Yesterday we learned that UK company directors managed to screw the public, the shareholders, and the people working in the companies they direct by getting awarded pay rises amounting to 50%. Chief executives (who do a little bit more work) managed to grow their pay by 43%.
Of course the unions were up in arms, but this is bad enough that even the Tories are a little uncomfortable with the repugnant greed, and David Cameron has called for “transparency” in the boardroom. Whatever that means – after all we know that these guys are greedy pigs, what do they need to be more transparent about?
The likelihood of any company board paying the least bit of attention to a polite request to act with restraint is about the same as the chance of a snowball in hell lasting more than a minute. After all these people are quite happy to be known as greedy pigs … they have spent years and sometimes decades working themselves into a position where they can make themselves repeatedly sick eating from the trough of the economy.
The CBI on the other hand has trotted out the tired old excuse of having to pay salaries sufficient to attract the best in the world.
Which is true to a certain extent (although I doubt that every company director – many of whom do not work full time – deserves quite as much as they get), but is not quite the whole story.
Every year it seems that the top-level executives see at least double-digit income growth, whilst people who actually do real work see far less than that. Over time it leads to an increasing gap between the income of the richest and the rest of us. This is normally phrased as a gap between rich and poor, but that is just as wrong as ridiculously high salaries. It isn’t a gap between rich and poor, but a gap between the richest 1% and the rest of us.
Conventionally we accept these sort of things because superior company directors are supposed to ensure that companies become healthier and more profitable, causing the economy as a whole to become healthier with more resources to spread around. In other words the rich get richer, and so do the rest of us. But this doesn’t seem to be the case.
Sometimes we forget what an economy is for. It isn’t to make the rich richer, but to ensure that all the population get a share of the wealth so they have enough to eat, a place to live in, etc. If there are people who do not have enough to eat, have trouble affording energy bills to heat their homes, have inadequate homes, or lots of other “issues”, then the economy isn’t working properly.
I do not know of an easy fix for this, but we do need to start looking into fixing things so that we all benefit from the wealth created by the economy. And in such a way that the wealth isn’t frittered away. It doesn’t mean total equality – those who contribute more should get more out of the system, but we have a broken system at the moment that doesn’t actually reward those who contribute more properly – it only rewards the wealth creators.
Now genuine wealth creators do deserve to be rewarded more than those who do not contribute so much. But they should not be rewarded excessively when everyone else is suffering (to a greater or lesser extent).
One thing that might help is a way of taxing bonuses and golden parachutes in a way that takes away money from those who just manage to get good contracts, but leaves more money with those who really increase wealth. If for example, we start with a base rate of 50% tax on all bonuses and golden parachutes greater than the average yearly salary. That percentage goes up to penalise those who have not increased profits and have lost jobs, over the last 10 years, and the percentage goes down to those who have created jobs and increased profits over the last 10 years.
Oh! And one last thing. Not all rich people are greedy pigs. On a day when Jimmy Saville has died, it is well to remember that he gave away 9/10ths of his pretty large income.