The huge pay gap between public and private companies

Vince might complain about excessive executive pay but the moment he tries to do anything they will warn that they will up-sticks and go somewhere more 'executive friendly'. The bankers tried that one (repeatedly) and it worked.
Why would the outcome with the rest of big business be any different ?

The only way to reduce the excessive pay of those at the top is to strengthen the hand of those at the bottom. ie. if a company is over a certain size then it must have worker representation on the board.

There is a wholly different cultural dynamic between the SME sector and the corporate sector.

With an SME everything is more personal and decisions really matter. Whereas in the corporate sector management is wholly political and, in my jaundiced view, utterly other-directed.

For example, twenty years ago I rescued an SME that was in trouble and made it into a viable proposition for entrepreneurial capital. Then after we had grown it into a bigger and far more profitable company it was sold on to a listed business. I stayed on as I was getting long in the tooth but it was like going to prison: we rapidly reached a point where nobody could make a decision as the new directors all spent their time looking over their shoulders.

You speak of talent; but there are different types of talent. There are the few who are very good at business and there are the many who are very good at asserting themselves. Assertiveness does not produce a result on its own: it has to be backed up by skill, expertise and success.

In the corporate sector there is a lot of assertiveness but precious little of the others. Most of the success derives from the way the business is structured, its product base and its markets, none of which have been determined by a senior management which is only along for the short-term ride.

The institutional investors (pension funds) seem to have little interest in those whose savings they are engaged to protect. Evidence suggests that they have more interested in the charges they can levy against those savings.

It would seem reasonable therefore to conclude that if pension funds remain the main shareholders nothing much will be done about the remuneration packages.

Does it really matter what these people earn?
Not really. Its insulting to employees who don't get a maningful share of the profits, its a demonstration of ridiculous greed and it arouses envy amongst the general population.
Yet I don't see how Vince Cable can legislate or negotiate in this situation.
The public can though, and the growing number of internet-organised petitions and actions should give them cause for concern (as Vodaphone recently found out). In the near future people may start voting with their pounds and no amount of advertising propaganda is going to save these fatcats and their companies if their reputations are damaged.
As for the threat that they will go abroad - the numbers of very talented business leaders from countries far less wealthy than ours is increasing at a huge rate. Replacing them won't be difficult.

More articles like this are needed to blow the lid off the pretence that we must all accept these preposterous salaries and contract T&C's. We are talking a well protected club defining its own and lucrative view of the corporate world. The truth is that the success of a large company is not down to the BoD's but will be found in the teamwork of the middle and specialist regions of a corporation. So a senior exec threatens to leave - there are plenty ready and able to replace them - possibly accepting more modest remuneration and perhaps working out of loyalty as well. Time to reform the supervision of these major corporations that have become a cash cow for the few.

Excellent article.
Spot on.

In order to improve the way large companies are run it is essential to give more influence to those who have a long term stake in the company.

Shareholders can easily sell their shares and in any case shares are often held indirectly through institutions so giving them more influence will not help very much.

The one group that really do have a long term interest and collectively probably know more about a business than the senior managers, are the employees. They should have more influence.

The John Lewis model is one possibility, but it is difficult to see how this could be imposed on existing companies owned by shareholders. However, it would be straightforward to require large companies to set up works councils based upon the German model.

There is a serious problem however. In the UK, political parties and individual politicians receive substantial contributions to their "campaign funds" from large companies and their senior managers. Any reform that Vince Cable might try to introduce, which threatened the power of the executives of large companies, would as a result be almost certainly blocked.

Thanks for highlighting this Robert, but is it news.

Fat Cats growing fatter at the expense of everyone else.

Those at the top didn't get there for their social tendencies. (And by 'at the top’, I don't mean running an SME, I mean the FTSE 100 CEO's, bankers, the landed gentry, monarchs etc.)

I'm sure Vince Cable will urge shareholders show 'restraint' with executive’s remuneration in the future...blah blah blah.

It won't work though, as Dempster has already stated, since the larger shareholders aren't risking their own money, just someone else's pension pot (which they themselves are milking). Maybe what BobRocket mentioned with workers' boardroom representation is a step in the right direction.

The more cynical might begin to wonder if something very bad (like foreclosure gate) is coming along and the looting has begun.

Has anyone got any good news?

The notion of a 'going rate' is an open invitation to the remuneration committees and FTSE-100 directors to engage in a merry-go-round of ever increasing pay - going rate - pay - going rate - pay - going rate - pay .......

I am sure the directors of Serco will receive further enhanced packages if this goes according to plan:

https://www.telegraph.co.uk/finance/newsbysector/supportservices/8098748/Anger-as-Serco-forces-cash-for-Coalition-cuts-on-suppliers.html

(or will they too take a pay cut?)

Only some kind of legal cap eg. all employees must receive at least one fiftieth of the rewards of the highest paid director/employee pro rata would fix this. This would have to cover absolutely all rewards (including those deferred), and be payable as a bonus to poorly paid employees.

But there are other things that could be done.

In view of the current crisis it would be a good mid term objective to bring all workers (including directors) within the embrace of PAYE. In the short term perhaps have all non PAYE tax payers tax information published on the internet.

Make it illegal for board remuneration committees to consist of anyone who is a director of any company. This would break the incestuous link
with other self interested directors who similarly desire to offer and be paid above the median rewards "to attract the best candidate" in a never ending inflationary spiral.

Sorry to be pedantic, but I feel that I need to pick you up on a typing error in the article.

You stated that, “since those who sit on remuneration committees are themselves beneficiaries of a pay system founded on the Rooney/Toure principle …”

In fact, I am sure that you meant to say that the current pay system is based on the “Looney Toon” principle.

2. At 09:58am on 01 Nov 2010, stanilic wrote:

There is a wholly different cultural dynamic between the SME sector and the corporate sector.

Agreed.

Give the fat cats a 100% wealth tax, rip up their passports and kick them out of the country. Honest toil produces prosperity, not greed, cheating and bullying. These people are poison.

The free market in labour and skills doesn't seem to work well in this area of CEO's - there always seem to be too few chasing too many positions. Maybe good ones really are hard to come by? I guess there are only so many people with thick enough skins that want to take on the 24x7 style of job that is often required - remember Tony Hayward anyone?

The only way forward that I can see is that remuneration should be more closely tied to losses when things are bad - some sort of claw-back/penalty clause...? I don't think it's easy to limit pay when things are going well...

Japanese management traditionally mingle with their co-workers of every level (having lunch together etc).
The attitude presented is that "were all in this together".
Sound familiar?
Not in British business in a million years.
People who earn as much as these fatcats operate on the fringe of society. They are insulated from the real world and I suspect this affects the validity of the decisions they make. Just like a lot of our senior politicians.
Less pay would enable them to make better decisions.
As for the market being an ass - some of them definitely are (housing, executive pay, ludicrous profits, football) and sometimes they are useful indicators. Is this not too subtle distinction EVER going to get political leverage in the UK when nano-brained free market idealogues persist in claiming its the answer to all our ills?

Robert

You are guilty of propagating a myth in your article. The pay of FTSE 100 directors is not determined by a market, and it's a myth to say so.

In a market, buyers and sellers are different groups with different interests.

The pay of FTSE 100 executives is largely determined by other FTSE 100 executives, or by executive investors who represent the major shareholders in those companies. Both of these groups have the same interest (very high pay for executives, as you indicate), and neither has to foot the bill.

