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Cameron’s politics of envy Says David Cameron:
Government can’t tell people what they should be paid but…
His excuse for meddling is that there has been a “market failure”, as indicated by a Guardian article that says that FTSE 100 directors’ pay increased by 49% last year. And that is not right. People just will not stand for this sort of thing. What about the shareholders? The board should be forced to let them vote on pay and termination packages, he thinks, otherwise it is just crony capitalism and stealing from shareholders.
It is perfectly obvious that all of this is factored in to the share price already, and perfectly obvious that there are no principles on display here. From Cameron’s Tory party we get the same envy politics as from the other parties. But I repeat Perry.
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I was visiting friends tonight and happened to catch Cameron on a BBC program called “Countryfile” working a similar sort of line …i.e: We need to keep industry working, but… we need to be Green! Green! Green!.
(vomit!)
Even allowing for him saying that to make himself appear not too rightwing and so to fit in with the enviro-propaganda line of the BBC program, what it really did was spotlight how much of a limp cardboard EU bureaucrat of a politician he truly is.
My last comment should have included the sentence after “(vomit!)”:
“Cameron was blatantly trying to say two opposing things at the one time!”
I’m sure whatever the government is considering will be ineffective and counterproductive but I actually agree with the underlying issue.
In western countries the executive class has taken to looting public companies at shareholder expense. Correcting this is really the shareholder’s responsibility, not the government’s.
Certainly I vote against lavish stock option packages at every opportunity, but most shareholders are fairly passive investors. This has allowed a cadre of executives sitting on one anothers boards to oversee an astonishing escalation of executive compensation over the last couple of decades.
Shareholders would be well advised to realize their interests need to be actively defended as well.
And government subsidized high speed rail lines are not crony capitalism, of course. Look away, nothing to see here!
If he has a real issue with what people are being paid, he might like to consider that the UK is increasing its foreign aid to Nigeria by 116% over the next 5 years to £300m per annum.
Meanwhile, Nigeria pays each of its 109 senators just short of $1.7m per year as an official salary plus allowances. And they have been asking for a pay rise to $2.2m per year.
Undeserved monies, indeed.
Yes, it should not be any of the governments business what an enterprise can or cannot get away with as long as they don’t break the law regarding theft or fraud, lies, etc.
But I must say the high pay outs and salaries have left me pondering the lack of consistency with reality there, and thus to wonder what is distorting the natural ebb and flow of exchange.
There must be built-in protections and subsidies that enable such distortions of reality and whatever they are, those false protections are the issues that need addressing.
And yes, morality seems to be the last refuge of the politician when discussing an issue.
One has to wonder what Cameron is really after.
If he were looking for a more honest target the high speed rail line Wh00ps mentions would be a good suggestion.
What shareholders?
See my comment on the above post.
The facts are simple enough.
Company performance has not improved much (if at all) over the years. Indeed many companies have been driven to bankrutpcy (or government bailouts) by mangers who have walked away with millions of Pounds.
After the collapse happens the share price does indeed collapse also – but that is only reflecting what has happened. A share price collapse after a company has hit the rocks does not prevent the drunken captain driving the company on to the rocks (he does not own the ship – and he gets millions of Pounds even if it sinks, so he could not give a toss).
Of course indiviudal shareholds (if they owned enough to make a difference) would be on the look out for bad policy.
But most shares are owned by pension funds (and so on) and they are interested in the end of year measuements – if things look good in the end of year accounts, then it is a big bonus for everyone.
The fact that these rosy accounts for the end of the year have been produced by destroying the long term prospects of the company may well escape their notice.
Why should they be interested anyway? A pension fund manager has a vast number of companies to look at – even if he was interested in more than the end of year accounts it would be impossible for him to really understand the long term business of all these different companies.
He (or she – whoever happens to be sitting at the pension fund desk that week) can not be expected to be as interested as people who actually OWN (themselves) a substantial part of an enterprise – and who are concerned that it says in business for their children and children’s children.
And, I repeat, one CAN NOT know as much about hundreds of different companies as one can know about one company.
Top managers pay (and PERKS) have exploded – whilst company performance has not dramtically improved (to put it mildly).
Do I support Mr Cameron’s plans?
No – they miss the point (the point being the decline of individual and family shareownership – because of such things as inheritance tax and capital gains tax) – and YES they play to envy.
But pretending that nothing is wrong is sticking one’s head in the sand.