The Great Pay Robbery

[thir]

I found this article in the guardian.co.uk, Mondy 23 January: Only a maximum wage can end the great pay robbery

It concerns the income of corporate exexcutives.

"The successful bank robber no longer covers his face and leaps over the counter with a sawn-off shotgun. He arrives in a chauffeur-driven car, glides into the lift then saunters into an office at the top of the building. No one stops him. No one, even when the scale of the heist is revealed, issues a warrant for his arrest. The modern robber obtains prior approval from the institution he is fleecing."

"Over the past 10 years, chief executives' pay has risen nine times faster than that of the median earner. Some bosses (British Gas, Xstrata and Barclays for example) are now being paid over 1,000 times the national median wage. The share of national income captured by the top 0.1% rose from 1.3% in 1979 to 6.5% by 2007."

"These rewards bear no relationship to risk. The bosses of big companies, though they call themselves risk-takers, are 13 times less likely to be sacked than the lowest paid workers. Even if they lose their jobs and never work again, they will have invested so much and secured such generous pensions and severance packages that they'll live in luxury for the rest of their lives. The risks are carried by other people."

" As the writer Dan Pink has shown, it's not just that there is currently no visible link between performance and pay; but high pay actually reduces performance. As studies for the US Federal Reserve and other such bolsheviks show, cash incentives narrow people's focus and restrict the range of their thinking. By contrast, intrinsic motivators — such as a sense of autonomy, of enhancing your skills and pursuing a higher purpose — tend to improve performance."

"The second reason is that, as the psychologist Daniel Kahneman has shown, performance in the financial sector is random, and the belief of traders and fund managers that they are using skill to beat the market is a cognitive illusion. A link between pay and results is a reward for blind luck."

"So what should be done? The UK government imposes a minimum wage, and even the neoliberal coalition appears to accept that this is a necessary intervention in the market. So why should it not impose a maximum wage?"

http://www.guardian.co.uk/commentisfree/2012/jan/23/george-monbiot-executive-pay-robbery

[denuseri]

Spot on thir!

We have a minimum wage why not a maximum one too?

[Ozme52]

I have to agree. In fact... pay them nothing and tie their compensation directly to the dividends they pay out to the owners, i.e., the stock holders.

Disallow them ownership of any stocks, except as blind trusts, to insure the actions they take are profitable and longterm rather than something that moves the stock price at the cost of longterm viability.

[IAN 2411]

Why is it that everyone is upset by high wage earners? Okay a good 60% don’t do anything to earn their money, or so I am led to believe by anybody that has a grudge against the rich or have a debt crisis of their own. Bankers; and let’s take RBS,s top man as he seems like a rich man, and by the sounds of it he will be £1.5 million richer if he receives his bonus, which I am in no doubt he will. Since he took over from Sir Freddy Goodwin that took the bank down, the one now has restructured the bank and closed all the holes so that money cannot leak out anymore.

The bank earns now in the region of £5-10 million a day and only due to his organisation. He was taken on under a contract that all RBS bank Chiefs sign, and he has a large salary with a bonus to match. The bank might be owned 80% by the British tax payer but even the Government have to abide by the binding contract. This guy in one year has turned a bank around from £ billions lost per year to £ billions profit. If he had not done so he would never have got the bonus. Yes it is a disgustingly high bonus, but if any of you were him I would not be having this conversation with you.

These guys work in telephone numbers compared to our tiny wages, but the opportunity is there for anyone that can make billions of £s on the scale some top wage earners do. There is a way to stop their high bonuses and that is to vote it out at the next shareholders meeting, but who the hell is going to cut the throat of the person that is keeping share prices high and giving them a large dividend.

By the way I live on a pension, I am not rich but comfortable, but I worked for it. I have always lived on the principle that if I have not got the cash to spend then I will not buy it. Everyone is blaming the banks for the mess Europe is in, but it is the individual person spending plastic and living above their means that the debt accumulates from. People with bank and credit cards are normally irresponsible, they might not start that way but greed and wanting what their neighbour has does strange things to the brain. If it is not in the bank then why spend the banks money, and just because the bank allows you to that does not mean you have to.

