Bonus brouhaha masks an awful truth

There are so many things to say about the Hester bonus row that it’s hard to know where to begin.

First, there’s a Chief Executive whose failure to meet his targets deserves not only a multi-million pay package but a near million pound bonus to boot.  According to the Independent on Sunday, he’s to get more. much more.

There’s the small matter of the bank being mainly state-owned and such an eye-watering remuneration package being considered appropriate for the head of what is effectively a public sector body.  The unions, in particular, have been frothing on this.

And then there’s the political response.  The Chancellor is outraged that he did not meet said targets which include a level of job cuts and service scything that make Fred the Shred look like an amateur.  Reward for putting people out of work:  nice.

Vince Cable, meanwhile, is reported to have insisted that Hester should not get the bonus.  Such private ire is touching.  The Lib Dems may be powerless – despite their oft-repeated promises on conference platforms to tackle the bloated executive pay culture – but we can be reassured they care.

Labour is treading a predictable line, trying to appeal to Mr Hester’s better side:  such rewards are unacceptable when other public sector workers have been subject to a pay freeze. Oh, and the Prime Minister should do something.

The Prime Minister tries to lay the blame at Labour’s door.  They appointed him, he insists, they put together the original package, and we’re stuck with it, because replacing this team would be too expensive.  The Scottish Government is silent, as it has been throughout the financial crisis.

(UPDATE:  just to thole me the First Minister broke his cover 30 minutes after this was published.  On the BBC Marr show, he blamed Labour and Conservatives for not taking more action to curb bonuses and apply discipline on public sector pay “at all levels”. Hmm.)

Helpless and hapless, not a single politician on these shores has come up with a solution to the problem.  A lot of hot air has been expended, some mealy-mouthed pledges have been made to tinker at the fringes of this culture, but they amount to nought.

No wonder the lieges are silently – and not so, if you’ve listened to any of the radio phone-ins in recent days – seething.

People are furious because nothing has changed.  Hester’s bonus is just one more in a long line of insults from the political and economic establishment.  People know that the brouhaha masks an awful truth: we still have the same system in place which caused this mess in the first place.  While all around, people are hurting – from frozen and fallen pay, from rising prices on everything from groceries to nursery fees to heating bills, from reduced pension pay-outs, from cuts in local services, from proposed and actual benefit changes – it’s business as usual.  We are paying the price, they are not.

Politicians are either wilfully or disingenuously covering this up with their pointless hand wringing.   They are being aided and abetted by the economic establishment: if we are to have the “best” (sic) people leading our financial institutions, runs the consensus, there is a small pool to choose from and these men (and they largely are) can command their price.  “Bashing bankers profits no one in the long run” sums their attitude up concisely.

The awful truth is that the world of high finance is still predicated on high risk, high reward.  There has been no tightening of regulation, there has been no global response, there has been no change.  (In fact, David Cameron took time out on Friday to have a pop at the proposed European financial tax).  It is still acceptable to gamble away people’s life savings, their homes and their pensions to make money.  If anything, it’s worse:  the game has shifted focus, moving on to toying with whole countries’ liquidity and leverage, with a handful of pumped up investors managing not only to calibrate whole economies and currencies, but also political frameworks.  Out with democratically elected politicians not up to the job and in with pals of theirs.

Oh, and they get to reward themselves, and those who play the game by their rules, handsomely.

No attempt to reform the rules, no thought on how to change the game.  We still accept the convergent neo-liberal and neo-conservative economic consensus that these institutions and activities are acceptable and actually, desirable.  This is how the money world operates and the only way to clean up our mess is to slash and burn our way out of our indebtedness, ignoring the pain caused to ordinary innocents along the way.

Yet, there is a real appetite for change.  The desire for a different offering is what lies behind people’s frustration.  But our political and economic classes (stoked by and stroked by a compliant media) are conspiring to keep it all the way it was.  A handful of people rule the universe:  same as it ever was.

What I find most curious is the SNP’s silence on it all and its lack of an alternative offering.  So much of the positive case for independence is predicated on not losing the trappings and comforts we currently enjoy.  Independence is an opportunity, not a threat: hence, the rather muddied message on lender of last resort.  It might make sense economically but really does not add up politically.  Yes, there is a balance – and it is a fine one – to be struck between enough change to persuade people to vote yes and not so much that it scares everyone into accepting the status quo.

But if ever there was a case for change, it is to the fundamental building blocks of our economy.  Scotland can be different.  We do not have to allow people to get rich on the misery of others.  We can have a successful financial sector but it could be calibrated differently.  Creating a fiscally and socially responsible fiscal culture that is based on key principles of fairness, moderation and justice might not find favour with the current masters of the universe, but it would open new opportunities.