So please stop supporting the myth that these are market forces at play. At best its a cartel. In reality, it's much worse than that.

I have been reading these blogs for some time but have never been moved to comment....until now.

It seems to me that capitalism has ceased to work; markets no longer function in the classical way and governments are largely powerless to do anything about it. The fat cats run things for their own benefit by a variety of means....threats, obfuscation, mutual backscratching among directors and fund managers etc. etc. etc.

A friend of mine many years ago proposed a foolproof way to improve the performance of any particular group of workers...lawyers, doctors, politicians, managers, whatever. We decide, by popular vote, who are the worst 10% for that week, take them down to the town square...and hang them.

"Or to put it another way, the pay experience of the majority of private-sector directors is similar to the pay experience of most private-sector employees: there've been slimmish picking over the past year of economic recovery."

Experience - not value - right Robert? Nice play on words there - trying to appease the 'under fire' and overpaid CEO's of the private sector.

It doesn't matter whether the overpaid are private or public - the fact is they are overpaid. Both as a result of extraction of wealth from any productive process - whether the extraction comes from labour (marxism) or the planet (environmentalism)

I realise that admission to the truth means that most 'entrepenueralist reward' comes from exploitation of one kind or another - but isn't it time we stopped beating around the bush and started working on the solution (to please the sheep who are now 'worried sheep')

The fat cats are only fat because they are 'creaming off the top' - I mean why else do you think the feline analagy is made? It's hardly because they're out all night and chase mice now is it?

Still - I suppose the truth is a hard thing to accept when it's going to impact your own life (not yours Robert, I mean generally) - that is why the free market entrepenuers cannot admit this - and would rather live an unsustainable fantasy - whether it's denying Marx's incredibly accurate critique of Capitalism (well it's happening just as he said it would) - or whether it's denying climate change - all denying the truth.

What a sad bunch of hypocrites - and these are the people David Cameron looks up to - that just say's it all.

You watch how this piece gets attacked from all angles as hearing the truth always make people irate - when that truth affects their materialistic tendencies.

#8 newblogger

'Has anyone got any good news?'

I'd never heard of Mondragon till someone posted on here.

I'm not suggesting that it is any better (well I am actually :) but that it is an alternative, one that I had not thought about until the internet came along.

This is the good news

Robert I agree

Surely it is a buyer's market? For the FTE100 companies and banks to rachet up top wages at a time when there are many in their ranks out of work is not right and an indication that there is something wrong.

I have recently had a conversation with a top Investment Banker who conceeded that he did not do anything "special" and there were 20 people in his team - several of whom were capable of stepping up and replacing him.

As a director of a SME - my wages will remain at zero until I plug the hole in my working capital the banks have refused to fill.

Why should the banks not follow this example - paying bonuses at a time when their balance sheets are week seems wrong.

16. At 12:00pm on 01 Nov 2010, Rob wrote:

"You are guilty of propagating a myth in your article. The pay of FTSE 100 directors is not determined by a market, and it's a myth to say so."

With all the respect to your comments, with sentiment of which I completely agree BTW, but isn't that just what RP is mentioning when he is talking about the Rooney/Toure principles?

It is a strange phenomenon that human beings organise themselves tribally around an "alpha male" who is supposed to lead and take all the decisions. In this regard, most CEOs are like most Presdients/Prime Ministers - they get to the job because they have the ambition and arrogance to put themselves up for it: and they excel at the skills needed to get themselves appointed.

The best are also good at running companies - a form of team leadership involving setting goals, inspiring effort, and rewarding success. The majority, I'm afraid, simply set profit targets and leave their minions to deliver or fail.

Finding and keeping the best might merit the sort of money we're talking about - the others are instantly replaceable. The question is, who is judging the talent? (nb If this is done by checking the balance sheet then another skill, creative accountancy comes into play).

Yet again bosses pay proves that we are NOT in this all together.

This yet again demonstrates the need for a National Maximum Income as was suggested by David Cameron a week or so back - set at 20 times the National Minimum Wage (as his is)!

All the mealy mouthed self-serving nonsense just will not wash!!!!

I think they should pay everyone in brown envelopes like they did long ago. I for one would be happy it annoys me that pay goes straight to the banks who take their cut and then the utilities take their cut and other major companies take their cut all through standing orders etc.. I can't help feeling it was better when you payed your bill when the red letter arrived instead of all these companies having access to your wages before you.
I think if these greedy shelfish arrogant pigs had to take their pay home in a brown envelope they would be very concerned before they got to the end of the street. It would be visually obvious to all just how unfair it was and how undeserveing they are.

"But if the market rate for FTSE-100 executives is a 54% pay rise, while more-or-less everyone else is seeing their pay reduced in real terms, then some are arguing that the market is an ass."

That's an understatement. Another bunch of morally-bankrupt criminals to go with the cloned imebeciles (for the large part) who suck up to them from Westminster. Add in the bankrutping bankers and no wonder the country is running to stand still whilst the Fat Cats get rich on the back of other people's good work. Shame we can't cart the lot of them off to Siberia - I don't think many people would be worse off.

What a terrbile politico-economic system it is where no-one is responsible for things that go wrong and everyone tries to take credit when things are perceived to go right.

Further I think we have been duped by the banks - it's Social Darwinism - they survived by holding the government to ransom or in effect taking over the government at the tax payers expense.

22. At 12:33pm on 01 Nov 2010, tFoth wrote

"It is a strange phenomenon that human beings organise themselves tribally around an "alpha male" who is supposed to lead and take all the decisions."

You may find the phenomenon you are talking about is quite common across the Animal Kingdom every time these creatures aggregate in social groupings.

But, shhh - the topic of animal/human interaction is tabu on this blog and you may get shouted down for it. By implying we are not all perfect you may destroy a few zany theories around here.

The facts are simple - who decides the renumeration of the FTSE100 CEO's?

Ultimately it should be the shareholders.

Who are the shareholders who swing this vote?

The pension funds, the Mutual funds, the banks etc.

Who did these people go to school with?

The FTSE 100 CEO's.

Come on Robert - it's been the old boys club for generations - and you've only just realised this?

In addition, even if they weren't all in the same club, it's not likely a majority shareholder will want to create market turmoil by ousting the CEO.

By ensuring that through pension funds we have a concentration of shareholders represented by one body - we have gone from the democratic joint stock company to a corporate fascist system where the views of the majority are overridden by the views of the minority.

Pension funds are like me going around my constituency before the election and taking everyone's polling cards and saying "I'll do that voting for you - you save yourself the hassle" - and as a consequence I get to choose the candidate with my 300,000 votes.

In a Democratic election this of course would be illegal - however in the world of finance - illegal is something completely different.

...to take the analagy further - pension funds are a co-ercsed system where I tell those who want to keep their votes for themselves - "if you don't hand me your vote your retirement will be a lot less and you will end up in poverty".

....democratically illegal - acceptable in Finance.

I have read most of these comments. Its seems its all down to The institutions milking our pensions. I have one with my firm. It hasn't made anything for the last ten years. My question, how can I move it to something else? I would do it now if I knew what to do.

Given the opportunity (nearly) all people lose their perspective and scruples over time. Whether it is bankers, FTSE 100 directors, peers and MPs with expense claims, people who campaigned against private education and then send their kids to private schools or any other of the hundreds of ways in which people gradually give way to temptation and ditch their previous views, it is a universal truth that opportunity corrupts. Of course there are a few saints who are the exception, but generally only those who lack a big enough opportunity remain uncorrupted (yet).

