Wealth hatred

Investment bankers, as we all know, earn a disgusting amount of money.  When you think how many nurses could be employed for the same amount as a top fund manager pulls in, it’s clear that there is a fundamental imbalance in society.  Nobody truly earns that much money; nor could anybody really need that much money.  It is thoroughly unfair.

At least, so goes the popular mantra, and it’s very understandable why.  Nobody was interested in what bankers earned before the credit crunch; but once the rug was pulled from under the economy, we needed someone to blame, a poster boy for the evil that is money (or rather, lack of it), and those pesky bankers filled the role very nicely.  The numbers on their pay slips were sufficiently beyond the comprehension of most of us to be unjustifiable, and thorough reform – at the very least – was demanded loudly and repeatedly by those with a platform from which to so do.

It isn’t just the size of the wage that is beyond most people’s comprehension though; feeding this righteous ire is also a lack of understanding of what investment bankers do.  It has always been the case that money begets money; those with money will always want it to work for them.  This is true of us all however, and is just a question of scale.  Most people with savings will have looked at various alternatives at some point, and the main selling point of any investment is what you get in return – the interest rate.  Countering that is an evaluation of the risk – those who once had Icelandic savings account will understand this more than most.  You want the highest interest possible – the maximum return on your investment – but with the minimum risk, and somewhere in the middle is a balance which satisfies the majority.

In a nutshell, this is what investment bankers do, but on a macro scale, and at a level far removed from most individual savers.  It affects the vast majority of people through their company pensions, ISAs or even child trust funds.  All these investments could be put in a National Savings account, which would make them about as safe as it’s possible to be; but because of that, you’d get very little interest.  So instead you place your trust in a financial institution, who assure you that they can do better for you than that.  And because a savings account that promises us a 6% return is always going to be more attractive than one that offers 4%, the banks do everything they can to make that return as high as possible, without undermining the bank’s ability to trade.  It’s that risk versus return decision again that we all make with our own savings, but on a much larger scale, and with millions of people’s money, not just yours.

It is natural then that you would want someone looking after this money who knows the financial markets well enough to be able to get the most money back for the smallest risk.  Considering that every financial institution is going to want the best fund managers, so they can offer they highest interest rates, they will compete to make sure they get them.  That competition means that the rewards on offer will be high; disgustingly high, to most people.  But ask yourself a question: would you prefer to entrust your money to the best person at the job, or the 10th best, or the 1000th best?  And, if you were among the best in the world at what you do for a living, and another company came along and offered you twice as much to do exactly the same job, would you turn it down?

This same model applies everywhere; the best sales people, the best builders, the best pilots, the best scientists, the best store managers, all of these people will rise up their professions to the level their skills allow, and the thing that drives them up is, fundamentally, money.  They might characterise it in different ways: giving the best opportunities to their children, ensuring they have an early and/or comfortable retirement, having more holidays so they can spend quality time with loved ones.  Ultimately though these things are the result of money.  The only difference in banking is that the returns are so high that the industry is prepared to pay the right people comparatively large amounts.  If you have a billion pounds to invest, the difference between the 10th best fund manager and the 1000th best might mean your investments earn £5 million less in a year, so to a bank it would be worth spending a million more to ensure the top 10 guy works for them rather than the competition.  What is absolutely clear is that there needs to be controls in place to prevent individual bankers taking excessively risky decisions, but paying them less overall isn’t the answer.

Since the start of the credit crunch there has been a worrying and increasing tendency to analyse the salaries of anyone in the public eye.  I say analyse; that suggests a level of inquisitiveness into how those salaries are made up, and why they are at the level they are, which actually is not the case at all.  The trend is more to use them as a stick to stir up what I can only describe as wealth hatred.  It isn’t about class: most Premiership footballers would describe themselves as working class, and they are subject to the same green-tinged commentary on their “obscene” pay packets as the aforementioned bankers.  Newspapers have started suffixing salaries in the same way as ages: instead of “the CEO of Suchandsuch.com, John Smith, 58” we are now seeing “the CEO of Suchandsuch.com, John Smith, who is paid £6m a year” when there is absolutely no relevance to the story.  Even when the article is about something like front-line employee salaries, publishing the salary of the head of the organisation is a misleading ploy: the individual concerned will, in most cases, be in the position they are in due to hard work and talent; their opinion is more valid, not less, as a result of their experience and expertise, for which they are – rightly – well paid.

Ambition and aspiration are fundamental aspects of human nature and development, and we are lucky enough to live in a society and a time that, broadly, reward hard work and aptitude.  While it is right that we should regulate the extremes of the few to avoid placing the good of the many into peril, equally we should not persecute or judge those people who have talents which allow them to bring home more bacon than the rest of us.


About theparttimevegetarian

A part-time vegetarian since 2008 when my wife decided to go veggy, I've worked hard to ensure our diet remains interesting, tasty and avoids any bland vegeburgers. I sometimes write about food, but a foodie blog this ain't. If you like this blog please Like my Facebook page: http://www.facebook.com/theparttimevegetarian
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