[Maximum wage] The people that vote for that will want a police state next, and then secret service looking over everyone’s shoulder to see who is breaking the law and paying too much. Then again didn’t the Russians try that and look at them now, because they are more capitalist than the capitalist West. Bloody hell, that’s us.

Be well IAN 2411

[IAN 2411]

http://uk.finance.yahoo.com/news/rbs-awards-ceo-share-based-194200978.html

I was only half a million out...but then if i was earning £3.5 million a year i would not be to botherd either

Be well IAN 2411

[lucy]

The problem with exorbitant wages and bonuses is that it attracts crooks and drives away good people. Financial incentives does that. In the long run it's not even in the interest of the company. *nods*


Corporate scandals are reflected in excessive top management compensation and fraudulent accounts. These scandals cause an enormous amount of damage, not only to the companies affected, but also to the market economy as a whole. As a solution, conventional wisdom suggests more monitoring and sanctioning of management. We argue that these efforts will create a governance structure for crooks. Instead of solving the problem, they make it worse. Selfish extrinsic motivation is reinforced. We suggest measures which clash with conventional wisdom: selecting employees with pro-social intrinsic preferences, de-emphasizing variable pay for performance and strengthening the participation and self-governance of employees. These measures help to increase intrinsically motivated corporate virtue and honesty.

Margit Osterloh
Bruno S. Frey
Corporate Governance for Crooks? The Case for Corporate Virtue (http://ideas.repec.org/p/zur/iewwpx/164.html)

[denuseri]

Why is it that everyone is upset by high wage earners?

We aren't...we are upset over greedy dishonest and irreparably corrupt assholes who have been robbing the people blind every chance they get.

Okay a good 60% don’t do anything to earn their money, or so I am led to believe by anybody that has a grudge against the rich or have a debt crisis of their own.


Or by academic statistical studies that prove it.

Bankers; and let’s take RBS,s top man as he seems like a rich man, and by the sounds of it he will be £1.5 million richer if he receives his bonus, which I am in no doubt he will. Since he took over from Sir Freddy Goodwin that took the bank down, the one now has restructured the bank and closed all the holes so that money cannot leak out anymore.

Good for him, give him a cookie, a pat on the back, a job well done Sir, a small bonus...something under a million dollars and lets give the rest to the people who need it, rebuild some infrastructure, give some people good paying jobs.

There is a way to stop their high bonuses...

Yep make it illegal!

By the way I live on a pension, I am not rich but comfortable, but I worked for it. I have always lived on the principle that if I have not got the cash to spend then I will not buy it.

To bad AIG and all the other speculators(who by the way knew plenty in advance that the whole house of cards was going to fall and fall big) didnt follow your example then.

Everyone is blaming the banks for the mess Europe is in...

Because it is their fault we are in it. When they mark loans up and fix credit as they please even when they know better and then bet against the person they loaned the money too so as to maximize their own profit... when the guy cant continue making payments because they lied to the poor sob who believed them to be telling him the truth...who is to blame? ...the greedy banker asshole speculators are to blame and the big corporations are right there with them and useing all their power and influence to continue taking advantage of the system and someone needs to stop them.

[IAN 2411]

We aren't...we are upset over greedy dishonest and irreparably corrupt assholes who have been robbing the people blind every chance they get.

Now let’s get something straight here, are we talking about the banks or the middlemen between you and the banks? Are you talking about the corporate boss that pockets the odd million every year while the other members of the board pick up say half a mill each? Then while this is taking place the poor old worker is on a low or minimum wage. Now if it is the latter I think that if either you or I were head of that corporation we would be doing the same. Why, because we would then be them, and not us.