This doesn't of course condone such behaviour since the world would be a lot better off if everyone in the UK gave up all their lifestyle (including the poorer people who still have TVs, running water, etc) and gave all their money to those in the world who don't possess such things. Of course I'm sure all of you are already doing that now.

The world has always been full of worthless rich people and its always going to be. A lot of them exist in marxist political states. I think the interesting factor of capitalism in the west is that to a large extent money has replaced power as the main focus of ambition. Al you can do with the directors, bankers etc is make it more difficult for them.

24. At 12:37pm on 01 Nov 2010, bmac1 wrote:

"I for one would be happy it annoys me that pay goes straight to the banks who take their cut and then the utilities take their cut and other major companies take their cut all through standing orders etc.. I can't help feeling it was better when you payed your bill when the red letter arrived instead of all these companies having access to your wages before you."

Well following my discovery last week of being charged 50p for using my debit card in a shop - I discovered last night that to get my takeaway on the debit card I now am charged £1.50!

So where are we with this? We're sold a cashless society - so the banks and other parasites (the credit and debit card suppliers) can later abuse this by adding on charges - at varying percentage rates (as it's a fixed sum, not a percentage)

Clearly as the SME's struggle they can no longer absorb the cost of transactions.

It's back to cash folks - better get down the cash machine this afternoon and get some out - your cards have become 'bank taxable'.

...of course everyone needing cash is going to produce a different problem for the banks and all of us..

# 24. At 12:37pm on 01 Nov 2010, bmac1 wrote:
"I think if these greedy shelfish arrogant pigs had to take their pay home in a brown envelope they would be very concerned before they got to the end of the street. It would be visually obvious to all just how unfair it was and how undeserveing they are."

A helluva good idea, I'm well over six feet tall and phsically fit. I'm damn sure I could wrestle a few million quid out of the Square Mile fats cats every pay day. Am I advocating theft, hell yes, they've been doing it to us for years so why not!!

25. At 12:47pm on 01 Nov 2010, RobVilla wrote:

"Further I think we have been duped by the banks - it's Social Darwinism - they survived by holding the government to ransom or in effect taking over the government at the tax payers expense."

...more commonly known as fascism.

Clearly the members of this magic circle are not going to restrain or regulate themselves. Would it be possible to have a regulator along the lines of Ofwat etc (perhaps Paywat!)to try and ensure that the market for boardroom pay bears some relationship to reality?

The correct response to this is to make all director pay awards subject to shareholder approval. Ultimately shareholders own the company and if they think a CEO is worth $100m a year then they are entitled to pay that sum.

The market has become warped because of US pay awards. In the US shareholders have very little influence over directors - far less than UK law

....the only going rate that most of the FTSE 100 execs seem to be interested in is that paid when the time comes for them to go after it becomes clear that they are not nearly so clever as they made themselves out to be, Goodwin, Blank et al.

26. At 12:53pm on 01 Nov 2010, Ian wrote:

"But, shhh - the topic of animal/human interaction is tabu on this blog and you may get shouted down for it. By implying we are not all perfect you may destroy a few zany theories around here."

Well Ian, it's funny you should mention that as I was a bit busy on Friday afternoon.
I have answered it for you - but the highlights are:

Ian says "everyone is selfish and greedy - it's human nature"

Writingsonthewall says "well there are people who aren't - take Linda Norgrove for example, someone who put her life on the line in a selfless act - how can your premise be corect about human nature when there are examples of people who are not?....and consequently how can you blame 'human nature' for the economic crisis?"

Ian says......?

This is the politics of envy. Just like our irritation about bank bonuses.
In the grand scheme of things the benefits of these people are peanuts as a percentage of total profits.
It doesn't make it right, but let's not get things out of perspective. The benefits should certainly be cut but more important is that these massive companies should perform well; if they don't the fat cats don't care but the workers do as they're the ones affected.
In the public sector whoever heard of a council going bust and having to lay everyone off? Even so there seems to be a number of very highly paid chief executives in that sector with their gold plated pensions, secure employment and other benefits quite apart from salary, all funded directly by the taxpayers who have no say whatever in what they get.

26. At 12:53pm on 01 Nov 2010, Ian wrote:

...oh and Ian....

22. At 12:33pm on 01 Nov 2010, tFoth wrote

"It is a strange phenomenon that human beings organise themselves tribally around an "alpha male" who is supposed to lead and take all the decisions."

I think you misunderstand - TFoth says it's a "strange phenomenon" - which means it's unusual - he's not saying that everyone likes to 'follow the leader' in this way....

You then say:
"You may find the phenomenon you are talking about is quite common across the Animal Kingdom every time these creatures aggregate in social groupings."

...but we're not talking about animals - we're talking about humans, and unless you're suggesting all the FTSE 100 CEO's, shareholders and workers are animals - then this is not common behaviour amongst humans.

I can see why you get into so many arguments - you don't read the blogs properly.

...or were you being sarcastic again??

> 22. At 12:33pm on 01 Nov 2010, tFoth wrote

> It is a strange phenomenon that human beings organise themselves
> tribally around an "alpha male" who is supposed to lead and take
> all the decisions.

Atavism occurs in very backward societies. It's old fashioned here now, although it still goes on in places such as The City and the Houses of Parliament etc. But even those dopes are learning, slowly.

In the meantime, we're all doing our best to keep the Sir Greedies on very short rations, to avoid ongoing crashes.

@ 22. At 12:33pm on 01 Nov 2010, tFoth wrote:

> most CEOs are like most Presdients/Prime Ministers - they get
> to the job because they have the ambition and arrogance to put
> themselves up for it: and they excel at the skills needed to
> get themselves appointed.

The old rules still apply. If you want to be the boss, you're not fit. And if you're fit to be the boss, you don't want to be.

28. At 12:59pm on 01 Nov 2010, winnie wrote:

"I have read most of these comments. Its seems its all down to The institutions milking our pensions. I have one with my firm. It hasn't made anything for the last ten years. My question, how can I move it to something else? I would do it now if I knew what to do."

Winnie, I'm afraid the pension is a trap - into which we're all lured by our fear for the future - i.e. when we get old.

While you think your storing your excess production now in order to provide for your future - the pension fund managers, the whole pension industry and now the taxman are all creaming it off.

The problem is that if you 'go it alone' then you are more exposed to fluctuations in the markets and could find yourself penniless when you retire.
Whilst you think your pension is a guarantee - it's not, and although pensioners up until this point have all done nicely - this is likely to change going forward as they have all benefitted from booms whereas we're now likely to have a period of stagnation - devaluing all our future income.

The most obvious element of the disparity of pensions is that in most companies the executives have a seperately run pension

Most people don't realise this - but it means that if the company goes down and you lose your pension as a result - it's not necessarily true the executives will lose theirs - even if it was their fault the compay collapsed!

...it's not what I would call 'all in this together' - society is really master and slave - it's just that half the slaves are unaware of this - they use their economic optimism to suppress these ideas and cling onto the hope that "one day I might make it big time" - which is coincidently why the national lottery is so popular in this country.

A man can't feed his family on hope alone though.

