bankers bonuses leaked document deferred

Bonus Balls
retirement age living longer jobs

Actually, The Retirement Age is Too High

People in power are not always trustworthy. One solution to that problem got delivered by a stand-up. And a big-name economist makes big-time sense. We trim, blend, and append three 2011 articles from: (1) the Guardian, Jan 25, on bonuses by George Monbiot; (2) YouTube, Mark Thomas manifesto of Land Value Tax; and (3) Foreign Policy, Jan 19, on retirement by James K. Galbraith (son of an advisor to JFK) who teaches at UT-Austin and is the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.

by G. Monbiot, by M. Thomas, and by J. K. Galbraith

As soon as bankers get a bonus, they spend much of it on land and houses. They know that these are safer investments than the assets in which they trade. If they trash the economy again, they at least will survive.

Conservatives said that where the taxpayer owns a large stake in a bank, no employee should be paid a bonus of over £2,000. However, bank bonuses in 2011 are expected to total £7 billion. A Downing Street spokesman admitted that the government would, after all, make no attempt to limit the size of bonuses.

What a leaked document shows is that even as the government claimed to be seeking strong international rules to curb the bonus frenzy, it was secretly lobbying to prevent them from being passed.

The EU ruled that bankers could take only a small part of their bonus as an immediate cash payment. The rest of the bonus would be a mixture of cash and shares, held over for up to five years. If, during that time, the bank did worse than expected, some of the promised money would be clawed back. This would force bankers to think about the future as well as the present.

The leaked document reveals that the Treasury contested the plan to impose a minimum period for deferring the rest of the bonus payment.

On January 11th 2011, the Chancellor of the Exchequer, George Osborne, claimed credit for the very policies his government tried to squash. It is in fact the minimum possible implementation of the EU directive. It seems to me that Osborne misled parliament.

As for the claim that tougher rules would damage the sector's competitiveness, such restraints will do the opposite, as Conservatives acknowledged while in opposition. The rules defend the banks against their bosses' greed.

The Prime Minister and the Chancellor of the Exchequer have been playing a double game. They claimed they wanted to tame the banks. In reality, they were pampering the rich and making the poor pay for their follies.

Fred Harrison, British economist and author Boom Bust (Jan 21): Mark Thomas is a British stand-up comic who spoke on the BBC about the solution of shifting taxes off our efforts, onto the value of land; for a chuckle, click here .

JJS: While making life sweet for bankers, we make it bitter for seniors.

The most dangerous conventional wisdom in the world today is the idea that with an older population, people must work longer and retire with less.

In the first place, "we" are not living longer. Wealthier elderly are; the non-wealthy not so much. Raising the retirement age cuts benefits for those who can't wait to retire and who often won't live long.

Second, many workers retire because they can't find jobs. They're unemployed -- or expect to become so. Extending the retirement age for them just means a longer job search, a futile waste of time and effort.

Third, we don't need the workers. Productivity gains and cheap imports mean that we can and do enjoy far more farm and factory goods than our forebears, with much less effort. Only a small fraction of today's workers make things. Our problem is finding worthwhile work for people to do, not finding workers to produce the goods we consume.

As new jobs appear, who should have the first crack? Older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?

The right step is to reduce, not increase, the full-benefits retirement age. Why not enact a three-year window during which the age for receiving full Social Security benefits would drop to 62 -- providing a voluntary, one-time, grab-it-now bonus for leaving work? Let them go home! With a secure pension and medical care, they will be happier. Young people who need work will be happier.

A proposal like this could transform a miserable jobs picture into a tolerable one, at a single stroke.

JJS: A single-stoke reform would actually be far more basic. That is, pay everyone an extra income apart from their labor or capital.

From whence the funds? From land, that is, from rent, or more precisely, from all the money that society spends for sites and resources and EM spectrum and ecosystem services it uses. Charge taxes or fees or dues to redirect all our spending for nature so that it does not line just a few pockets but instead lands in the pockets of everyone. From the recovered rents, pay citizens a dividend, a la Alaska’s oil dividend.

This geonomic policy not only lets the elderly finish their lives in dignity, and shrinks the workweek so young adults can find jobs or start firms, it also keeps rents out of the clutches of grasping bankers so they’d have to live like the rest of us -- and a comfortable life it’d be.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Bankers face activists' anger in the streets of Chicago

Greek debt, Merrill Lynch buyout, & Killer Pills are Rip-offs

World's rich got richer, so how about a break?

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