Is there no end to Banker greed?

Posted on November 23, 2011

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It is hard to find an exclamation mark big enough, or a jaw-drop long enough.  How does one express how the sense of outrage at the latest news on bankers’ pay? For those reading this who are not in the UK, you might be vaguely outraged too – after all these are multinational companies we are talking about.

The latest awfulness comes in the form of the contents of a report which has tracked bankers salaries over the last 30 years. The High Pay Commission has found that bankers’ pay has increased by 4000% over the period, whilst average wages have just managed a threefold hike.  CEOs are being paid 100 times that of their lowest paid employees compared with just 13 times thirty years ago.

Coincidentally we visited the Occupy London site at St Paul’s on Sunday.  It is an extremely well organised camp and there are some brilliant displays of artistic ingenuity conveying political polemic on a razor sharp level of wit.  One I particularly liked shows a young boy being offered an ice cream.  The tag is ‘Bankers Bailout’.  And this is indeed what it feels like.  It is as if these people (bankers) have never been said no to; never actually taken a hit; never had to a face a day let alone a week where there was not enough food in the cupboard, or money for the electricity bill.   In fact, bail-outs and rescue measures have simply feathered their nests even further.

The reality of poverty is one that the comfortable middle classes rarely think about, and the booming nouveau riche will tell you doesn’t even exist (and if it does fuck ‘em!  they deserve it!) . Those free-marketeers will argue that bankers have earned their salaries and their bonuses so who is to say they shouldn’t have them?  Well, the High Pay Commission report puts paid to this, pointing out that bonuses have been delivered regardless of performance.

More broadly though, isn’t there a fundamental disconnect between the customers of these banks and the outcomes they deliver?  It is not the shareholders who are necessarily bank customers, and therefore it is not the shareholders who are faced with that awful frustration of poor service, large fees, patronising and restrictive banking practices that stymie so many in their quest to lead their lives with some help from their bank.  To argue that this is all about shareholder action (or lack of it) is to miss the point.  Shareholders want profits – the more the merrier.  They are not there to pore through the salaries of the top 500 employees or to track through 10 years of pay data to determine whether salary increases are justified.  Nor is it in their interests to cap pay and bonuses.  So why would the do it?

No, I believe one of the reasons the banks make so many people so angry is that they are one very significant example of the dysmorphic distribution of power and information across the institutions that govern our lives.

Steiglitz is widely regarded for having identified information dysmorphia as a fundamental problem with modern capitalism.  He is right.  But it is also the levers of power that are dysmorphic.  How can a customer possibly act to influence a bank?  If all the banks demonstrate the same behaviour, the argument that customers can vote with their feet is farcical.  So in my mind we need a much more effective way for consumers to be able to influence the corporate behaviour of the multinationals upon which they rely for so much – whether this is energy companies, phone companies, banks or insurance agencies.  Is this via the circuitous route of the ballot box and parliament?  Probably, but this must result in a far more direct mechanism to challenge this chocolate fountain of excess.

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