Scotland as a global leader in fashioning a new and different way of doing business:  there are plenty who will scoff, but plenty more who will listen.   Such concepts may discomfit the SNP leadership and campaign team but these are the kind of discussions we need to have in the next two years.

Do I want to live in a Scotland post independence which has its own Hester bonus brouhahas, because some people are allowed to get filthy rich for making very little contribution to our economic or social common weal?  No.

And neither does anyone else I know.


11 thoughts on “Bonus brouhaha masks an awful truth

  1. I was going to blog about this, but you’ve just said everything I wanted to say, better than I would have said it. So I’ll just link to this instead.

  2. I think debates about competitive business tax regimes and who is more social democratic is really not the point. I think the problem is that, at the level of the super-rich, people have just gone a bit mad and they have forgotten what money is for. At a basic level money is what we use to facilitate the provison of goods and services. And there is a limit to how many goods and services one person or one family can consume. The Hester family must have everything they need in material terms so what could they even spend another million pounds on? I know that is maybe quite a simplistic way of looking at things but there is a simplistic truth here that I think is overlooked because money – of itself – is worthless. It’s only value is in what it allows you to purchase. If someone reaches a point in life where they can already purchase everything they could need or want, they really don’t need any more money and the obsession with accumulating it is actually a kind of madness. The obsessive greed of these banking types and other mega-greedy people, like the Blairs for example, is not just a reflection of a society whose values have gone askew, it’s a psychological sickness. Rather than accepting that it’s in any way normal for people to be obsessed with getting more and more money we should actually be saying these people are sick, there is something wrong with them. Because there is something very wrong with them.

  3. If what as on offer was a democratic socialist green republic of Scotland I’d be racing you up the stairs to knock on doors. It’s not.

    Seems like what’s on offer is rather the opposite of that: Alex Salmond reiterated on the Andrew Marr show that he favours rock bottom tax rates and a reliance on corporate headquarters rather than real industries.

    • The point is Aidan, that after independence, we get to choose what sort of country we want to be. Won’t be entirely Alex Salmond’s choice. Might not be his choice at all!

    • that’s good to hear because the probability of a democratic socialist green republic UK is much lower.

  4. I wonder if perhaps the reason the SNP hasn’t gone all out to promote such an idea is that, as much as people like to say they want things to be different, the reality is people often shy away from massive changes. Taking away the independence issue, if a party in the UK offered people the chance of a different kind of economy, something which fundamentally challenged the ideas we’ve been indoctrinated into believing is “the only way”, would they get elected to government to allow them to put their ideas in action? I doubt it. People would continue to vote for either Tory or Labour, because it’s just what they do. See the tiny steps the Green party has taken in England for proof.

    The idea of a country governing itself has such obvious benefits that I sometimes struggle to understand how people could think otherwise. Because of devolution, we’re already halfway there, and the powers that people seem to be most scared of handing back to Scotland – foreign affairs, defence, monetary issues – are the powers that have the most obvious benefits of all. In reality, independence is not a massive change, and yet we’re having to “normalise” it in order to avoid scaring the children and horses.

    If we can’t convince people to change the head of state and our currency at the same time as changing which parliament looks after our taxes, then how do we convince them to make a massive change to how our economy is run? Before we even tried, we would need to have it all worked out, because if we think media, political and business opposition to independence is bad, it’s nothing in comparison to how a challenge to their cushy little system would be treated.

    Then again, independence used to be an idea that attracted much derision and mocking. That has almost disappeared now, though. Perhaps if we start figuring out how this new economy could work, we’ll get there one day. Maybe the Occupy movement is the beginning of that normalisation process?

  5. Who else goes to bed at night and wakes up 8 hours later after earning another thousand pounds puts a new look at sweet dreams! We are constantly told it’s the markets and we have to listen to them and bow to there instructions well maybe its time, as I read elsewhere, that we collectively ‘Are the Market’ and not the gambling funny money men that government needs to start listening too.

  6. The SNP is silent because the FIrst Minister has close ties to Sir Fred. He was rather supportive of the Sir Fred’s acquisitions and did offer all support. The Tories and Labour bend over backwards for the financial sector as well.

    If the FM wants Scotland to retain a strong financial industry post-independence, he is going to have to make allowances otherwise they might decide to join Ms Mone.

    I do not see a post-independent Scotland being any different with regards to financial sector regulation, apart from the odd loose end being tidied up so things look better. Apart from that it will be business as usual.

    So expect very little forthcoming from the SNP on this matter.

  7. Get a cup of tea and a sandwich and be prepared to watch this all the way through. It explains a lot, especially about the world wide monetary systems which reward money lenders for making money out of money.
    Even Adam Smith warned about the dangers of letting the money lenders control the economy.

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