Bonus Hysteria vs Expenses Sleaze

31 03 2009

The recent indignity suffered by Home Secretary Jacqui Smith over her husband’s viewing of two “adult” films, which she then submitted as part of her parliamentary expenses claim got me thinking again about the slightly older furore over Sir Fred Goodwin and his humungus pension, and the ongoing hysteria over bankers’ bonuses.  I posted a couple of weeks ago on why I thought it unlikely that Harriet Harman’s threat to take government action to recover Sir Fred’s pension would be successful.  In the meantime Congress in the USA has got itself worked up into  a  lather over bankers’ bonuses and is considering a 90% rate of tax on all executives (from those institutions receiving state bail outs, particularly AIG) receiving compensation packages in excess of $250,000. 

When I posted on the subject originally, I said I thought that the politicians were merely trying to deflect attention from their own  inability to actually take meaningful action to mitigate the effects of the recession.  Nothing that has happened since dissuades me from that view.  Indeed reports in the newpapers suggest that President Obama has been coming under some pressure to do something and there are signs that his honeymoon period may be drawing to an end.  A report in the Financial Times on the 27th last was headline “America’s liberal lay into Obama” and he was accused “of taking dictation from the same financiers who have brought the economy to the brink of depression”.  Some of the (American) people I follow on Twitter are also incensed by his actions (ok, that’s not representative I know but the mood of optimism that greeted his inauguration seems to have withered).  America’s liberals! Heaven help the man!

Politics is never an easy world and politicians will always be criticised whatever they do.  What irks me in with these two particular issues though is how politicians were calling, effectively, for the rule of law to be pushed aside so that valid contractual relationships between employer and employee could be set aside to satisfy the public call for bankers’ blood (and make the politicians look like they were doing something) when at the same time politicians dissatisfied with their incomes are loading their expense claims up onto the taxpayer  bcause they feel their salaries don’t compensate the sufficiently.  Jacqui Smith gets a salary of £141,000.  Her husband, who acts as her parliamentary aide, gets a salary of £40,000 (if the newspapers are to be believed).  She lives in her sister’s house during the week (and that has been the subject of criticism already)  and claims an allowance for that.  I have no issue with what her husband chooses to watch on TV (although I do wonder how stupid he must have been to submit the cost as an expense).  Jacqui Smith is not alone in having her expenses questioned – and no doubt we will be hearing a lot more similar stories in future  –  but I do have an issue with the hypocrisy of politicians (as a class) who criticise bankers for greed when their own actions don’t pass scrutiny. 

I’m not surprised; it was ever thus but let’s just bear it in mind next time Harriet Harman, Gordon Brown, Alistair Darling et al start singling out sections of the working population for special treatment.




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