Seriously Obese Cats

fat-catsI am no believer in the notion that Jack is always as good as his master. Just occasionally, he might be. But far more often, the captains of industry are smarter, have trained more and now work harder than most. I have no problem with them earning, say, 20 times what the person sweeping the floor in their business earns. Or even 20 times what their average employee earns. As my old friend Will Hopper noted in his excellent book The Puritan Gift, that was pretty normal among the great companies of the Western World as they were becoming great.

But 200 times? No. That is obscene. No one needs 200 times. Not only is it grossly unjust, but it is bad for business. But it is happening, in the USA, and also in the UK. The Spectator recently reported:

The average FTSE 100 chief executive received £5.5 million in 2015. They have been impervious to the financial crisis and the economic ills that came in its wake. Packages in the FTSE 100 have seen a 32 per cent rise since 2010. The typical CEO now earns 183 times as much as the median pay of a full-time British employee, taking only three days to make what they earn in an entire year.

Unhappily, the voices that might have done something about this have been strangled.  In the UK, the Labour Party is in the grip of an idiot. In the USA, the presidential election has just been lost by a woman who is not an idiot, but who is utterly untrustworthy. As for France, don’t even ask. Germany is still pole-axed by its twin problems of guilt[1] and an inferiority complex[2].

Companies will say that they have to give huge packages to CEOs in order to attract the talent. It is what football clubs say about the earnings of their star players. Sometimes true and sometimes self-serving bullshit.

Might the answer be tax? Apply a tax on companies which maintain these absurd differentials? That would keep the playing field level.

Free of the EU, it might well be possible to get USA to do the same thing – they have the same problem.

Overseas companies? If their jurisdictions do not apply a similar tax, apply an import duty or enhanced VAT on any goods or services they provide in the UK.

It is a cultural issue really. No one needs a 200x salary package. As I have said many times, money only really matters if you don’t have any. Anybody earning 20x will have some.  Of course, people need incentives to achieve great things. But 20x is plenty.

100 years ago, the Western world was at war. The worst war the world has ever seen.  The Russian revolution was about to happen.  In large measure, these catastrophes happened because the rich were blithely ignorant of the dangers they faced as a result of their self-indulgence.  I have a feeling that those on 200x salaries might be running a similar risk. Brexit and Trump are just early harbingers.

[1] See WWII

[2] See WWI


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