To continue with more of "the employer class outlook that is beginning to pervade this blog", here is Merryn Somerset Webb having a go at excessive top management pay.
This isn’t just a UK problem (look to the US and you can find a long, long list of CEOs cleverly extracting $20m a year from the companies they have been appointed to run). But it is an increasingly serious problem for two reasons.
One, it is entirely unnecessary, and therefore wrong (it represents a pointless transfer of wealth from shareholders to managers). And two, because it looks bad......capitalism is amazing. But it only works as long as it keeps making us all better off and – crucially – is seen to be doing so. Stupidly high executive pay packets jeopardise both the reality and the perception of capitalism. That’s a very bad thing indeed."
It could be said that it was inevitable that this would happen as control of companies passed from the owners to managers employed by each other on behalf of the owners and that it is the shareholders who the problem mainly affects who are the ones that have it in their power to put it right, however, in the comments, P Kralj points out:
Shareholders will vote against such pay if they are enfranchised. Most shareholders hold their investments through fund managers and it is the fund managers who vote. The beneficial owners of the shares are not permitted to vote. This is just the same system that the trade unions of old used before Thatcher. It is about time we stopped these commissars voting with our money. If only those with a beneficial interest in the shares were allowed to vote these vast salaries which are unearned and unjustified and are only permitted because of the power in the hands of those who earn them, would not exist.
So in reality something that looks like a necessary problem with capitalism, the better off getting richer at the expense of the worse-off, as railed against by Piketty et al, seems to be more of an unnecessary problem that a few small, but fundamantal changes will go a long way to put right. A bit like LVT, in fact.
Debate Magazine
