Hugh Hendry brings up a really interesting point about banker bonuses and capitalist society in his recent interview with BBC Hardtalk.We can all talk about how bankers get paid too much and teachers don’t get paid enough – but think about what it would take to change the pay structure.
“Do you get to the point where you have a commission to determine what just is? And say, we’ve just decided that you get paid too much and actually you don’t get paid enough – so we’re going to raise your salary and we’re going to cut your salary?”
But then Hendry points out that it’s hard to justify pay reform because some people work harder than others, and should be rewarded monetarily for it.
“So you didn’t show the commitment in education, and you didn’t really achieve any grades and you find yourself doing the same task that 1.3 billion people in China can do – should we do anything about that?”
That’s hard to swallow. It’s pretty obvious that a large percentage of the 1.3 billion people in China, or wherever, that work in factories or low-paying jobs do it because it’s the only opportunity available to them – not because they’re lazy.
Hendry’s right that pay reform can’t just happen overnight because some people don’t like hedge fund managers earning billions, but he’s wrong that the only way to fix it is socialist-style reforms that equalise pay just for the sake of it.
Then again maybe what he was expressing is more of a “there’s nothing we can do about it because there’s so much wrong with the system” attitude.
But then he just starts talking nonsense. He says that he would have made more money if the banks hadn’t been bailed out. We suppose it’s remotely possible, but really? Yeah right. Hendry returned 32% in 2008. Chances are whatever he was he invested in or shorting back then would have crumbled, or the banks who sold it to him wouldn’t have existed to pay him.
By the way, Hendry is down this month.
Here’s a transcription of the good part of the clip. The video is below.
People look at the rewards that come with your type of business – tens of millions of pounds -and they look at the rewards that come to policemen or nurses or what have you and they say, our society is sending the wrong sort of signals about where worth lies.
Hendry: Is it really? And do you get to the point where you have a commission to determine what just is? And say, we’ve just decided that you get paid too much and actually you don’t get paid enough – so we’re going to raise your salary and we’re going to cut your salary?
It’s just fantasy land! It doesn’t work!
A footballer is paid and they get paid if they’re successful they score goals if you will, they get paid an obscene amount of money. But if you suffered in terms of you didn’t show the commitment in education, and you didn’t really achieve any grades and you find yourself doing the same task that 1.3 billion people in China can do – can we do anything about that?
Do we double your salary and just say, you’re worth it. Enjoy it. Or do we say we’re going to keep the 1.3 billion people in China in poverty?
So we should not intervening to reduce the bank bonuses which seem so out of kilter, particularly in an what is now for all of us, an age of austerity.
Hendry: I’m revulsed by the public purse bailing out the banking centre.
Frankly, the whole financial system was bailed out by the public. Your job would not be the job it is today had the public purse not been used to safeguard the banking system.
Hendry: I’d have made more money.
If we had complete financial meltdown?
Hendry: I’ve been thwarted by the efforts of the financial by the generosity of taxpayers who are now set to lose their jobs if they’re public servants.
Business Insider Emails & Alerts
Site highlights each day to your inbox.