The economics of envy

The news that one hundred public figures have joined a pressure group's campaign for a High Pay Commission to curb "excessive" pay does not surprise me. People like Vince Cable and Jon Cruddas will always take such a stand, it shores up their vote and may save their parties from meltdown in the coming general election. The campaign has been launched by Compass who are calling for measures such as maximum wage ratios and bonus taxation. Odd I thought there was bonus taxation; called income tax. As I have said before there are two very good reasons why banks pay such large bonuses (compared to basic salaries); first it keeps the staff working very long hours rather than sitting back and just taking the money, second bonuses do not count as pensionable income and so their pension liabilities are reduced. It is odd that the BBC and others never think about these points, I suppose they do not fit the "narrative" of "greedy bankers".

I read today that "Chancellor Alistair Darling has said he is ready to curb bonuses if necessary." If necessary for what? To raise taxation to pay for the mess Gordon Brown has made of the UK economy? To shore up the Labour vote? To get a positive headline in The Guardian, The Daily Mirror and on the BBC?