Why are there bonus points in bashing bankers?
February 9, 2009I have to say I’m struggling to understand the calls on the Government to follow Barack Obama’s move and cap banker’s bonuses and even salaries.
Yes, bankers the world over were too reckless. Yes, that recklessness has been a big contributory factor in the credit crunch and the recession which has followed. Yes, the attitude of recklessness needs to change before these problems can be fixed.
But it is not, emphatically, powerfully not, the Government’s job to set wages to that end. Government is very bad at things like wage setting. It defeats market forces, it’s anti-competitive and it will force the brightest and best out of the British market.
We all now own massive stakes in some Britain’s biggest banks. I want the very best people at the top of RBS, Lloyds and Northern Rock sorting them out. We’ve already lost billions off the share prices and we need that investment back.
But the best talent comes at top-dollar prices. The market determines what the CEO of a bank is worth and the UK Government has no place even trying to do it.
We don’t have to like seeing big bonuses and staggering wages paid to big bankers. As the owners of some of the biggest banks, we can call on the Government to sack under-performers.
But we can’t stop them operating in the market and that means the people in the board room have to have the final say on salaries in the company. At the moment, it looks like the Government understand this and that cannot change.
