Public must learn to 'tolerate the inequality' of bonuses, says Goldman Sachs vice-chairman
Bankers' soaring pay is an investment in the economy, Lord Griffiths tells public meeting on City morality
One of the City's leading figures has suggested that inequality created by bankers' huge salaries is a price worth paying for greater prosperity.
In remarks that will fuel the row around excessive pay, Lord Griffiths, vice-chairman of Goldman Sachs International and a former adviser to Margaret Thatcher, said banks should not be ashamed of rewarding their staff.
Speaking to an audience at St Paul's Cathedral in London about morality in the marketplace last night, Griffiths said the British public should "tolerate the inequality as a way to achieve greater prosperity for all".
He added that he knew what inequality felt like after spending his childhood in a mining town in Wales. Both his grandfathers were miners who had to retire from work through injury.
Griffiths said that many banks would relocate abroad if the government cracked down on bonus culture. "If we said we're not going to have as big bonuses or the same bonuses as last year, I think then you'd find that lots of City firms could easily hive off their operations to Switzerland or the far east," he said.
Goldman Sachs is currently on track to pay the biggest ever bonuses to its 31,700 employees after raking in profits at a rate of $35m (£21m) a day.
The idea that greed is good because somehow one person’s obscene pay will eventually benefit the masses is one made often by free market conservatives and tea party protesters here in the States. The irony that this is the same exploitive attitude found among British lords should be lost on no one.
Furthermore, the argument that people should just tolerate inequality because if they don’t, the bankers will take their toys and move to Switzerland is at best elitist and patronizing; at worst, it's economic blackmail.
Does anyone really think Goldman Sachs will abandon the London market to its competitors? Does anyone else really think that the inequality created by bankers' huge salaries will create prosperity for anyone other than that same privileged group?
It seems to me we fought a revolution over this kind of exploitation, the attitude that “you little people are here to serve us aristocratic foks.” The economic exploitation of colonies is a theme which runs deep through British colonial history, and one often hears the argument that this is what led to the fall of the British empire. How ironic these arguments are now parroted by America's free-market conservatives, our own home-grown brand of elites who confuse greed with patriotism.
I don’t mean to dump on our British cousins. Here's an idea from Lord Turner, chairman of the Financial Services Authority:
Lord Turner, who was also present at the meeting, called once again for a global tax on financial transactions. He said that such a so-called "Tobin tax" could redistribute bank profits to help fight world poverty and climate change.
See, they aren't all bad.
I don't see the argument that people must tolerate inequality for their own good as resonating anywhere in the world. The mere fact that such gross inequality exists pretty much negates your argument. If a group of bankers raking in mega-millions helped the rest of us, then we wouldn't all be in such dire straights right now, would we?
If the idea that tax cuts spurred the economy and allowed wealth to rain down like pennies from heaven on the rest of us, we'd all have benefitted from the Bush tax cuts of 2001 and 2003 and poverty would not be at an 11-year high.
Face it, there are no free market fairies, and nothing trickles down on the people except misery. Telling people to shut up and let bankers have their giant bonuses because it's good for Britain (or America) is not a winning argument.