By a strange coincidence, this year's Public Sector Rich List from the TaxPayers' Alliance is published just as the row over bankers' bonuses explodes once again.
The Rich List first. This year, the TPA has discovered 805 public employees earning more than £150,000 pa (and that excludes local authority employees, who are covered in the TPA's companion study, The Town Hall Rich List). Among the "highlights" (data relates to 2008-09):
- 8 people got more than £1m pa
- 333 earned more than the Prime Minister
- The group's average pay rise was 5.4%, compared to 2.7% for a nurse and 2.3% for a teacher
- The group's average total remuneration is £226k per annum; by comparison, according to the Institute of Directors, a managing director of a private organisation with a turnover of between £50 million and £500 million (about the size of a typical quango) could expect to earn £141k and an executive director £87k.
Which brings us back to those banker bonuses, with over 5000 of the varmints apparently in line for over £1m apiece - ie a total bill in excess of £5bn just for the top guys.
Should we care?
You bet we should. As my Lord Myners was explaining all day yesterday, these bankers have been bailed out with squillions of taxpayer dosh. Apart from the effectively nationalised banks (ie RBS and Lloyds), all the other UK banks are being propped up with open-ended taxpayer guarantees on their liabilities. WTF should we allow them to walk off with barrowloads of our cash?
So what of their threats to resign and go off to work for Goldmans?
Call their bluff, we say.
Look, the key reason we're still in this mess is because Brown has not grasped the nettle we've blogged about so often (eg here). However it's dressed up, we need to split high street retail banking away from investment banking (aka a new Glass-Steagall).
High street banking should go back to being a low risk utility type operation, fully guaranteed by taxpayers but heavily regulated and subject to a hefty annual insurance charge to pay for the guarantee. Pay packets would soon return to the the more modest levels that always used to exist in our high street banks.
In contrast, investment banking should be much less regulated, a thousand flowers should continue to bloom, but there should be absolutely no taxpayer guarantee, either explicit or implicit. Investment bankers should pay themselves whatever they like, but if their bets go wrong, they should be left to incinerate.
We desperately need to get on with this. The existing arrangements are not only grossly unfair to taxpayers, but over time they will hobble our nationalised banks into oblivion. Whatever they decide to do, they will not be able to match their competitors bonuswise, because we won't let them. They will inevitably go the way of all nationalised industries before them - second-rate and a drain on national prosperity.
So what would we do right now?
Irrespective of international agreement, we'd announce our own Glass-Steagall. From say, end-2011, any bank wishing to offer UK high street accounts guaranteed by the taxpayer would have to comply with new regulatory requirements. And those requirements would include complete separation from any entity offering investment banking services (there would be other restrictions as well, covering such matters as asset and liability liquidity).
Meanwhile, we'd say to our nationalised banks yes, you can continue to pay bonuses, but they have to be in the form of deferred equity in your new post-2011 offspring. Cash? Forget it.
Throughout history, so-called "rent seekers" have sought to capture government so as to extract unwarranted financial gain at the expense of taxpayers. But whether in the public sector or the private, taxpayers should not be expected to underwrite the riches of others.
PS And talking of rent seekers, the furore over Climategate is gathering pace. The conflicted tax-funded global warming industry has now woken up to the threat, and is trying to argue that lies and distortions from East Anglia aren't that important to the case - loads of other "respected" scientists have come up with the same results independently. Except of course, it isn't like that. As the splendid Prof Philip Stott pointed out on R4 Today this morning, the whole global warming biz is an inverted pyramid, resting on the work of about 40 scientists. And 39 of them work at East Anglia. Well, no, I made that last bit up, but it is only around 40, forming a very tight groupthink mutual support network. But like the man said, you can't fool all of the taxpayers all of the time.