A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left. Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Wednesday, August 19, 2009

More nonsense from Compass

My reaction to the Compass High Pay Commission proposal (http://www.compassonline.org.uk/campaigns/campaign.asp?n=5246) is that I could not care less what the super rich earn - it's seeing the least well-off in society properly rewarded for their labour and free of poverty that gets me politically fired-up.

It seems a very odd political priority to push the punishment of a very small number of the extremely financially successful rather than focus on the betterment of the least well off. In tax terms punishing the super rich few would not generate enough to be useful for practical redistribution, might indeed lower the tax take due to evasion and emigration and might stuff the economy even more than it already is by stifling entrepreneurialism. I.e. the only benefit would be to placate the feelings of the jealous or politically angry, not to make the poor richer.

Have Compass never read John Rawls' "Theory of Justice" (summary here: http://en.wikipedia.org/wiki/A_Theory_of_Justice), which makes the logically impeccable case that social and economic inequalities should be arranged so that "they are to be of the greatest benefit to the least-advantaged members of society" i.e. an unequal distribution of wealth or other resources can be just when it maximizes the benefit to those who have the lowest allocation of resources - the Maximin theory?

All this political energy should be going into anti-poverty pay initiatives like the London Living Wage campaign, not wasted on bashing a group of people who are so small in numbers as to be statistically irrelevant and already paying vast sums in tax.

Ordinary hard-working people want a better life for their families and not to be exploited. My guess is very few of them subscribe to limiting the wages of the people at the opposite end of the spectrum.

Can anyone name a free society where a maximum wage has successfully operated without leading to massive offshore tax evasion? Why wouldn't the people threatened just go and work and earn in the US or some other country without these kind of remuneration restrictions?

And who are Compass' targets? Just bankers, if so how many? FTSE 100 ceos get mentioned in the text but surely some of these in sectors outside finance don't deserve bracketing morally with Fred the Shred et al? What about TV and pop stars and footballers - my hunch is the public don't mind their heroes earning vast amounts if they have a unique talent? And what about entrepreneurs or inventors who create jobs and bring wealth into the country - does Compass think it would be a good thing to cap their earnings?

And why pick on capping pay, as opposed to all the other ways the very rich get income (e.g. return on investments)?

The whole idea is puerile and the worst kind of bandwagon jumping, but that's Compass for you.


Blogger Mark Still News said...

There should be no super rich and every one should get the same pay. people would be rewarded by what they do to better our society the more they achieve the better all our environment would become and there is no greater reward than that!

11:55 pm, August 19, 2009

Anonymous Anonymous said...

Luke. Statistically the number of the super rich is irrelevant.the fact that they exist with to a large extent no checks and balances means that Labour will never be able to deal with poverty pay and the increasing inequality.

You are going to have to get real on this one Luke. These people have a lot to answer to for the current crisis that the poor are having to pay for due to the excesses of the super rich.

Compass are contributing to the debate and you are clearly obsessed with them. Get over it and be thankful they are presenting an alternative. It will gain votes for Labour as opposed to the New Labour policies losing Labour votes.

7:34 am, August 20, 2009

Blogger Hughes Views said...

As he does so often, David Aaronovitch wrote rather well about this topic in the Times on Tuesday: "Forget a High Pay Commission, making people’s earnings public would create a fairer society – and be more fun".

But it's not only Compass who are trying to leap onto this bandwagon. The LibDems and Michael Meacher are, of course, in hot pursuit but so, apparently unashamedly, is the party that's always banging on about the need for small government and reduced state intervention in everything. George Osborne was at it in the Guardian on Saturday...

9:18 am, August 20, 2009

Blogger donpaskini said...

Luke says, "Ordinary hard-working people want a better life for their families and not to be exploited. My guess is very few of them subscribe to limiting the wages of the people at the opposite end of the spectrum."

There's been quite a lot of polling done on this.

