Wednesday, 15 January 2014

Higher bankers' salaries? Fine by me.

The Treasury had already launched a separate legal challenge arguing against the EU's right to set any limits on banking bonuses at all, saying that such intervention could lead to an increase in base pay and undermine financial stability.
How is this a problem? Why would anybody see a move to a form of remuneration that no longer encourages a few individuals to take insane risks that will seriously damage everybody except the risk takers as a bug, rather than a feature? Why are politicians and the commentariat queueing up to lecture the National Health Service* about Goodhart's law and the downside of target cultures, but not the banks?

Could it have anything to do with power, influence and self-interest?

Banker's pay - it's not about the politics of envy. It's about the collateral damage to the rest of us, stupid.

*These things do apply to the NHS, too, but it wasn't the NHS that blew up the economy.

Update ... one last, exasperating, thing. Controlling bankers' bonuses could 'undermine stability?!?!' Because the existing system of incentives has been such a major contributor to the stability of the economy that we shouldn't even think about reforming it, obviously...