From what I can gather, there are two arguments in favour of bankers receiving large bonuses. First, if they do not feel that they are being rewarded sufficiently, these bankers will leave the country and go somewhere that pays better. Secondly, a large salary and bonuses is the “going rate” for the exceptional banking skills that these people possess.
Both of these assertions are false. For the first one, I base that judgement on the simple observation that people, in general, don’t up sticks and leave. Oh, they whinge and complain, and say that if things get worse, they will emigrate. But they don’t. By and large. Admittedly, a small minority in any population show some mobility, and really do live far from their origins. Often it’s the best people.
“Aha!” you may say. “If the best bankers leave over money, even if it is only a few, then won’t the loss of awesome skills mentioned in the second pro-bonus argument devastate the country’s institutions, to the detriment of all of us?”
There would be some merit in that line of reasoning, if bankers did indeed possess unique skills. Or perhaps even if they were just competent. But we have ample evidence that they are not competent. The people being awarded bonuses, almost without exception, are the same people who caused their institutions to fail.
Yes, in a sense, the ability to turn a huge heap of money into a gaping black hole is a unique skill. But one with few practical applications. It’s certainly not what bankers are supposed to be paid for. It looks to me as though you could emulate the bankers’ successes in the good times if you had the basic skills of being conscious and understanding simple arithmetic. And avoid the bad times by the simple skill of never investing in a financial product which you are too stupid to understand.
The current British government, after a preliminary pantomime of bluster and posturing, has decided not to intervene over bankers’ bonuses, even when the banks are majority-owned by the taxpayer. (The reason we own banks, I scarcely need remind you, is because they carelessly and incompetently ran themselves into unmanageable debt.)
Perhaps the government fears that any action against bankers will undermine their “big lie” that blames the previous administration for all the country’s economic problems. I had little liking for the previous “New Labour” government, but I have to point out two facts: the bulk of the national deficit was run up by bailing out incompetent banks; and the previous chancellor extracted £3.5 billion from the fat bastards in a one-off bonus tax. A repeat of the latter would be a nice little windfall for education or other services, wouldn’t it?