When BoDs take as given that their self-interested remuneration packages, monitored by similar self-interested BoDs, are the norm, and ignore legitimate complaints from shreholders, then the system is collapsing. If the many beneficial workers in the UK, such as doctors, nurses, teachers, police, firemen, civil servants all have revue bodies determining salary levels - why not BoDs?

Mr Cameron is quite ready to impose a 20 times relationship between lowest paid and top paid in the public sector - why cannot Mr Cable impose the same for the larger private organisation - starting with the 2 "publicly owned banks"? With a system whereby the board members (to avoid legitimate taxation) are given bonuses in shares their self-interested influence increases - their power is multiplied through excessive shareholder influence. As has been demonstrated by several of the larger, and successful, UK companies, Cadbury as an example, the BoDs are willing to have wide-ranging social implications to their personal gain in selling to foreign organisations. Historically, at least since the Thatcher era of sell everything in sight, the control of most of the UK manufacturing and service industries has slipped into foreign ownership. Would this have happened with greater control of BoDs whose drive for personal gain over the greater benefit for employees, product, or their social environment has meant the loss of our national integrity.

With the future Tory "coalition" Government programme of selling-off even more of the institutions and corporations that were established by hardworking UK employees, we are likely to find in the next 5 to 10 years that we are all slaves to foreign masters whose agenda may not be in our best interests. The extent to which the country is owned by Arab oil wealth, Russian oligarchs, American monopoly interests, Indian steel magnates, etc. is alarming for those who are increasingly marginalised in multinational interests.

Time for change - I think not it is too little and much too late. Italy in the 18th century here we come.

34. At 1:07pm on 01 Nov 2010, Justin150 wrote:

"The correct response to this is to make all director pay awards subject to shareholder approval. Ultimately shareholders own the company and if they think a CEO is worth $100m a year then they are entitled to pay that sum."

Justin150 - they already do!!!!

See my post on 27 as to why this is a failing system.

37. At 1:10pm on 01 Nov 2010, pietr8 wrote:

"This is the politics of envy. Just like our irritation about bank bonuses."

Envy (also called invidiousness) is best defined as an emotion that "occurs when a person lacks another's (perceived) superior quality, achievement, or possession and either desires it or wishes that the other lacked it

...so our FTSE100 bosses have a superior quality then - well can you explain how Sir Freddie Greedy, Sir Victor Blank, Adam Applegarth and the other failures manage to 'slip through the net' then?


"In the grand scheme of things the benefits of these people are peanuts as a percentage of total profits."

...and yet not one of these 'geniuses' can explain where that profit comes from.

"It doesn't make it right, but let's not get things out of perspective. "

Murder isn't right - should we put that into perspective too?

"In the public sector whoever heard of a council going bust and having to lay everyone off? Even so there seems to be a number of very highly paid chief executives in that sector with their gold plated pensions, secure employment and other benefits quite apart from salary, all funded directly by the taxpayers who have no say whatever in what they get."

2 wrongs don't make a right - the incestuous nature of the public sector chief exec. appointments is a mirror of the incestuous appointments made in the private sector.

You started off with 'the politics of envy' - and yet you showed a bit of that yourself at the end there.

Clearly envy of the public sector is acceptable 'politics' in your household, but the same cannot be applied to the private sector fat cats.

I would suggest you look at your moral standpoint more closely in future.

Do you think they would let me prescibe the going rate. Perhaps if I looked long enough and hard enough I could justify paying them less.
I I think if you looked at what the going rate is in India or China the remuneration committees could find a strong and viable arguement to drastically reduce their pay.

RE 30, WOTW.

For what it's worth, the cheapest rate I can get for my business to accept cards is 3.3%. That is the card co, cream 3.3% of the sale before I get it. In contrast you can get a fixed 20p cost for any debit card.

It would be nice wouldn't it if you could get a relationship between money and quality, but the relationship seems to break down with pay.

Following the mass exodus of poorly remunerated banking sector employees abroad perhaps it would be possible for newly evicted housing benefit claimants to move into the banks headquarters? That way they maintain their luxurious lifestyles and still live within walking distance of central London. The remaining bankers could double as social workers in their spare time and take the kids out for games of football round Canary Wharf.
If we could just get rid of the remaining boardroom executives and CEOs by offering them the derisory corporate leaders minimum wage of £100k p.a. then that would leave even more space for the housing benefit exodus.

28. At 12:59pm on 01 Nov 2010, winnie wrote:
'I have read most of these comments. Its seems its all down to The institutions milking our pensions. I have one with my firm. It hasn't made anything for the last ten years. My question, how can I move it to something else? I would do it now if I knew what to do.'


Invest your money yourself, thereby avoiding pension fund charges and then being forced into buying an annuity at the end of it. Private pensions look to be the next big financial scandal.

This comment was removed because the moderators found it broke the house rules. Explain.

Comparing the head of a FTSE listed PLC with the manager of a small shop or small company is like comparing Steven Gerrard with someone who kicks a ball about in a village football team.

What would happen if our top footballers were told they couldn't have a pay rise? They would go to foreign club on the next plane.

Mind you we do prefer to have incompetents in charge of our top jobs. Why else do we have Osborne, Johnson, Brown and Darling running our national finances when none of them have ever had any qualifications or relevant experience. And in some cases never even having had any interest in the job.

Robert

Why are you continuing to look at peoples pay when there are more important things out there.

Can you please cover why the UK is still giving the EU money when they havent had a set of their accounts signed off ever...

Never mind a 2.9% cap - why are we giving them any money at all if they dont need to be accountable. Would it not be better to have these leeches evidence why they need money before we just give them it.

I for one - would rather see the money spent on Britain, likewise why are we giving foreign aid to Russia and China when they are both incredibly rich countries.

I think you're barking up the wrong tree for once.

Working in the corporate sector I see daily the amount of waste and excess that these 'super' companies condone. My job is to rationalise company expense, but for many large businesses this ideology is as alien as E.T submitting this months mileage form on time.

My colleagues who work within the commercial sector are seeing businesses review their costs across the board, and are often experiencing pay freezes or even pay cuts, but those in the corporate bracket don't seem to realise that we are in a recession. When you have company Finance Directors tell you that they aren't considering any cost cutting initiatives in this fiscal calendar, it makes you wonder what school of economics they attended (or more importantly what planet they are on).

I am not against corporate wealth, or people being rewarded healthily for their hard work, but the sooner these senior managers are dragged into the real world the better.

I suspect that the majority of Directors of FTSE 100 companies really honestly believe that they provide good value for money for their respective companies and to be fair, many probably do without the excess of pay which prompts so much debate.

Whilst finding it annoying, I doubt very much whether those that are being specifically talked about are particularly concerned about the opinions regarding their salary packages being bandied about in the media, and neither will be until or unless legislation delivers a wake up call.

I agree that some Directors (not all I hasten to add) need to take a reality check and be seen to earn their salaries.

Some possible considerations aimed at PLCs maybe:
Legislate that Executives/Directors salaries should be linked to a maximum multiple of the lowest paid worker in the organisation (a la John Lewis - 72 times I think)
Scrap all executive/director share option and share incentive schemes. Any share options/incentives should be available on the exactly the same terms to all employees/directors.
Scrap all executive pension schemes and any other lump sum contributions to other schemes. Membership of pension schemes must be on the same terms as other employees.
Bonuses to be limited to a maximum multiple of basic annual salary.
Any bonuses in excess of 100% of salary to be taxed at 100% for which the company must pay.

