By Dave Burridge
In a week where bankers bonuses have yet again come into question, we are posed with a question: are these bonuses justifiable?
The majority of people hold the view that a lot of banks are owned by us, the taxpayer, and these banks were significantly responsible for creating the mess that we then had to bail them out of.
All of this simply means that in the opinion of many, the people who run or work within these banks do not deserve bonuses for inflicting hardship upon the rest of us.
Whilst quite a strong view, it is one many members of the general public adhere to. However, there are some arguments to the contrary.
Culture of debt
Take for example the point that banks are responsible for the mess. They are not wholly responsible and the blame should be shared around. For example, we must look at ourselves for the debt culture that we have chosen to abide by for the last decade.
It is only fair that the general public should have some right to voice concerns over banks in which the taxpayer is the majority shareholder. However whilst the usual majority shareholder is an informed individual who know’s how a good business is run, the general public do not necessarily have any of these qualities and through no fault of their own may actually hinder the bank by taking decisions they feel to be right.
“A bad board at a bank is likely to cost the taxpayer significantly more than the bonuses paid to a good board”
A top banker or chief exec of a large bank has many skills which may have taken them many years to build. They take on a large responsibility and often heavy workloads. These attributes are valued and are often what turns a profitable business into a highly profitable business.
Working in other industries or countries, chief exec’s expect a large remuneration package. So if the banking industry is to wipe out bonuses to staff these talented individuals who may quite likely make the bank much more money than they are paid will move elsewhere leaving the bank with a flagging leadership. Ultimately a bad board at a bank is likely to cost the taxpayer significantly more than the bonuses paid to a good board.
The real question perhaps is not what is best for business and the taxpayers investment but what the taxpayer believes is morally correct.
Are they prepared to accept monetary loss in order to stick to the values that those that created the mess do not deserve good pay or are they more concerned on securing a return on their investment?