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On Monday as ever from Mr Rees-Mogg, an excellent article about Banker’s Bonuses and other stuff in the Times: http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article6824030.ece

As we have come to expect, it was a measured article with good perspective and common sense. I too remember to 1970s and all that palaver, wage and price controls, that stuff never work and there is little point in trying it again today but that takes us to something else too.

Accepting Blame, Accepting Responsibility

I can always recall, although it took time for the stories to reach me, the sheer fantasy of the allegations concerning me during a divorce from my wife back in the mid 1980′s, this the stuff she said to others rather than her equally flaky affidavit. In the end and to me, it just became a “lesson”, who among us readily takes personal responsibility for our own actions and how, this has led us to where we are today ? Far too few I suspect…

Bankers, CEOs, Politicians are far easier to blame than accepting that for whatever reasons, we over borrowed and made a total Horlicks of our financial lives along with that, so too our dependent family members. No, it is far easier to ‘blame others’ than to accept personal responsibility for our own poor judgement, even though it was us who signed the re-mortgage or loan documents that we knew we couldn’t afford from existing income.

But NO, far easier to blame others be they white, black, brown, yellow, male or female, Bankers, Businessmen, Politicians, Farmers, people with one leg… “It was them wot made me do it !” and just how pathetic is such a cry ?

Politics

Banker’s Bonuses have become a political football and likely, quite unfairly but having said that, other issues also impinge.

I don’t know whether this idea might fly though, I am sure there will be many counter arguments but in principle what we want to do is encourage a longer term view to be taken by both the institutions that invest money and their employees.

We should remember that the “Markets” have been plagued with a short term and “churn” approach for decades and the current crisis was a consequence of that. Share prices based on an earnings ratio, seem to have disappeared long ago, most of the business deals are little better than asset stripping come monopoly games disguised as “releasing shareholder value” – my left foot, just another way to earn a commission on the “merger-de-merger deal” !

Bankers Bonuses

Let the Bankers get paid whatever they like but rather than “punish them” through higher taxes, set a maximum amount that may be taken in one year whether expressed in cash or percentages with the remainder paid into a National Savings Account that pays interest. This NSA amount could be drawn down in equal amounts over say 5 years, one might even as a “sweetener” allow a tax concession of basic rate tax on the withdrawals rather than their higher rate.

Yes, it is a form of enforced saving but then, so too are pension schemes but it does avoid distorting the whole tax regime for the sake of the few and means that people who are good at their job, get to build up personal wealth plus, being successful over 5 years will still deliver a very high and internationally competitive income in that Fiscal Year with a good buffer for the future, should times get hard.

Such a scheme could/should apply to all people, including Directors of any company paid a high incentive package with all bonuses removed from any “Final Salary” income calculation whilst in Office.. Well, what I call, the start of an idea.