Corporate Fatcats Will Party Until We Turn the Music Off
Corporate Fatcats Will Party Until We Turn the Music Off
By Owen Jones /

Capitalism is having a laugh at our expense. Surely that is the only reasonable explanation for the current shamelessness of Britain’s corporate elite. Having survived the financial crisis without the public, armed with pitchforks, hammering on their doors, perhaps they now believe they can get away with just about anything.

Take BP’s Bob Dudley. In February his company recorded its biggest ever loss and sacked thousands of workers. You might expect Dudley to offer a show of solidarity and cut his already substantial pay packet. But this is British capitalism, and so Dudley seeks a 20% pay rise, bringing his package up to £14m. This brazen behaviour provoked a mutiny: nearly six out of 10 shareholders voted against the deal. Even unapologetic defenders of modern capitalism are getting queasy: “Only a fool would believe that in order to find someone intelligent and creative enough to run BP you need to pay £14m,” writes the thoughtful Tory Danny Finkelstein in the Times: and indeed he worries about the “political consequences” of this behaviour. “Capitalism is supposed to cascade wealth down, so why does it seem to be cascading up?” asks former Tory MP Matthew Parris. “Twenty-first-century western man finds grotesque disparities of income within one society odious. People won’t stand for it.”

The Tory MP Nadhim Zahawi worries that people are turning away from capitalism: that increasingly they “don’t like people getting rich, and they don’t like capitalism”.

In truth, popular anger has not been proportionate to the crimes. Mervyn King, the former governor of the Bank of England, freely admits he’s surprised “people weren’t angry sooner”.

A financial elite plunged the country into calamity and effectively got away with it unscathed, while workers suffered the longest period of reduced pay since the Victorian era. Meanwhile public services, social security and secure jobs were slashed. It has become increasingly clear – as the Panama Papers underscored – that a significant chunk of our economic elite simply do not like paying tax in this country.

The problem is that this injustice is met with resignation, rather than anger. While rage at the smaller misdemeanours of the poor – such as benefit fraud – seems easy to stir, destructive behaviour on this far greater scale is discussed like the weather. The rich pay themselves ludicrous sums of money, major corporations avoid tax, sometimes it rains. It’s this resignation – stemming from a lack of faith in any viable alternative – that feeds the triumphalism of the powerful, enabling them to engage in behaviour that is ultimately destructive to the health of their beloved capitalism itself.

Consider the figures. In the early years of New Labour, corporate chief executives were paid an average of 47 times more than their employees; now it’s rocketed to 183 times. Across the Atlantic, the figures are even more perverse: American CEOs were paid nearly 296 times more than their workers in 2013. In certain circles, criticising McDonald’s is now treated as snobbery; but consider that in the United States, as McDonald’s workers campaign for a living wage, their chief executive reportedly received a 368% rise. And Britain’s High Pay Centre found that the salary of the head of Barclays was a staggering 4,899% higher in 2011than it was in 1979.

Unless you pay chief executives ever more exorbitant salaries, it is often said, talent will flee elsewhere; but the New Economics Foundation has hammered that argument. How can the claim be right? Out of 10 advanced economies, only the US pays its CEOs more than Britain. Top pay boomed even as share prices slumped, making a mockery of the idea that obscene salaries reflect performance and achievement.

Stefan Stern, director of the High Pay Centre, will tell you that it is as much about status as anything. “It’s about where they stand in a pecking order,” he says. Being paid more than another CEO doesn’t reflect higher performance but it does reflect higher status. You can almost smell the testosterone.

And what is the result? One obvious repercussion is that distance is placed between those CEOs and their companies. They are disincentivised from investing in workers and research and development; short-termism is rewarded. The economy is also damaged in all sorts of ways. When lower-paid workers receive a pay hike, they spend the money, boosting the economy. As for the rich, they are more likely to stash it away, often in tax havens.

Low pay leads to higher personal debt and more spending by all of us on social security. Higher wages for the low-paid, says the New Economics Foundation, produce employees who are “more likely to be creative, more loyal, more productive and provide better customer satisfaction”. Then there is the communal effect – equal societies tend to be happier and have better social outcomes. There’s persuasive evidence too that high inequality is bad for growth.

The High Pay Centre is right to argue for workers’ representation on remuneration boards. Stronger trade unions would also mean countervailing pressure against the concentration of wealth and power in such few hands. And protests by the likes of UK Uncut highlight the injustice of tax avoidance. All this could be helpful.

But the problem with executives such as Bob Dudley isn’t just them – it’s also us. For until we shake off this weary resignation, the well–heeled will continue to enjoy their decadent party – in the knowledge that we’re the ones paying for it.

