Nothing over a million dollars

Those who cannot imagine how those in the future will see the present, doom that future.

Gulliver reported his Travels to the lands of the little people, the big people, the mad scientists, the tragic immortals, and the Yahoos. He did not report on his visit to the 21st century. We don’t know his comments on our economics. But we can guess.

Many bright sparks have suggested solving the economic woes of many countries by giving to them the surplus of any income paid to directors of all financial institutions over one million dollars.

The immediate response to this is that the CEO and directors would then flee any taxing countries to nice taxless havens. The answer to this is - breathless - let them flee.

None of them would be missed. Our own country is full of people who could be content to be CEOs with incomes of less than a million dollars. With such low incomes they would be more likely to see the world as it is, and consequently their banks would be less likely to need bailing out on occasion.

There is no doubt that present incumbents would try and wriggle to get out of paying such a super tax. Their antics could be made public.

The bankers have used their powers so badly that they lurch us into peril rather than saving us from it. It is not a habit just acquired. We might imagine so, with the present government bailouts so huge and so international, but it goes right back to the 19th century if not before. It has just got worse.

“The power of the bankers must be wiped out. The have used their powers so badly that they have shown they are not safe custodians of the money and credit of the country.” That was Lord Beaverbrook in 1932, continuing a fruitless fight from “the deflationist twenties to the squeezes of the sixties”, arguing that the government should control the banks and not the other way round, since bankers did not know the signs of the times. Like Scrooge McDuck they wore blinkers made from their own incomes. (Michael Foot, Debts of Honor, 1981 p76) (transposed because Beaverbrook did not mention Scrooge McDuck).

Criticisms are even more justified today, because the salaries and bonuses of the financial leaders bear ever less relation to the wages of the people, or even to the wages of their own employees, to the detriment of morale and productivity.

Their incompetence is shown by their very acceptance of such large discrepancies. A quick guide to the likely incompetence of a CEO is those of them who willingly receive an income more than 20 times that of the average of other employees.

This makes them incompetent because they are unaware of the most obvious situations in the world in which their company must operate. Their decisions are also likely to be wrong because of their bias - which is greed. What do they need so much money for?

Will people lose all ambition because a million dollars a year is all that they can earn - and no more?

Those who are paid more for moving money around are unaware of the widespread effect of their examples. They help to rot the fabric of soceity, from those who have the potential power to enrich themselves, such as politicians, to the working-class gamblers who lose their pay for the sake of a million-dollar hope. Even in Australian universities, which are struggling financially, because a professorship means a higher income, there are far too many professors.

Most people are blinded by acceptance of the status quo. They look at those who criticise high incomes, and cry politics of envy. Some cry “good on those at the top, if they can take what they can”. But once we position ourselves in the future and look back to today, we will be amazed at what at present is accepted. Where is Jonathan Swift? The answer is that our business pages are written by Gulliver himself.

The argument for paying directors more than a million dollars a year and a hundred times more than their workers is that they deserve it for the good job they do, that very few others are equipped to do.

This argument has been demolished in the fall of their reputation.

The argument that people at the top of a business dealing in billions of dollars deserve more than a million dollars in pay is a fallacy. They work no harder, achieve no more than thousands of other men and women do. Rulers of nations are paid less - unless they run a kleptocracy.

Banks and utilities have a nature and function to serve the people which are qualitatively different from all other companies. That function should be first in their priorities, by law, with profits for shareholders and directors secondary and modified accordingly. William D Cohan, the American commentator of “On Wall street and main street” remarks on “all reward, no risk”.

For the life of me, I can’t figure out why Wall Street bankers, traders and executives get paid so much money year after year for doing jobs that rarely require them to innovate, enlighten or put their own capital at risk, and have the nasty habit of periodically sinking our economy.

Since the big banks have the function of borrowing abroad in order to lend at home, there may even be a way for domestic businesses to borrow straight from abroad and bypass banks.

The argument that those at the top of firms must be paid special incentives to give their best and keep them from flitting implies that they are venal, without any nobler motives such as the satisfaction of building up a good business, the service of the public, the use of one’s talents, the respect of others, the enjoyment of good work company, and the welfare of employees.

What do they do with their pay for themselves? Investing in property is one antisocial way, because it raises property prices and keeps out others who cannot afford it. Investments in art raises the prices for national galleries. Some fraction of income is spent on signs of status such as tagged handbags. They can join the jetset as outstanding consumers of the planet. The proportion of their income spent on philanthropy turns out to be a fraction compared with the proportionate giving by the poor, or middle classes.

Whatever way you look at it, the salaries and bonuses of the super-rich are not a good argument for the democracy we try to peddle abroad, or for the finger-wagging at African kleptocrats.

Come now, imagine you are able to nobly reject an income of more than a million dollars. How will you spent the million dollars you have left? We should set out a supposed budget for these rich people. It could help bring their view of money closer to the real world.

And that would be a good thing, when they are pondering how to foreclose on farmers and people who have lost their jobs.