On the point of pensions I'm amazed that higher rate tax payers still enjoy tax relief on contributions 40%. As the vast majority of employees only get relief at the basic rate this might be a field (perhaps controversial and worth a whole article in itself) that the coalition might take a close look at?

I would guarantee that Directors/Executives and probably pensions funds (major shareholders) may be up in arms at any of these suggestions, but we may get to a time where such radical actions need to be taken to curtail what is seen as excess in corporate boardrooms and make it more transparent.

27. At 12:55pm on 01 Nov 2010, writingsonthewall wrote:

> it's been the old boys club for generations - and you've only just realised this?

He must know - he's one of the old boys himself. But if I've got his number right, he's got a foot in both camps (like us). Robert Peston might be quite valuable to the future of this country - I suspect he's keeping his powder dry for now, though.

We'll see.

Pay at 72 times the companies lowest paid is far too much 7.2 times is adequate and I think it would put a sharp focus on directors to increase the pay of those at the bottom. To be honest why 7.2 times why not 3 times. This would be a good starting point and any pay rise recieved would be 3 times that of those at the bottom.

Out of curiosity, what does everyone think a suitable wage is for heading up a multi-national business with turn-over pushing into the billions?

I'd rather be a cleaner on £12,000 working a 35 hour week, than a CEO of such a company on a six-figure salary.

True, the pay of these directors is vast, but it's a single measure on qaulity of life. For me personally no amount of money would draw me away from earning a middle income, working a strict 37 hour week, on full flexi, where I leave work and forget about it until I am next in the office, thus enabling me to spend as much time as possible with my family.

Aside from not really caring about what other people earn, or what they do for the money, what I am interested in is quality of life for the employees and the way in which companies look after their needs beyond their pay packet each month. If imposing a scale based on multipliers to ensure that pay is distributed equally in measure throughout a company than I would certainly agree, but I'd sooner take the time over the pay. Hell, I'd sooner be a traveller and live off the land if I could persuade the other half!

The huge pay gap between public and private companies
_____________________________________________________

Trying to get Race Equality Scheme performance (Race Management) history information from private companies is far more difficult.

Perhaps positions of POWER in the private companies are considered to be higher risk therefore the rewards are expected to be higher.

50. At 2:09pm on 01 Nov 2010, sandy winder wrote:
'Comparing the head of a FTSE listed PLC with the manager of a small shop or small company is like comparing Steven Gerrard with someone who kicks a ball about in a village football team.

What would happen if our top footballers were told they couldn't have a pay rise? They would go to foreign club on the next plane.'

Ermm...so what? Let them go, might break the strangle-hold the big clubs have on the game and make it cheaper to spend an afternoon with your mates supporting your local club (assuming that is at all important).


'Mind you we do prefer to have incompetents in charge of our top jobs. Why else do we have Osborne, Johnson, Brown and Darling running our national finances when none of them have ever had any qualifications or relevant experience. And in some cases never even having had any interest in the job.'

Who exactly has the correct qualifications and experience to run the national finances? I hope you are not suggesting we employ someone from the banking industry, they don't seem to have a particularly good track record in 'running' things in anyones interest other than their own.

56. At 2:50pm on 01 Nov 2010, Turbulent_Times wrote:

This is a good point, if a little extreme.

A friends university friend was CEO of an Asian firm, and whilst his standard of living was superb - holiday home, small yacht, penthouse in London & country mansion, he didn't see his children grow up, missed 12/17 Christmas days, missed countless birthdays etc.

The stress and inconvenience of the position was such, that he waived a £750K bonus payment and took early retirement (with generous golden handshake of course).

> 56. At 2:50pm on 01 Nov 2010, Turbulent_Times wrote:
> Out of curiosity, what does everyone think a suitable wage is for heading
> up a multi-national business with turn-over pushing into the billions?

Well, when I have far more responsibility than any executive (e.g. controlling the orbit of spacecraft worth billions) I take home two or three times the average. People with far less responsibility than me should get less pay, in my opinion.

There's very little anyone can do to prevent those in the top companies from receiving these huge salaries if the shareholders are content with their performance. Although over the past few years too many seem to have been rewarded for failure.

The more important point is that they are made to pay their proper proportion of tax to the treasury thus benefitting the country as a whole.

As far as SME's are concerned most small businesses rely on a small number of crucial staff who need to be looked after in any downturn. Any credible owner will forego their own salary to keep those staff until the bitter end if need be.

Which brings be to the public sector........

History has shown that the public sector doesn't sack their top people for incompetence they just pay them off and they move to another top job somewhere else. Oops! Forgot. That's the private sector too.

Rewarded for failure. Nice work if you can get it.

Yes we do need lots and lots of people who are prepared to start up their own business working seven days a week and every hour that god sends. Who earn very little initially and are strangled by all kinds of rules and regulations who are terrified to take on staff because of the overbearing employment laws.

Where are these angels for in today's climate I would certainly not be one of them.

56 Turbulenttimes
To be honest, it is shameful that these selfish individuals behaviour has to be discussed at all. If somebody sets up a company and it thrives and makes great money well they deserve the profits and certainly hope they would reward their staff accordingly. However,we are talking in most cases of some numpty, taking over a business which it is difficult to lose and then loading their pockets with as much as they can get away with, this is wrong.
I was recently made redundant to cut costs, all the rest of the workforce were told they were on a wage freeze. When I looked on the company web site I noticed the C.E.O. had given himself a huge pay rise the week before and his bonus could have kept over 100 people in work of the 300 who lost their jobs. Within weeks however I noticed he had left the company by mutual consent (useless) and then a couple of weeks later the company had took a £100,000,000 hit on a failed venture abroad.
To be honest I usually wish the best for everyone but on this score I cannot believe that this guy could justify his huge salaries. Obviously someone somewhere thought he was worth all the money he recieved but the reality is this man squeezed costs then squeezed some more and then squeezed until I personally believe it was to the overall detriment of the business to function properly.
The company still made vast profits but it would have done anyway and customer satisfaction was at an all time low. He has gone now but there are many other examples of these bosses making huge mistakes and then just going from one almighty cockup to the next in some other business somewhere. How many C.E.O.'s have presided over a business that collapses and then just pop up as C.E.O. somewhere else or how about the current boss of Prudential (Thiam) failed takeover costing millions. Are these people really worth these salaries I doubt it.

@ 56. At 2:50pm on 01 Nov 2010, Turbulent_Times wrote:

> Aside from not really caring about what other people earn,

You would soon find yourself at the bottom of the pile with that attitude, and exploited.

The problem is that if the group pays too much to one member, then there is less for the other members, so they go on strike. Quite rightly, too ... I mean, who would put up with that sort of rubbish?

Were all missing the vital point, these companies are owned by shareholders. If they wish to pay these high wages so be it. We can't tell people how to run their businesses. If they don't look out for the interests of THEIR company, then they are the ones who will loose out when the company makes losses or goes under. If they don’t look after their own companies then it’s up to them, just like I can’t tell you how to live your life, we can’t tell people how to run their businesses. There is such a thing as personal choices; we are all accountable for the choices we make. When the consequences of their actions arrive, they will be held accountable for it.

The more we try to meddle with this, the worse we make it. If we leave these people to ruin them selves then they will learn their lesson. If we stop/protect them from the consequences of their actions they will never learn their lesson, and will find another way to do the same thing.

The best action is no action, if we take action we will be thinking short term and make it worse, just like what we are accusing the directors of doing.

