Public Say No to Porker Capitalism

Everything has its price - capitalism eats itself!

The last week has seen executive pay high in the headlines in Britain again as we saw first the damp squib of the Con Dem government's supposed assault on overpaid corporate bosses followed by the same Government's decision to allow a bonus of nearly £1 million to be paid to Stephen Hester, the head of struggling state-owned bank, RBS. With both their report and Hester's pay, they resorted to their faux calls for responsible capitalism and for him to "do the decent thing" and hand the money back. Needless to say, there is no sign of either on the horizon.

Repeatedly, all three main parties have taken part in a mindnumbing dance of twisting and turning on executive pay. They all condemn the huge disparities in pay awards - nearly 50% increases for directors and senior managers in the FTSE 100 this last year in spite of the same bosses insistence on pay restraint among "ordinary" employees. They rail against the soaring ratios of 500:1 and higher in the top to bottom pay in some companies - a far cry from the 10 to 1 ratio seen as the "acceptable face of capitalism" back in the 1950s, not that that face showed itself quite as often as some apologists of reformist capitalism like to fondly remember.

And yet when it comes to action, they all baulk at anything effective. The furthest the Government has gone has been to propose an exceedingly modest increase in shareholder control over executive pay; but nothing on punitive taxation of bonuses; nothing on giving workers a say on the remuneration boards of big companies; nothing on squeezing down the immoral and outrageous inequalities in pay in spite of the spiralling social misery and potential disorder this is creating. In spite of their failure to pay fair or even any tax and their track record of business failure and short-sighted greed, these people, the politicians argue, are too valuable to risk them leaving Britain.

Fortunately, the public do not agree.

An opinion poll published by ICM today shows that only 7% of the public believe any executive should be paid more than £1 million. Just 1% - one per cent - of the 2,003 people surveyed agreed that the very top executives currently earning £4 million per year are worth it. Two thirds want to see workers on remuneration committees - an option ruled out last week by Business Secretary Vince Cable on the bizarre grounds that where companies have employees working overseas, it would be too difficult for them to elect representatives to sit on these bodies. Risible to say the least.

So in spite of the clear antipathy of the public to the eye watering inequalities in pay, none of the main parties offer any political action to tackle these effectively. Meanwhile, of the parties "bubbling under" in national opinion polls, only the Green Party commits itself to taking mandatory action on pay.

Three years back, I was involved in a Green Left proposal to the Green Party of England & Wales conference to set a maximum pay rate as well as the current minimum wage rate. At that time, we suggested £150,000 p.a. - roughly ten times the living wage rate. The proposal received significant support but fell short of being passed. The following year, however, the Greens adopted a policy that commits them to statutory measures to enforce a ratio of ten to one between the highest and lowest wages within any company or organisation; and the party is committed to higher tax rates for higher earners, with an emphatic endorsement of progressive taxation.

So for progressives, there is a genuine option for action on pay inequality. And as "The Spirit Level" report by Wilkinson and Pickett showed, a more equal society is one where there is much less crime, better health, stronger communities and higher levels of happiness. It also paves the way to a more sustainable fostering and use of resources at a time when many of the most basic are under increasing pressure. So everyone would benefit.

Meantime, under the Old Grey Parties, Britain remains firmly set on a course towards social disintegration. Austerity and authoritarianism are the watchwords of our gradually more and more embattled elite as it seeks to suppress rather than resolve the despair of the squeezed majority. Like the ancient Spartiate nobility in its decline, terrified by the growing resentment of its helot underclass, British capitalism is teetering over the abyss between chaotic collapse and social fascism.

Another news item today, on the BBC website, highlights that in Papua New Guinea, the price of a bride is four pigs. Checking the current price of adult saddleback pigs in Britain, the monthly pay of someone on the national minimum wage is worth less than two pigs - and of course that falls to zero when compared to the cost of the greedy porkers sitting in the boardrooms of "broken Britain."

Trickle down economics - from The ConDem Effect

Tilting At Windmills - the Imaginary Crusade of Vince Cable

Con Dem heavyweight, self-styled "free radical" Vince Cable, Britain's Business Secretary, today unveiled his much touted crusade against crony capitalism and grasping executives. After a 4,000% (yes, four thousand per cent) real terms increase in the pay of the FTSE 100 executives over the last 30 years, quite a few of us have suggested for a while now this was more than past the time to take real action.

Let us briefly remind ourselves of how Vince's mate, Nick Clegg and his boss David Cameron trailed this latest Con Dem initiative.

Cameron talked of the executive pay merry-go-round of Directors sitting on each others remuneration committees and of "market failure" as top pay rocketed by 33% in one year, while corresponding company share values rose by only 24%, and ordinary staff pay by somewhere less than 4%. On 8 January, he promised real action - no gimmicks - in creating "responsible capitalism".

Clegg, meantime, promised to "get tough"on the abhorrent levels of executive pay back in early December. Like Cameron, he wanted shareholder power to be given legal status to ensure that company AGMs could vote down excessive pay awards (at the moment, such votes are not binding) and similarly he complained about the "I'll scratch your back if you scratch mine" arrangement of mutual participation on each others remuneration committees.

So, finally, today, Vince the Crusader unveiled his heavy hitting package of regulatory reform as he fearlessly TOOK ON the pirate captains of British industry:

ZAP!: shareholders will be allowed to have a binding vote on executive pay, if they ask...
POW! : shareholders may also be able to "demand more clarity"on executive pay deals...
KERCHANG!: Company boards are to be "more diverse" by ensuring that two people on each board should not have been board members before...
BLAM!: the views of ordinary staff should be "taken into account" if they ask for them to be..although Vince pointed out that this is already the completely ineffective and almost entirely disregarded law in large companies...
WHOOOOSH!....er...er...well, that's it really...

Cable's Crusade - the mask slips....

So much for the great assault on crony capitalism. The new shareholder right to have a binding vote is not unwelcome, but given the massive logistical difficulties of anyone wanting to communicate with and organise a majority vote among the shareholders of these huge companies, it is hardly likely to set the heather on fire. On the BBC tonight, Cable admitted that "no (executives) will be quaking in their shoes over this..." And earlier in his statement he had been at pains to stress the Government has no plans to "micromanage" company pay. Indeed, he was not even willing to give his opinion on the touted seven figure bonus due to be awarded to the head of the state-owned RBS bank. Apparently, any speculation was "above my pay grade."

It is hardly surprising. In spite of all the rhetoric of the last few weeks, it would have been far more of a shock if a government of committed neo-liberals and free marketeers had done anything at all to tackle the excesses of the moneyed class. It is striking that the sole piece of legislative action - the possibility of binding votes on pay - supports the owners of companies. The Government had made noises about supporting the High Pay Commission's call for a worker's representative to be put on each remuneration committee; but Cable turned this down on the pathetically laughable grounds that, as some companies have overseas employees, it would apparently be too difficult for them to participate in electing a representative. And as for Directors on each others remuneration committees, the shocking corruption condemned so fiercely by both Clegg and Cameron? Vince the Bold says it happens so rarely that "it isn't actually a problem..." So, no need to do...anything, after all.

And so, with both government parties sympathetic to cutting income tax for higher rate tax payers - the Lib Dems have opposed it mainly during the recession; many in their party, including Clegg ally David Laws still see cutting top rate tax as a longer term aim - the chances of any genuine redistribution of income or wealth are lower than zero under the current regime.

The upward climb of the rich goes on unabated. The ever-pompous Cable, meanwhile is revealed as the Don Quixote of delusional reform; except even his windmills are imaginary. If this is responsible capitalism, only the Invisible Hand can save us now.... Erm...