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    After Clegg denied RBS the permission to increase bonuses to base + 200%, it got thinking that it was very unfair. Why should premier league footballers be allowed to get paid extortionate amounts of income (£300k/week) + rising? Whereas hard-working people such as bankers who have to work excessive hours have to suffer a pay cut.

    The free-market justifies bankers huge bonuses similarly to how it justifies footballers wages. So isn't it discrimination against the Banking industry? What are your opinions on bonuses for bankers being capped?

    I'd urge you to take an objective approach.
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    We own RBS after the bailout. Therefore we decide whether or not they have earnt bonuses. And seeing as how they allowed their bank to collapse, that's pretty much a resounding no. We don't control the wages football clubs hand out because we're not in charge of the clubs. And we also don't control the wages of the banks that we don't own.
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    Yet doctors get a fraction of that for saving lives.
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    (Original post by Drewski)
    We own RBS after the bailout. Therefore we decide whether or not they have earnt bonuses. And seeing as how they allowed their bank to collapse, that's pretty much a resounding no. We don't control the wages football clubs hand out because we're not in charge of the clubs. And we also don't control the wages of the banks that we don't own.
    RBS is an example, the government didn't bail out all banks. There is a government initiative to cap bonuses for bankers whereas other industries (Such as Football) are not being targeted.
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    (Original post by lor771)
    Yet doctors get a fraction of that for saving lives.
    Doctors are hired by the public sector :lol: They have monopsony power and decide doctors wage rates, regardless of what the free-market equilibrium would suggest.
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    Because massive, massive bonuses for short term profit, little penalty for long term failure and a criminal lack of regulation doesn't work in the financial sector. See the last seven years for evidence.
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    (Original post by DaveSmith99)
    Because massive, massive bonuses for short term profit, little penalty for long term failure and a criminal lack of regulation doesn't work in the financial sector. See the last seven years for evidence.
    Couldn't have put it better myself. I don't know where to start with this, other than saying that to try and frame a veto of banker's bonuses as a bad thing, when the bank in question is publically owned and has performed terribly, is nothing short of ridiculous. These very institutions- when lightly regulated and allowed to pay extortionate money to promote risky, short term reward- are responsible for having nearly caused the downfall of western society, and now harp on about the need to return to the shocking pay packets of the past to recruit the best talent. What, the same talent that nearly destroyed the UK economy?! The sense of entitlement is beyond belief! I think we should be asking ourselves why hard working, crucial professionals like me and my colleagues (psychologists, nurses, speech and language therapists in the NHS) have had a pay freeze for four years, and yet no one is talking about the need to 'keep the best with higher pay' in an institution which keeps the nation alive and functioning.
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    I disagree with legal caps on bonuses, but if the taxpayer owns the bank (as it does RBS), then the government should be allowed to influence the levels of bonuses given
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    (Original post by Dr.Psych)
    Couldn't have put it better myself. I don't know where to start with this, other than saying that to try and frame a veto of banker's bonuses as a bad thing, when the bank in question is publically owned and has performed terribly, is nothing short of ridiculous. These very institutions- when lightly regulated and allowed to pay extortionate money to promote risky, short term reward seeking are responsible- nearly caused the downfall of western society, and now harp on about the need to return to the shocking pay packets of the past to recruit the best talent. The same talent that nearly destroyed the UK economy. The sense of entitlement is beyond belief! I think we should be asking ourselves why hard working, crucial professionals like me and my colleagues (psychologists, nurses, speech and language therapists in the NHS) have had a pay freeze for four years, and yet no one is talking about the need to 'keep the best with higher pay' in an institution which keeps the nation alive and functioning.
    You chose to work in the public sector. The public sector don't give a flying **** about the free-market allocation of wage rates. Welcome to the real world, the banking industry is the private sector and works purely on incentive functions be-it wage-rates & actually making money of these risky trades.