Oh! and by the way the list of people on the board of my previous employers was a who's who of failed businessmen.

WOTW:

"Envy (also called invidiousness) is best defined as an emotion that "occurs when a person lacks another's (perceived) superior quality, achievement, or possession and either desires it or wishes that the other lacked it"

You went to the bother of quoting the definition and then only talked about the "quality" bit. Personally I think most envy I've seen is to do with possession/achievement.

The fact that possession and achievement don't sufficiently correlate to ability is the icing on the cake. (the cake is made of excrement).

Far be it from me to agree with WOTW (his world is a trifle too black and white for my tastes) but he is dead right the western world is turning into a fascist society. This will eventually kill capitalism and lead to a great deal of misery and pain in the world (if you think its bad now wait for the fear and loathing created by a loss of hope and economic stratification).

The major problem is that companies are too big.

Utilitarian principles predict people will steal as long as the liklihood of punishment is small compared to the rewards. Liklihood of punishment at the mo? Zero! This allows CEO's to steal from the shareholders, as long as nobody notices the 10p a week taken out of thier pocket nobody cares. When people notice they are being robbed they get upset (quite rightly) this is what causes the outrage, not the politics of envy.

How to fix it? Simplistically we could tax all company turnover and private ownership above (say) £1 Bn at 100% with the amount deducted at point of sale /accounting (similar to a pay roll tax).

Causing the sprouting of multiple smaller companies that should all be compelled to compete with each other. Ordered systems to split companies would be arranged so the transition from 1 into 2 companies by splitting the shareholdings would be the norm.

It is of course a pipe dream :-) However our ossified economic society is a real danger to us all.

64 Quasim
Would be a valid point but who are the shareholders? The fact of the matter is if you have a pension scheme you probably are but how many votes did you get on the last remuneration policy of these C.E.O.s. The problem is these pension scheme bosses could and should vote these pay schemes down but choose not to.
Do you really believe there are people out there who deserve a seven figure salary I find that difficult to believe. While these board members are paying themselves so much it is coming out of someones pension scheme.

I don't have a problem with top executives earning massive sums of money. What does irk me is when the executives earn six or seven figure salaries despite the companies they are running making a loss or failing. It seems they are rewarded for failure. Where is the sense or motivation in that.

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60. At 3:14pm on 01 Nov 2010, Jacques Cartier wrote:
> 56. At 2:50pm on 01 Nov 2010, Turbulent_Times wrote:
> Out of curiosity, what does everyone think a suitable wage is for heading
> up a multi-national business with turn-over pushing into the billions?

'Well, when I have far more responsibility than any executive (e.g. controlling the orbit of spacecraft worth billions) I take home two or three times the average. People with far less responsibility than me should get less pay, in my opinion.'

You define responsibility in monetary terms.

Perhaps a nurse or paramedic should work for nothing? Or perhaps you can judge their financial worth by the bank balances of the people they save? 10 points for a Solicitor and 0 points for a Tramp.

These CEO's are doing nothing different to anyone else in the sense that they are looking after themselves. Either you support the freedom of individuals to enrich themselves at the expense of others or you don't. You support Capitalism and the free-market or you don't and you can't have it both ways.

A different picture emerges if the term 'pay' is deconstructed to its components of salary, performance related bonus and the value of long term incentive share positions. If share prices of companies have risen well in the last 12 months then the 'pay' will have risen with it without anyone awarding anything new - and without cash being extracted from the company. If a bonus has been awarded for 'performance' then it probably fits a formula thatis related to corporate earnings. That leaves salaries which, I suspect, have hardly moved at all. The use of the term 'pay' reveals weak understanding of remuneration practices.

23. At 12:36pm on 01 Nov 2010, John_from_Hendon wrote:

Yet again bosses pay proves that we are NOT in this all together.

This yet again demonstrates the need for a National Maximum Income as was suggested by David Cameron a week or so back - set at 20 times the National Minimum Wage (as his is)!

All the mealy mouthed self-serving nonsense just will not wash!!!!


- John, try reading the article before posting. See:

"The big finding is that the majority of directors across the private sector received a pay cut in real, inflation-adjusted terms in 2010."

Various WOTW:
"By ensuring that through pension funds we have a concentration of shareholders represented by one body - we have gone from the democratic joint stock company to a corporate fascist system where the views of the majority are overridden by the views of the minority"

No, we have one company owning a lot of shares. The people in the pensions that the said sharefolder administers have no shareholding.

"Envy (also called invidiousness) is best defined as an emotion that "occurs when a person lacks another's (perceived) superior quality, achievement, or possession and either desires it or wishes that the other lacked it

...so our FTSE100 bosses have a superior quality then - well can you explain how Sir Freddie Greedy, Sir Victor Blank, Adam Applegarth and the other failures manage to 'slip through the net' then?"

Or perhaps the envy that is really apparent from a number of posters here is that of the "achievement, or possession and either desires it or wishes that the other lacked it" ?

Some people do better in life than others - some through hard work and sacrifices to their personal life and others through people they know and sometimes through pure luck eg winning £113m on the lottery.

So how does that square with the recent authoritative report from Incomes Data Services, which disclosed that FTSE-100 directors saw their total earnings increased by a mouth-watering 55% on average over the past year, while the average increment for the FTSE 350 as a whole was 45%?
Why would you think the surveys are contradictory. There are two types of companies and two types of directors or CEOs:
1. FTSE (normally too big to fail) and
2. everybody else.
What could explain this stunning contrast between the FTSE-100 executive class and the owner-manager class?
Oh my, the list is endless, but let's start with front-end trading on the stock exchange, loose financial regulation, the great creativity of financial institutions when it comes to labelling a bonus as stocks or deferred shares or whatever...and remember, it is these financial sorts that are choking off the money supply to small and medium businesses preventing expansion and sometimes even existence.
Certainly, it's been relatively easy for big sprawling listed companies to cut costs and overheads to boost margins during the downturn. Is this what they did? I thought they implemented new marginal ways to improve profit - like front-end loading, or computerized trading.
Yep we are witnessing pay disparity.
Chief executives on contract at FTSE-100 companies are in a different position; as hired guns, it is rational for them to pocket as much as possible as quickly as possible from pay, bonuses, share options and long-term incentive plans.
Which of course is why for the past 20-odd years there have been endless attempts, through corporate governance codes and remuneration reforms, to more closely align the interests of publicly-company bosses with owners.
How's that coming along?
The only way to deal with this disparity and bring the hired gun to bay is to have financial/trading/accounting regulations so tight that it levels the playing field. What do you think the chances of this happening are - in either the US or the UK?
And yes, the market is an ass, a corrupted ass at that!

I am not in the least surprised to hear this. The problem with news reports about small private business -the majority of businesses in the UK - is that those in power and those who carry out these surveys do not understand what a small business really is. If they want to get a more accurate picture of what's really going on in the economy they should be speaking to those who work with small business day in day out, for example smaller firms of accountants, small business networking groups etc.

At the root of a lot of this is a fundamental misunderstanding about the nature of "talent" -- a ruse used by people in corporate and public institutions to justify high pay. But most of these people are not talented -- they are not unique (or near unique) talents like Wayne Rooney. They are simply people of reasonably strong but unexceptinal ability who are highly skilled only in playing corporate politics. The best elucidation of this argument is in management writer David Bolchover's recent book: Pay Check: Are Top Earners Really Worth It? It's an argument to be reckoned with.