*People think a company director should earn 6.25 times what a factory worker does (they think the ratio is 12.5, it is actually 42.3).

*This is because they think that high earners are overpaid, rather than that they think low paid workers are underpaid (e.g. people think a company director should earn an average of £75,000, rather than the actual figure of £555,000).

*87% think City bankers are overpaid. As for Luke's comment that "my hunch is the public don't mind [footballers] earning vast amounts if they have a unique talent?", 96% think that premiership footballers are overpaid.

*69% think that the gap between high earners and average earners is too large.

*17% believe that large differences in income are necessary for Britain's prosperity.

*71% of Conservative Party supporters say that the gap between rich and poor is too large.

*73 per cent of voters said City bonuses had become ‘excessive and something should be done about them’.



I actually agree with Luke that the priority should be anti-poverty campaigns like Living Wage campaigns, and I don't support the High Pay Commission (not least because any campaign on this subject led by Neal Lawson would quite deliberately alienate most of the public very quickly and be a total disaster).

But simply in terms of politics and public opinion, there is currently much more support for taking on the super rich than for reducing poverty.

10:43 am, August 20, 2009

Blogger Alex Leonhardt said...

I completely agree with you. The Compass campaign conflates the two issues of inequality caused by the very well paid and the 'bonus culture' that supposedly caused the credit crunch.

I think both, to a large extent, are red herrings. The 'bonus culture' may have contributed, but was not the primary cause of the credit crunch. I also think a lot of egalitarian minded people would be a lot more relaxed about inequality if the poorest in society could live a decent life, and this should be the priority.

One thing to note, though, is that Rawls advocates the Difference Principle applied to what he calls the "primary social goods", which is explicitly not merely wealth or any purely material measure, but includes numerous other factors. If the existence and publicity of the very wealthy makes people feel or be powerless, or systematically lowers the self-esteem of the less well off (for instance), then it's entirely possible that the Difference Principle would advocate curtailing the pay of the very wealthy.

11:27 am, August 20, 2009

Blogger Tom said...

Well, I don't support a maximum wage and I'm told that neither do Compass. I think the idea of a commission is a good one. Used to be very Rawlsian, but a bit less liberal these days.

"is that I could not care less what the super rich earn - it's seeing the least well-off in society properly rewarded for their labour and free of poverty that gets me politically fired-up."

This is based on an economic fallacy. Extreme wealth allows the monopolisation of limited goods, thus raising their market price (this is an inflationary constant of which people tend not to be aware, but it happens).

It also allows them to further monopolise production and exchange, alongside the political power that goes with it. It's an important part of the political structure of Thatcherism.

All in all, the effect is firstly to dispossess, and secondly to disempower.

Secondly to this there is the very simple (and IMHO very strong) humanist argument which is simply that all of the evidence points towards greater material equality being very, very heavily tied to greater human happiness.

Great bedtime reading here if you fancy opening your mind to a bit of simply expressed hard evidence

Of course poverty is important. But it is part of a larger evil that the labour movement and its party should not ignore. As for the point about exploitation, it is the inequality of bargaining power which stems from inequality of reward that leads to continually more exploitative arrangements taking place.

There is a rationale to this.

2:09 pm, August 20, 2009

Blogger Tom said...

Wealth concentration also means that society devotes more of its net output towards jacuzzis and wealth management companies, which could have been spent on feeding hungry people or providing medical help. Where money goes matters.

2:11 pm, August 20, 2009

Blogger Ravi Gopaul said...

I do think what the very rich earn is of interest.
Surely it is the job of all progressive parties to want see a fairer distribution of wealth in the country?
You talk about anti poverty measures, yet those with extreme wealth (i.e. the super rich) have a lot of power and are not shy to use it, much like the Trade union movement in the 70s except they don't attract as much vitriol from the press. Do you think it is their interests to want Warwick II?
Although I can see the merit of what Mark is saying, I don't believe harmonisation of wages is the way. I believe (like yourself I imagine) we should have a wage structure that rewards for the work done/training received.
This is the problem with New Labour, too keen to bash the Left and have little or no progressive substance.

