Saturday, 22 January 2011

Bankers Bonuses, good or bad?

For the past few years, every once in a while, the subject of bankers pay comes up and it always gets negative views by everyone (which is fully understandable). There are those (idiotic) people who just go "NO NO NO" without looking at the facts. I am really mixed about it - but I am much more for it than against.

(simplistic view) I think it is so stupid that we live in a world where a company/bank can fail simply because a few people can say they think it will, they quickly sell, so everyone else does. But, at the end we do, and it is a fact we have to live with.

Computers have changed banking forever, traders are able to trade millions at a time by pressing a few buttons. Banks will never be like the old days.... So we have to stop thinking like that.

As far as I am concerned, the argument against is simply that it is far too much and in the majority of cases where a bail-out is concerned, it is public money.

My only real gripe is not that it is public money (If the banks don't spend it, I am sure the government will find another way to waste it!), but that it is just so much, other than that, I really think it is fair, and now I will say why!

Commission (in most industries) is a good way to make things happen, it rewards success and only success. If you were to organise a deal from scratch which would of never happened without you and made your company a million, would you be happy getting absolutely nothing?

The answer to the above question may be yes if you were a good worker, but there would be very little motivation to go out of your way and make another (or better) deal.

Without a banker, a deal will never happen, so, every bank wants bankers and how do you get them - offer money/commission, and as they only get the big money on successful deals, they don't mind hiring them!

So, the argument of they are having public money does not really wash with me as if it wasn't for them, the bank wouldn't have this additional money in the first place.

I think that by offering the bonuses, it is actually much better for the public as it means we will get paid back the government investment quicker and most importantly, we also get a lot more tax from the bonuses than we would in corporation tax alone which is what would happen if the banks did not pay the bonuses.

If the publicly owned banks were not allowed to give bonuses, the bankers would simply move to one of the many other banks where they were not under this restriction.

I hope I have said fairly the argument. At the end of the day, I see the only way that we can ever limit it, is by an all out restriction/limit on bonuses, however, this could mean that many leave the country and work where these restrictions do not exist... This in turn could open up more jobs, but quite frankly, I am not sure it would/could work and we may just be best off letting it go.

Until I am persuaded of a better solution, I am for the bonuses.

2 comments:

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