But don't you know????

You MUST pay these public sector people - civil servants, NHS Managers and the like - LOTS and LOTS of money or they'll all leave the hospitals, Whitehall and the town halls and go and work for bigger wages in the private sector? And then the public sector will just crumble and the world stop turning and ... and ... and

Erhhh.... a bit like all those U.K. bankers who were going to flee the country and go elsewhere and .... well.... didn't.

But what is perhaps more gutting about this particular ego-trip is that it's being paid for out of the public purse and while we're paying these seemingly over-inflated wages - in relation to their productivity and worth - to these people then the money is NOT going to delivering service outcomes for the likes of hospital patients, social services clients or the homeless, etc., etc..

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71. At 4:10pm on 01 Nov 2010, ukblahblahblacksheep wrote:

>> 60. At 3:14pm on 01 Nov 2010, Jacques Cartier wrote:
>> I have far more responsibility than any executive

> You support Capitalism and the free-market or you don't and you can't have it both ways.

I certainly don't support any free-market - that would be insane. Imagine lying on a hospital bed and the doctors tell you to either pay everything you've got, or die!

Or imagine crossing the Atlantic, and the Captain says that fares have gone up, so jump out or pay up!

No - you're bonkers to follow any free-market, that's for sure. I'll have it both ways, please!!

36. At 1:09pm on 01 Nov 2010, writingsonthewall wrote:

I’m not sure you realised this yet but you have just proved my own thinking here to boot. Thanks for that.

To expand slightly, the human nature is indeed capable of the most beautiful acts (to use your example of Linda Norgrove) as well as the most evil (have you been to Auschwitz?). We are all somewhere along that scale and some of us will have impulses towards civilisation (live peacefully by the rules) and others will have inclination towards power. If left unchecked, those with impulses to power invariably take over (Napoleon, Stalin, Hitler and countless others). This was excellently brought to life in the Lord of The Flies and I believe a number of studies proved that to be the case.

Moving the thinking a step further towards your favourite subject - even if the (discredited now, I believe) idea that all children are born with clean slate is true their parents are not so they will, necessarily, be brought up under “wrong” conditions. You could, of course, remove them from the family and place en masse in indoctrinating institutions...

As you love writing about contradictions, there you go, an inherent contradiction in your theory – you want to get to your Nirvana quickly (as you keep saying there is no time), via revolution, yet you are going to have a huge chunk, dare I say a majority, of population unready. Now – that’s some dilemma. What do you do with them...?

I’m not going to expand about the need you identified earlier to educate that in itself takes a long time. How do you reconcile that with revolution (happens very fast)?

Contradictions, contradictions everywhere. And then you marvel that some bearded agitator was able to prove contradictions in the system as complex as Capitalism…

(My last writings on human nature, I promise, from now on I will only cross-reference to this post.)

78. At 4:31pm on 01 Nov 2010, Sutara wrote:
.....But what is perhaps more gutting about this particular ego-trip is that it's being paid for out of the public purse and while we're paying these seemingly over-inflated wages - in relation to their productivity and worth.....
--------------------------------------------------

Don't forget that high salaries in the private sector also are paid by the public in the guise of the consumer, so we all have an interest in all areas of executive pay.

64. At 3:34pm on 01 Nov 2010, Qasim wrote:

“Were all missing the vital point, these companies are owned by shareholders. If they wish to pay these high wages so be it.”

Not quite – if you read RPs bit on Rooney/Toure principle and a number of comments on this blog you will understand entrenched interests between major shareholders ( e.g. pension funds) and the executives drive their salaries inexorably upwards. Post 27 explains that in some detail.

@ 37. At 1:10pm on 01 Nov 2010, pietr8 wrote:

> This is the politics of envy.

Or is it the politics of greed?

> like our irritation about bank bonuses.

And did you forget the credit crunch already?

> The benefits should certainly be cut but more important is that these
> massive companies should perform well;

You certainly need happy workers for that to happen. Will gigantic
wages for the boss make the workers very happy indeed?

Nope, I thought not.

38. writingsonthewall

You are quite right, we appeared on this Earth from the planet La La, all ready-made and, of course, completely unrelated to any living creatures here.

If that is what you propose that would be some interesting revelation, WOTW. Not that far off from beliefs of all the major religions. Are you turning yourself into a prophet…? Is that really your angle?

And – I’m impressed, WOTW, you actually (tentatively?) recognised sarcasm. That ink on your device must be in colour…. There is always hope…

I do enjoy our little sparring, WOTW, honestly :-)

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BBC Breaking News!

Top Stories this Monday Evening!

1. Lord Young will minimise the "bureaucratic burdens" which increase costs and hassle
2.Lord Young will identify ways that government departments can help ensure firms have access to sufficient finance
3. Lord Young will encourage people to start businesses rather than seek jobs as employees
4. Lord Young will improve the way government listens to the views of small and medium-sized enterprises when designing policy
5. Lord Young is the Man in the Moon.
6. Sheffield mum has triplets
7. Firemen earn more than soldiers!
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11. Oh, that's OK then........




GC

74. At 4:21pm on 01 Nov 2010, yam yzf wrote:

'Some people do better in life than others - some through hard work and sacrifices to their personal life and others through people they know and sometimes through pure luck eg winning £113m on the lottery.'

Some people do better in life by standing on everyone else.

Some people do better in life simply by being greedy.

Apparently, it is ok to get angry at cheats unless they are exteremly successful -then it is simply envy!

50. At 2:09pm on 01 Nov 2010, sandy winder wrote:

"Comparing the head of a FTSE listed PLC with the manager of a small shop or small company is like comparing Steven Gerrard with someone who kicks a ball about in a village football team."

Hereford United 2 Newcastle 1
FA Cup third-round replay, 1972

Wages don't always show value.

56. At 2:50pm on 01 Nov 2010, Turbulent_Times

...but turbulent - don't confuse high wages with hard work - I used to arrive before the CEO of my last company and leave after him - and he spent every Wednesday afternoon on the golf course!

He was a CEO of a FTSE 100 company - he did it for a bit, decided to move on and got a big fat payoff.

Where's the drag in that?

What about the SME's who's business success has a lot more riding on it (like their house for example)? Now that's an unforgiving world, hard work and massive risk - and they don't earn the salaries of the FTSE 100 'club'.

61. At 3:20pm on 01 Nov 2010, virtualsilverlady wrote:

"Which brings be to the public sector........

History has shown that the public sector doesn't sack their top people for incompetence they just pay them off and they move to another top job somewhere else. Oops! Forgot. That's the private sector too."

Very good you made that point virtualsilverlady - maybe the split should be 'upper sector' and 'lower sector' to reflect the split of wages across both public and private.

...and there we have the class system, as defined by Marx.

Excellent stuff. The 'New Industrial State' may not be so 'new' but has clearly gone from strength to strength. It's very easy to talk about 'fat cats', 'greedy executives' and a corporate class awarding itself exorbitant renuneration way beyond anything that can be justified by hours worked, years of service, expertise and levels of responsibility but they are only acting rationally, if not quite ethically, according to the business system they inhabit.

As J K Galbraith was at pains to point out ('Economics And The Public Purpose') one way to address the problems of inequality within the private sector, between what he termed the 'planning system' of large, listed and often multi-national corporations and the 'market system' of smaller, largely proprietary firms - the SMEs, if you will - is for government to pursue policies and implement regulation that improves the market power of firms in the market system. David Cameron has just given this notion a nod with his averred intention to make it easier for small companies to bid for and win public contracts.