2:18 pm, August 20, 2009

Anonymous Linda said...

Call me a bourgeois sybarite if you will, but I really don't want a world without Jacuzzis.

I'm quite prepared to get all authoritarian in pursuit of better equality of opportunity. Lets ban private schools, or tax them into oblivion and use the proceeds to give state school pupils a comparable education i.e. 6 pupils in an A-level class instead of 25 and all the extra curricular activities and experiences they enjoy.

3:17 pm, August 20, 2009

Anonymous David Floyd said...

Well, what the very rich earn while working for banks significantly owned by the state is certainly of interest. The government can and should regulate that directly.

In terms of high pay in a general sense, I don't think it's the business of the state to set a limit.

What the government does need to do is to regulate financial services in such a way as people aren't able to earn huge sums of money by indulging activities that will ultimately result in the taxpayer having to bail out the institutions they work for - the wonderful 'heads I win, tails you lose' situation.

3:48 pm, August 20, 2009

Blogger Merseymike said...

Whilst I am unconvinced about the precise suggestion advocated by Compass, it is quite obvious that a more equal society cannot be created whilst the rich are ignored. More equal societies are seen to be both happier and healthier - read Wilkinson's work

Pretending that the super-rich are not there is tantamount to accepting the permanent existence of a powerful oligarchy

I think it is blatantly obvious that City financiers are grossly overpaid and the bonus culture an evil which must be removed. I am also sure it would be very popular.

Social democracy is about redistribution. It is egalitarian. Crosland's work is still the core of the social democratic creed and all Luke's article proves is what many of us who are very much social democrats, and not on the Left, realised a few years back - that New Labour is largely Not Labour.

5:58 pm, August 20, 2009

Blogger Merseymike said...

PS Think the other problem, Luke, is that you have no critique of globalisation, which is also utterly inimical to any sort of social democracy. Free market economics is Conservative politics. To avoid the latter, reject the former.

6:00 pm, August 20, 2009

Anonymous Tom Copley said...

Where do Compass say in their statement that they want to tax pay? I checked it carefully before I signed and there was no proposal for that. It mentions ideas to "restrict excessive remuneration" but not to cap wages.

The High Pay Commission would be about looking at various ways to combat excessive "rewards" and promote equality. Surely all domocratic socialists can sign up to that?

3:17 am, August 21, 2009

Anonymous Anonymous said...

I see the Times is rating Compass as currently the biggest political force on the left:


4:22 pm, August 21, 2009

Blogger Luke Akehurst said...

I thought the Labour Party was "currently the biggest political force on the left".

9:02 pm, August 21, 2009

Blogger Duncan Hall said...

Well I'm inclined to agree with Luke on the latter point (though I have resolved to keep my Compass-bashing down to an absolute minimum from now on...) - but while poverty is a higher priority than wealth, inequality is key. And when Michael Howard declared, in 2005, that he didn't believe that one person's wealth contributed to another person's poverty he was being irrational: of course it does. We of course would then reach very fundamental discussions about the sources of wealth and doubtless disagree, but relative poverty is important; inequality is important. I'm not relaxed about the filthy rich, and I don't believe socialists or social democrats ever should be.

1:21 am, August 22, 2009

Blogger Merseymike said...

No, the Labour party really cannot be seen as 'on the left'. It contains people who would be worthy of that description, but their policies are not, overall, to the left of centre. Centrist, with some slightly left, some slightly right of centre. The problem is that all three main parties are in this place so changing between one and another comes down not to policy but for those not committed, a question of who appears most attractive.

5:53 pm, August 23, 2009

Anonymous Anonymous said...

Luke i think for people like Merseymike, Respect is the greatest force on the left...

4:22 am, August 31, 2009


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