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

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 ·
1
What's Next
Trending Today
Ten Ways We Misunderstand Children
Jan Hunt · 15,217 views today · 1. We expect children to be able to do things before they are ready. We ask an infant to keep quiet. We ask a 2-year-old to sit still. We ask a 3-year-old to clean his room...
The Little Engine That Couldn't: How We're Preparing Ourselves and Our Children for Extinction
Daniel Quinn · 11,230 views today · In a recent semi-documentary film called Garbage, a toxic waste disposal engineer was asked how we can stop engulfing the world in our poisons. His answer was, "We'd have to...
18 Empowering Illustrations to Remind Everyone Who's Really in Charge of Women's Bodies
Julianne Ross · 2,503 views today · When Brazilian graphic designer Carol Rossetti began posting colorful illustrations of women and their stories to Facebook, she had no idea how popular they would...
When You Kill Ten Million Africans You Aren't Called 'Hitler'
Liam O'Ceallaigh · 1,736 views today · Take a look at this picture. Do you know who it is? Most people haven’t heard of him. But you should have. When you see his face or hear his name you should get as sick in...
Debt, Inequality and the Logic of Financial Violence
David Graeber · 1,576 views today · Five years after Occupy, organizer and anthropologist David Graeber speaks to ROAR about the power of finance, the history of inequality and the legacy of the movement.
Gabor Maté: Why Our Culture Makes So Many Of Us Unhappy
3 min · 1,086 views today · Dr. Gabor Maté explains why it is that our culture makes so many of us unhappy, unkind to one another, miserable, alienated from ourselves, etc. Watch the full interview in Part 2.
Your Lifestyle Has Already Been Designed (The Real Reason For The Forty-Hour Workweek)
David Cain · 1,048 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...
John Lennon's "Imagine," Made Into a Comic Strip
John Lennon. Art by Pablo Stanley · 918 views today · This is easily the best comic strip ever made.  Pabl
The White Man in That Photo
Riccardo Gazzaniga · 912 views today · Sometimes photographs deceive. Take this one, for example. It represents John Carlos and Tommie Smith’s rebellious gesture the day they won medals for the 200 meters at the...
Bitter Lake (2015)
136 min · 822 views today · Adam Curtis: Politicians used to have the confidence to tell us stories that made sense of the chaos of world events. But now there are no big stories and politicians react...
Schooling the World (2010)
66 min · 668 views today · If you wanted to change an ancient culture in a generation, how would you do it? You would change the way it educates its children. The U.S. Government knew this in the 19th...
Beyond Civilization: Humanity's Next Great Adventure
Daniel Quinn · 586 views today · PART ONE A fable to start with Once upon a time life evolved on a certain planet, bringing forth many different social organizations—packs, pods, flocks, troops, herds, and...
It Didn't Start With You: How Inherited Family Trauma Shapes Who We Are
Mark Wolynn · 571 views today · The past is never dead. It’s not even past. — William Faulkner, Requiem for a Nun
Yemen's Forgotten War and Famine Fuelled by Weapons from The West
3 min · 485 views today · The world has forgotten the war in Yemen but you'll remember these shocking images of its starving children.
You Should Get Naked More Often. It's Good for You.
Joni Sweet · 478 views today · When Nelly encouraged overheated people worldwide to get naked in 2002, he was unknowingly advocating much more than just a sexy, sweaty dance party. Sunbathing, sleeping...
Today I Rise: This Beautiful Short Film Is Like a Love Poem For Your Heart and Soul
4 min · 438 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...
90 Inspiring and Visionary Films That Will Change How You See the World in Profound Ways
Tim Hjersted · 410 views today · The world today is in crisis. Everybody knows that. But what is driving this crisis? It's a story, a story that is destroying the world. It's a story about our relationship to...
Masculinity Is Killing Men: The Roots of Men and Trauma
Kali Holloway · 364 views today · We begin the damaging process of turning boys into men long before boyhood ends.
A New Story for Humanity (2016)
102 min · 359 views today · Inspired by the New Story Summit at the Findhorn Foundation: a sold-out multicultural, multigenerational inquiry into a new story for humanity, attended by change makers and...
Lawns Are for Suckers. Plant a Garden - for the Climate!
Nathanael Johnson · 351 views today · Ripping out your lawn and planting kale and peppers won’t just lead to great stir-fry — a new study finds it could make major contributions to fighting climate change...
Load More
Like us on Facebook?
Corporate Fatcats Will Party Until We Turn the Music Off