which they have the ability to pursue. That, in my opinion, is a better explanation of why the final result doesn't match the objectives of the policy.
Put it in a different context. Your team and my team have different objectives - I want to score a goal against you, and you want to score one against me. Just because I want to to achieve a certain objective (scoring a goal against you, restraining executive pay) does not preclude you from trying to prevent that objective or, indeed, seeking a different objective contrary to mine (scoring a goal against me, increasing executive pay). But if I seek to achieve my objective, but you prevent me and instead you achieve your objective, no-one would argue that my seeking my goal had the unintended consequence of your scoring of your goal.
Yet this (trying to score a goal against you causes you to score a goal against me) is, basically, what those who argue that attempts to control executive pay have the unintended consequences of increasing it are claiming. Right?
Personally I feel that unintended consequences claims are often very politically problematic, as they both disguise the real processes at work and undermine the belief reformers have in their ability to achieve change. The more important question, I guess, is whether those are themselves intended consequences of using this form of argument?