I'm just at the section where he covers the healthcare debate, and it struck me that much of what he says rings true for the executive pay "debate".
As I've said before, I think a major problem with public policy around executive pay is the gap between rhetoric ("Crackdown" etc) and the proposals that emerge (triennial shareholder votes, companies required to disclose a bit more data). But it's clear that this applies more generally, and what Thompson add to the mix is the role of the policy specialist (or "technocrat").
So for example, on the failure of technocrats to explain what they do:
"[M]ost public policy documents remain impenetrable to the public themselves and, despite freedom of information legislation and ever great 'transparency', the gap between the illuminati and Pericles' 'ordinary working people' has grown steadily wider. And yet precious few technocrats seem to regard the explanation of policy as part of their job. Many were never trained how to do it, and even those who were may doubt whether their listeners would be capable of understanding them, given how intricate the issue have become. As their world and that of popular political debate have diverged and they've come to realise that few politicians are prepared to even raise the question of hard choices and painful trade-offs, some have concluded that even to attempt such explanation is a hiding to nothing."I think we can see all this at play in discussions about executive pay. I would particularly flag up the way that ordinary people who have views on the subject are regarded by many insiders as unable to grasp the 'real' issues. And the avoidance of talking about trade-offs - and the corresponding emphasis (throughout the ESG world) on 'win-wins'.
Then there is the gap between presentation of policy by technocrats, and by politicians:
"The modern technocrat aims to use data and logic to formulate and debate policy in the most empirical and logically coherent way possible. The politician wants to frame those issues in as sharp and political compelling way as he can. While the first sees no rational need for ideological differentiation - just follow the facts - the second is understandably obsessed with it. Both may regard public understanding of the issues as a good thing in principle , but neither is likely to see it as an over-rising priority. When urgency is high and the potential for partisan advantage is low - following acts of God, say, or when dealing with new diseases or other population health emergencies - technocratic and political priorities may align around simple, clear information and advice to the public. But such moments are rare."I imagine a fair few people reading this will be mentally tut-tutting about the behaviour of the politicians in these scenarios, and your instinctive sympathy may be with the technocrats. In response to which I will adopt an Alan Hansen voice and say: "You don't know the game." We need to consider why politicians act the way that they do.
"The crowd listening to expectantly to the candidate require one kind of public language; the audience of of experts discussing an arcane matter of policy quite another. Politicians respond differently to each, not because of a given 'mindset', but rather because they are professional communicators and it is clear to them what the context and pathos of each occasion demands."He has a bit to say about the changing modes of political rhetoric when a party and its representatives shift from opposition to power, As famous the aphorism puts it: "You campaign in poetry. You govern in prose." When a party is seeking to gain power, which in practice means building a coalition of various groups of voters, the presentation is necessarily different. Problems arise when a shift is required, from campaigning mode, to governing mode.
"Barack Obama is perhaps the most obvious example of the two rhetorics, the change we need giving way almost overnight to tight-lipped and sometimes testy managerialism. The word-worlds of Obama the campaigner and Obama the president turned out to be so different that it was almost as if they were twin brothers with contrasting personalities - the electorate voting twice for the passionate rebel, yet each time finding themselves stuck with a professor who, desire his undoubted intelligence and grasp of the issues, seemed somehow to have mislaid the unbounded sense of possibility and hope which made him so attractive in the first place.But the thing that really hits home is this bit:
"[T]he character of modern politics - the competitive bidding on emotive policy issues, the immense pressure to oversimplify to get the headline, the sheer complexity of government, the furious media scrutiny which meets any shortcoming - seems to have increased the amplitude, by which I mean the distance from the peak of expectation to the trough of disillusion.These two paragraphs really do apply to executive pay. Over the 15 years or so I have been following it, the language around this issue has become more charged (I'm less sure it has been simplified). Where once the focus was on pay for performance, and avoiding "rewards for failure", the rhetoric introducing policy has shifted markedly towards scale, the pay gap and "greed".
"When we think of political failure, we tend to think of failed actions, the policy that didn't work, or the economy that didn't revive. But much of today's sense of betrayal is focused on politicians' words and the gap that often appears between those words and reality."
But the underlying policy has not significantly shifted. The default assumptions in the technocratic sphere - in which I would include ESG professionals as well as civil servants in relevant departments - remain that pay is matter for the market, and that shareholders are best placed to oversee it. Policy has been far more focused on alignment with shareholder interests (also known as performance linkage... ;-) ) than the scale of pay, or its relationship to that of employees. I don't think anyone in the technocratic sphere would honestly consider that the last round of executive pay reforms would make a serious dent in inequality, either within the firm or across society. Many would consider that these are not appropriate objectives in any case.
To the extent that the public follows executive pay, I think the impression that they gain is that there is a lot of tough talk, but that after it everything carries on much before. Which is not an unreasonable view. There is a gap between rhetoric and reality.
As I've blogged before, I don't believe this divergence is sustainable, or desirable. As long as it continues it will feed disenchantment with politics (which conversely makes it easier for "insider" interests to control policy). In practical terms, technocrats could shift to policy proposals that at least attempt to meet the aspirations that politicians articulate, or politicians could tone down their language. But something should give.