Executive pay and the assault on aspiration
The consensus that top bosses get paid too much is really a way of selling the idea that all society is too greedy.
Occupy London, the Labour Party, the Lib-Con coalition, the Archbishop of York… It doesn’t matter to what or to whom you look, you’ll find the same simple-minded sentiment: the root cause of our economic and social problems is greed. The greed, that is, of bankers, of overpaid CEOs, of those at the top of society who simply have and want too much.
This weekend, it was UK prime minister David Cameron’s turn to say what every other party leader and Spirit Level-reading commentator has been saying for the past couple of years and stick it to the men in expensive suits: ‘Big rewards when people fail make people’s blood boil.’ He then promised, at the risk of ‘stealing [business secretary] Vince Cable’s thunder’, that something will be done about the ‘excessive’ pay of chief executives.
Cameron was not blazing a trail of course; he was sauntering down a path trodden by just about every other stripe of mainstream political opinion. It’s like a game of spot the political difference. Here’s Labour leader Ed Miliband speaking at his party’s conference last year: ‘When people are struggling, when the middle is being squeezed, when people are seeing their living standards fall, it is not fair for those at the top to get runaway rewards not related to the wealth they have created.’ And here’s Lib Dem leader Nick Clegg speaking in October: ‘I think some of them [pay awards] are incomprehensible and will strike most people as a slap in the face for millions of people who are on normal incomes and struggling to make ends meet.’
The back-slapping, we’re-all-agreeing-about-this-together does not stop at the gates of the Palace of Westminster. Over at St Paul’s Cathedral, the protesters at Occupy London – a self-styled hotbed of anti-capitalist radicalism – have also been angrily preoccupied by the corporate greed of the fictional one per cent. Well, at least to the extent that any coherent point can be gleaned from their utterances. And where the occupiers are sat, so the Church of England has plonked itself alongside them. So it was that the idea that the ‘obsession with wealth and maximising shareholder value… a winner-takes-all attitude’ is dragging society hellwards, proved to be the rather less-than-Christmassy message of the Archbishop of York John Sentamu’s, er, Christmas message.
If there was ever a striking indication of the deadening political conformism, the dearth of social imagination, that so characterises our contemporary impasse, it is there in the sheer ubiquity of the Greed-is-Bad argument.
So what is driving this pervy, across-the-board obsession with the pay packets of super execs? It’s certainly not impelled by a desire to get to grips with the economic crisis that holds most of the developed world in its grip. No doubt there are some simple-minded souls in a state of Occupation who believe that blaming and bashing company CEOs or bankers is somehow to understand the economic crisis. But just as the remuneration packages of a few bankers and bosses did not bring about the current crisis, so seeking to limit their wages, to impose a maximum national wage, will not solve the crisis. And while £3million or £4milllion for a CEO’s annual salary does seem huge, such figures amount to very little in the grand economic scheme of things. As the Investor’s Chronicle points out: ‘The average FTSE 100 CEO is paid £3.9million year. But this is only one four-thousandth (0.025 per cent) of the average market capitalisation of a FTSE 100 company.’
The current fashion for attacking large pay packages, then, is economic neither in impulse nor intent. Rather it is driven, in the first instance, by a narrow moralism. For its numerous proponents, either in party offices or in spartan tents, it represents an easy posture, a cheap critical pose. One Guardian columnist virtually gave the game away: ‘Like phone hacking or MPs’ fiddled expenses, this is an issue that only needs to be described to seem reprehensible.’ That is, to the right-thinking types on liberal broadsheets, criticising large salaries is just too good an opportunity to miss. Indeed, like attacking tabloids and MPs, it is a mark of one’s membership of the right-thinking to have a pop at the really, really rich.
But there’s a deeper, darker impulse driving this cheap attack on exorbitant pay packages than just preening self-righteousness. And that’s the belief that the large pay packets pursued by the undeservedly wealthy are a symbol of a society-wide pathology. The cheap attack on top earners is also an attack on the material aspirations of the rest of us. We are, in short, just too greedy now to be left to our own unregulated, uncontrolled devices. A report from the High Pay Commission – a grandiosely monikered body established by centre-left think tank Compass, a few trade unionists and business secretary Vince Cable – makes this clear by drawing the highly questionable link between this putative celebration of ‘greed’ – or ‘an elevation of the concept of the rational self-interested man to unprecedented heights’ – and the August riots. ‘It should not perhaps surprise us’, the report states, ‘that the rioters took the trappings of wealth that they could not afford – the TVs and designer trainers. It reflects a sense of entitlement that pervades society from the very top to the bottom.’
The implication of this moralistic criticism of our social and economic situation is clear. If greed is the problem, then enforced restraint is the solution. We need to stop wanting so much. We need to lower our material aspirations. We need to want less and refrain from consuming far more. And you can rest assured that there are plenty in the political and media class who are all too keen to help us on the road to salvation.
This cheap moralism, this myopic obsession with the earnings of a tiny few, comes at a considerable cost, however. It distracts us from facing up to the reality of our profound social and economic problems. For those without a clue, perhaps the distraction is welcome, but for those who want something more, something better, the wealth of a minuscule proportion of the population is less worrying than the poverty of ambition currently dominating the political response to these straitened times.
Tim Black is senior writer at spiked.