Something else that might help smaller firms is a better framework for them to receive payment for goods and services delivered to their corporate customers. After all, what most SMEs want is, not only people purchasing their products but also a healthy cash flow - which requires customers who pay on time. Would it not then be possible to give corporate customers to SMEs an incentive to pay promptly by, say, having a time limit for payment beyond which interest on the bill becomes payable to the SME?...It's just a thought.

64. At 3:34pm on 01 Nov 2010, Qasim wrote:

"Were all missing the vital point, these companies are owned by shareholders. If they wish to pay these high wages so be it. We can't tell people how to run their businesses. If they don't look out for the interests of THEIR company, then they are the ones who will loose out when the company makes losses or goes under."

Post 27 and it will explain all.

...and how many of Northern Rock's board 'lost out' when the bank collapsed?
...how many of RBS's board 'lost out' when their bank had to be rescued?

If that's 'losing out' - then please let me lose every single time!

73. At 4:17pm on 01 Nov 2010, Lindsay_from_Hendon wrote:

"- John, try reading the article before posting. See:

"The big finding is that the majority of directors across the private sector received a pay cut in real, inflation-adjusted terms in 2010."

Lindsay - try realising that's because inflation was at a high level and that this was this year - what about the 20 years before that?

up, up, up, up...

Didn't you discredit yourself by suggesting that the housing market is 'optmistic' but admitting that nobody can get a loan - making the optimisim like having a bell in a vacumn?

...or haven't you looked back to see me reply?

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None of the bemoaning going on here is going to change anything. CEOs in FTSE or multinational companies as was previousaly noted on a previous blog are equally quickly dispached if other senior board members or investors do not like their performance. Very few are in the job for a long period of time they are either "let go" if they dont perform or if they prove to be good "headhunted" by other companies. People like Sir Terry Leahy at Tesco, or Sir Martin Sorrell at WPP are a rareity. As such this creates the football wage culture as well as the hire & fire culture we see in premier football managers.

Im not a CEO at a FTSE company and certainly dont earn the salary & bonuses they earn but as a CEO of a US group European & African units spend vast amounts of time away from my family and endure constant stress to perform in an unrelenting manner not just for shareholders but to maintain & secure the livelyhoods of the employees. A 9 to 5 is completely unknown to me and receive call sometimes in the middle of the night. Add in Legal & H&S and the risks associated with your own personnal standing and life as a CEO is not all a bowl of cherries with summer homes, boats & planes as some would have you believe.
Generalising is dangerous, ignorant & demeaning some with their vile comments here should think a little first.

74. At 4:21pm on 01 Nov 2010, yam yzf wrote:

"No, we have one company owning a lot of shares. The people in the pensions that the said sharefolder administers have no shareholding."

...which was bought with the pension holders money!!!
So what I said was correct then - thanks for qualifying that.

"Or perhaps the envy that is really apparent from a number of posters here is that of the "achievement, or possession and either desires it or wishes that the other lacked it" ?"

...? - what are you on about? Of course it's a little frustrating when we pay idiots highly to run our banks into the ground. Most of us would not expect to get paid if we did a bad job - if that's not grounds for envy then I don't know what is.
Maybe you just like tobe made to feel inferior to others who have no apparent worth?

"Some people do better in life than others - some through hard work and sacrifices to their personal life and others through people they know and sometimes through pure luck eg winning £113m on the lottery. "

...but for most people their chances of doing well are limited by the fact that finite resources are already allocated to others .....so they can waste them.

You make your own luck in life - you don't make your own chances.

81. At 4:45pm on 01 Nov 2010, Ian wrote:

36. At 1:09pm on 01 Nov 2010, writingsonthewall wrote:

"I’m not sure you realised this yet but you have just proved my own thinking here to boot. Thanks for that.

To expand slightly, the human nature is indeed capable of the most beautiful acts (to use your example of Linda Norgrove) as well as the most evil (have you been to Auschwitz?). We are all somewhere along that scale and some of us will have impulses towards civilisation (live peacefully by the rules) and others will have inclination towards power. If left unchecked, those with impulses to power invariably take over (Napoleon, Stalin, Hitler and countless others). This was excellently brought to life in the Lord of The Flies and I believe a number of studies proved that to be the case."

...but you said greed and selfishness was human nature - well did you or didn't you? Your justification for there not being a revolution is because the natural greed and selfishness would result in some form of totalitarian regime.
I have taken your starting premise and demonstrated that there are people who are not selfish and greedy - but you say this proves your argument?

"Moving the thinking a step further towards your favourite subject - even if the (discredited now, I believe) idea that all children are born with clean slate is true their parents are not so they will, necessarily, be brought up under “wrong” conditions. You could, of course, remove them from the family and place en masse in indoctrinating institutions..."

Discredited? - by who? - by you? How can a child where the brain isn't developed until so many weeks be born with greed and selfishness (as you suggested)?

"As you love writing about contradictions, there you go, an inherent contradiction in your theory – you want to get to your Nirvana quickly (as you keep saying there is no time), via revolution, yet you are going to have a huge chunk, dare I say a majority, of population unready. Now – that’s some dilemma. What do you do with them...?"

I didn't say I wanted to go quickly, I said events are likely to make it so. You don't seem to read to well my friend.
To prepare these people they will need to be educated - which was the previous point I was making - capitalism has ensured we will have worse education now, not better - making the situation you describe as worse, not better - now who did that? me, or Capitalism?

"I’m not going to expand about the need you identified earlier to educate that in itself takes a long time. How do you reconcile that with revolution (happens very fast)?"

Revolutions occur when there is a rapid awakening, you could avoid this through education - but the lack of education means there is more likely to be rushed events - which of course may well lead to totalitarianism.

However, again, I ask you - who created that situation? Me, or Capitalism?
"within the system of capitalism itself it holds the seeds of it's own destruction"

"Contradictions, contradictions everywhere. And then you marvel that some bearded agitator was able to prove contradictions in the system as complex as Capitalism…"

There are no contradictions here - they are in your mind.

Children are not born greedy or selfish
Capitalism encourages and nurtures selfishness and greed
Crises of Capitalism stifle education
Lack of education leads to revolutions (in times of Economic crisis)

What's contradictory?


"(My last writings on human nature, I promise, from now on I will only cross-reference to this post.)"

I bet you do.

85. At 4:49pm on 01 Nov 2010, Ian wrote:

38. writingsonthewall

"You are quite right, we appeared on this Earth from the planet La La, all ready-made and, of course, completely unrelated to any living creatures here."

How many 'animals' are aware of their own demise (environmental impact)?
How many 'animals' kill for fun / greed / emotions?
How many animals pass their knowledge from one generation to the next?

Still think you're an animal?

I didn't say we were unrelated - I said "this is not common behaviour amongst humans."

I really think you shoudl take more time to read before replying - we all get a bit excited on here, but you need to at least stay in the same ball park.

96. At 5:10pm on 01 Nov 2010, jeffa4444 wrote:

"None of the bemoaning going on here is going to change anything. CEOs in FTSE or multinational companies as was previousaly noted on a previous blog are equally quickly dispached if other senior board members or investors do not like their performance. "

..yes with a lifetimes salary as a pay off - hard times.