There’s a lot of debate in the UK right now about two interesting topics: 1) should bank executives get bonuses and 2) should bank executives resign?
Okay the first question is more like… What can the government do to stop bankers getting bonuses? I find this issue a little strange. Clearly corporate pay packets are based around the idea of bonuses to the degree that they aren’t really bonuses anymore but part of these highly paid individuals’ regular pay. They expect and probably rely on them. So what we are really asking is, Can our government enforce upper earnings limits on individuals in certain industries?
An interesting and not senseless debate to be having, though I think the motivation for most people is probably punitive, which is silly. Our government should have been enforcing proper financial services practices through the glut years. And no quick-fix of punitive pay caps is going to help us now. But it might be useful in the future, because really there must be some upper limit for corporate salaries. That said, I would suggest that the mainly poor members of any capitalist society are to some degree driven by belief in the idea of infinite possible earnings, so by insisting on upper limits, we might be taking away the middle class’s motivation to slave for their corporate overlords.
The other hot topic, Should bankers resign for their failings? I have always found it funny the way that any British politician who makes the slightest mistake is expected to immediately resign. You’d have to be discovered with an eight ball in one hand and a fourteen year old boy in the other to be expected to resign in the States, and even then you might just scrape by if you claimed you were trying to convert him to Jesus. It has always struck me that to expect resignation for a first mistake violates the principle of learning by our mistakes. If it is true that we learn best by trying and failing — and I believe it is true — then expecting the person who screws up once to resign means we are always losing the person who is potentially best at the job. A new person coming in to take over could not possibly be more experienced or better equipped than the person who has just resigned. Well… unless they have tried and failed in other areas, in which case, they are essentially the same as the person they are replacing. Both have made mistakes in the past and seek to do their job better in the future.
So, why not keep the same bankers in place, but charge them with the job of sorting out the system so that what we have seen taking place over the last twenty years does’t happen again? Make it their responsibility to ensure that the future of banking is more secure than its past. Surely they know more about what went wrong than anyone?