How can the banks rob you as a person if you are a saver? Even if you are a borrower in the UK the bank interests rates are set by the Bank of England. The person that is pushing the mortgage interests up is the lender and very few banks in the UK lend money for mortgages. It is also the building societies that are telling the lies so they can get your hard earned cash not the banks. It might be different in the USA but the interest a person pays the middlemen is the killer.

Banks do not foreclose on mortgages, money lenders foreclose on mortgages of people that speculate that they will always be in work to pay the mortgage.

Banks do not send debt collectors to your door, it is companies that do that for the goods you bought without paying. Once again, it’s living above your means or on plastic credit, speculating that you will always have enough money to pay at the end of the month.

Banks do not close companies, bad management and over investment does it for them, once again speculation.

WoW!!! That speculation is all around us, so AIG is not alone after all.


Good for him, give him a cookie, a pat on the back, a job well done Sir, a small bonus...something under a million dollars and let’s give the rest to the people who need it, rebuild some infrastructure, give some people good paying jobs.

Get in the real world denu, the bank is a business and there to make money. I would also like to point out that a bonus is a gift of appreciation from board members. It comes out of their premiums and not out of further profit.


There is a way to stop their high bonuses...

Yep make it illegal!
That’s a good idea then we can get a few clowns in to work for peanuts and then watch your money disappear even faster.


To bad AIG and all the other speculators(who by the way knew plenty in advance that the whole house of cards was going to fall and fall big) didnt follow your example then.

Come on denu they are speculators and that is what they do speculate, it’s only a little safer than betting on horses. I am not an investor or a speculator that’s why I still have my diddly-dosh.

Everyone is blaming the banks for the mess Europe is in..
Because it is their fault we are in it. When they mark loans up and fix credit as they please even when they know better and then bet against the person they loaned the money too so as to maximize their own profit... when the guy cant continue making payments because they lied to the poor sob who believed them to be telling him the truth...who is to blame? ...the greedy banker asshole speculators are to blame and the big corporations are right there with them and useing all their power and influence to continue taking advantage of the system and someone needs to stop them.
No in the UK that is the Bank of England ...a government run machine. The two banks that were taken down and were bailed out by the Government in the UK, bought other banks that had hidden debts. That was not speculation it was not doing their homework.

Be well IAN 2411

[js207]

If we want the government to start cutting into excessive pay at the top, how about starting with itself? The head of the tax-funded BBC is paid £800 000 a year, plus extravagant perks and a gold-plated pension. The head of Royal Mail pocketed huge bonuses - under the last, Labour, government, while cutting services and jobs. Not to mention the MPs paying themselves "expenses" which would be illegal for any private company, millions of pounds a year in subsidised meals - then had the brass necks to complain when they had to start providing receipts for some of their expenses claims, and the taxpayer was "only" paying 85% of their personal mobile phone bill rather than the whole lot! Many of them had been committing outright fraud; a few went to jail (then expected us to pay for their lawyers, too) but most got away with just returning the ill-gotten gains.

As for the EU's mess, a large part of that was governments spending beyond their means, binging on cheap credit then being unable or unwilling to pay when the bill came. Ireland had a housing bubble, which crippled their economy in the short term; Greece had a structural problem of government profligacy, a financially disastrous Olympics... it's the Greek government that was lying (fiddling the figures to get into the Euro), the banks are the ones being left out of pocket since the Greeks are now reneging on their debts. Of course, the Greeks just get violent when asked to carry some of the burden they're trying to shift onto the rest of us.

To make matters worse, the system has always been that if I lend your company or government some money, I can take out insurance against you not paying, known as a "credit default swap". The Eurozone governments have just discovered that if the insurance has to pay out on Greece's bad debts, it'll break the insurance companies as well - hence the need to find loopholes so that Greece can skip paying its debts and the insurance companies can dodge their obligations as well.

As with the banks, the governments seem desperate to avoid using proper bankruptcy proceedings to wind up the failed Greek government and failed banks ... as always, there is no limit to how much of our money they will spend rather than admit failure!