3.0 ·
What's Next
Trending Today
Your Lifestyle Has Already Been Designed (The Real Reason For The Forty-Hour Workweek)
David Cain · 17,087 views today · Well I’m in the working world again. I’ve found myself a well-paying gig in the engineering industry, and life finally feels like it’s returning to normal after my nine months...
No Moral Superpower: Arundhati Roy, Edward Snowden, and the Crimes of Empire
Jake Johnson · 9,563 views today · When Arundhati Roy was preparing, in 2014, for a trip to Moscow to meet Edward Snowden, she was troubled by two things. One of them was the fact that the meeting was arranged...
Dinosaur explains Trump policies better than Trump!
8 min · 9,400 views today · Donald Trump is actually the corporate triceratops, Mr. Richfield, from the 90's TV show sitcom, "Dinosaurs". 
Noam Chomsky Has 'Never Seen Anything Like This'
Chris Hedges · 5,659 views today · Noam Chomsky is America’s greatest intellectual. His massive body of work, which includes nearly 100 books, has for decades deflated and exposed the lies of the power elite...
And After the Election, The Reaction
Ret Marut · 4,156 views today · Could there be any better illustration of the shortcomings of representative democracy than this year’s Presidential campaign? For months upon tiresome months, the whole world...
Men Loving Men
Bianca Vivion · 3,373 views today · When my father was seven he and his best friend Phil cut their index fingers open and placed them together to create a “blood pact” that they would always be brothers. To this...
'The Climate of Fear Is Unacceptable' - Ken Loach on I, Daniel Blake
6 min · 3,104 views today · Ken Loach’s Palme d’Or-winning film I, Daniel Blake tells the story of a man who is denied disability benefit after a heart attack and who is then subsequently caught in a...
What Makes Call-Out Culture So Toxic
Asam Ahmad · 2,341 views today · Call-out culture refers to the tendency among progressives, radicals, activists, and community organizers to publicly name instances or patterns of oppressive behaviour and...
Writers Tom Hayden and Naomi Klein Talk About Journalism and Activism
27 min · 2,109 views today · Author, Activist and Former California State Senator Tom Hayden talks in depth with the author of No Logo and The Shock Doctrine, Naomi Klein, about the state of the fourth...
Today I Rise: This Beautiful Short Film Is Like a Love Poem For Your Heart and Soul
4 min · 1,910 views today · "The world is missing what I am ready to give: My Wisdom, My Sweetness, My Love and My hunger for Peace." "Where are you? Where are you, little girl with broken wings but full...
Forget Shorter Showers: Why Personal Change Does Not Equal Political Change (2015)
11 min · 1,838 views today · Would any sane person think dumpster diving would have stopped Hitler, or that composting would have ended slavery or brought about the eight-hour workday; or that chopping...
Three Massive Mergers - Millions for One Bank and a Disaster for Food, Water, and Climate
Wenonah Hauter · 1,685 views today · In addition to advising on all three mega-mergers, Credit Suisse is playing a big role behind the scenes of the Dakota Access pipeline.
25 Mind-Twisting Optical Illusion Paintings by Rob Gonsalves
Dovas · 1,495 views today · The beautiful and mind-bending illusions in Canadian artist Robert Gonsalves’ paintings have a fun way of twisting your perception and causing you to question what in his...
Grow Heathrow: Residents Resisting Eviction Over 3rd Runway
4 min · 1,230 views today · On March 1st 2010 Transition Heathrow members swooped on an abandoned market garden site in Sipson; one of the villages to be completely tarmacked to make way for a third...
Social Geographer Shows How Much of You is Determined by Where You're From
3 min · 985 views today · The Professor of Geography examines social inequality and the geodemographics of the UK, using maps created by Oliver O'Brien (UCL, CASA) in 2012 and updated in 2015. You can...
John Lennon's "Imagine," Made Into a Comic Strip
John Lennon. Art by Pablo Stanley · 736 views today · This is easily the best comic strip ever made.  Pabl
A Beautiful Reflection on What It Means to Be Human
8 min · 660 views today · Hello! We are Oh Wonder, a musical duo from London. We believe that everyone is equal. We are all human. We all deserve the world. And we can build that equality by sharing...
Speaking Out Against Australia's Unforgiving Refugee Policy
42 min · 614 views today · The Forgotten Children: More than a hundred child refugees are stuck in asylum limbo on the island of Nauru as a result of Australia's harsh and unsympathetic border policies...
Heartbreaking Animation Reveals Plight of Animals Under Threat of Extinction
3 min · 599 views today · This stunning and heartbreaking animation gives voice to animals under threat from human activity. Made as part of the Wildlife Conservation Film Festival, it features a...
The Top 100 Documentaries We Can Use to Change the World
Films For Action · 555 views today · A more beautiful, just and sustainable world is possible. Take this library and use it to inspire global change!
Load More
Like us on Facebook?
Corporate Fatcats Will Party Until We Turn the Music Off