    I was referring to banks in general being pressured & forced to cap bonus pay.
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    (Original post by yo radical one)
    I disagree with legal caps on bonuses, but if the taxpayer owns the bank (as it does RBS), then the government should be allowed to influence the levels of bonuses given
    I suppose this argument would make sense. Although, that again would just be discrimination against bankers in the UK.
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    (Original post by Dr.Psych)
    Couldn't have put it better myself. I don't know where to start with this, other than saying that to try and frame a veto of banker's bonuses as a bad thing, when the bank in question is publically owned and has performed terribly, is nothing short of ridiculous. These very institutions- when lightly regulated and allowed to pay extortionate money to promote risky, short term reward seeking are responsible- nearly caused the downfall of western society, and now harp on about the need to return to the shocking pay packets of the past to recruit the best talent. The same talent that nearly destroyed the UK economy. The sense of entitlement is beyond belief! I think we should be asking ourselves why hard working, crucial professionals like me and my colleagues (psychologists, nurses, speech and language therapists in the NHS) have had a pay freeze for four years, and yet no one is talking about the need to 'keep the best with higher pay' in an institution which keeps the nation alive and functioning.
    In California they're thinking about imposing an extra tax bands on companies who pay their CEO's excessively. It hasn't got a chance of being implemented in any meaningful way because the financial lobby over there is beyond ridiculous, but it's an interesting idea.
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    (Original post by Abdul-Karim)
    You chose to work in the public sector. The public sector don't give a flying **** about the free-market allocation of wage rates. Welcome to the real world, the banking industry is the private sector and works purely on incentive functions be-it wage-rates & actually making money of these risky trades.

    I was referring to banks in general being pressured & forced to cap bonus pay.
    I've got news for you pal, the very fact that the government seems to take a similar perspective to you and 'don't give a flying ****' about recruitment and retention in crucial public services is part of the reason the NHS is bleeding talent at a rate not seen since the 80's. Me and plenty of my colleagues are planning on leaving, or have already left the NHS, taking our services to the private sector. The NHS has lost so many A&E consultants that half the staff working in such a specialty in Victoria, Australia trained in the UK or Ireland. The NHS is recruiting nurses from the Phillipines in droves again, and many Psychologists, SALTs and Physiotherapists I know are now working in the private sector, leaving inexperienced, burnt out clinicians to try and hold what's left of NHS community services together.

    The fact that these bonuses directly contributed toward the high risk culture that led to the crash of the economy highlights how the 'market' has become broken in banking, and how it isn't considered enough when recruiting and retaining professionals in the public sector. People in the NHS, civil service and other public bodies can take their skills elsewhere; it is a market economy and if you don't respect them enough, they leave. That's the 'real world'.
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    (Original post by Abdul-Karim)
    You chose to work in the public sector. The public sector don't give a flying **** about the free-market allocation of wage rates. Welcome to the real world, the banking industry is the private sector and works purely on incentive functions be-it wage-rates & actually making money of these risky trades.

    I was referring to banks in general being pressured & forced to cap bonus pay.
    The reason why the public sector has no money is because of the market failure of the financial sector. When a market continually fails it needs to be regulated, I thought you studied economics?
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    What annoys me is Ed Miliband's proposal for a bonus tax. With most bankers being extremely young, whereby it is already expensive enough in London.

    For people like me, it's a total joke. He's basically proposing that even if you come from a poor background and get a large bonus, a massive chunk will go in tax to help your friends in school who did **** all to get a job.

    Add onto this, he wants tax to go up to 50%, plus 12% national insurance plus a bonus tax, sorry - what is the point in working 100+ hours a week?

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    (Original post by Abdul-Karim)
    After Clegg denied RBS the permission to increase bonuses to base + 200%, it got thinking that it was very unfair. Why should premier league footballers be allowed to get paid extortionate amounts of income (£300k/week) + rising? Whereas hard-working people such as bankers who have to work excessive hours have to suffer a pay cut.

    The free-market justifies bankers huge bonuses similarly to how it justifies footballers wages. So isn't it discrimination against the Banking industry? What are your opinions on bonuses for bankers being capped?

    I'd urge you to take an objective approach.
    Because we're not capping their bonuses out of jealousy. We're capping them because they pretty much all contributed to massively ****ing the rest of us over.
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    Further to above, I disagree with the government on this 200% cap.

    I don't think it is fair for the following reasons...

    People seem to generalise and think if the bank performs badly then no one should get a 200% bonus without realising there are literally hundreds of divisions.

    If Banker A in one division makes £10,000,000 for the firm but Banker B in another division loses double that amount - then surely Banker A should still get a bonus for his performance despite Banker B destroying the overall performance of the bank.

    It is this thinking that because some bankers brought down the performance of the bank that even the really good performers of the bank should not be rewarded which will cause RBS' recovery to take even longer.

    Even if the 200% bonuses were paid to the top performers, the total compensation package is still 33% behind other banks and now that is even more.

    It's not acceptable that the government can dictate the pay of even the top performers at the bank (those driving the recovery), as we've already seen, they will jump to other banks. And it's no wonder they have a recruitment issue with even junior bankers when they get slated like this.

    Also some divisions carry more risk than others. It's not right that bankers working in relatively risk free divisions who make money should get slated with the guys who work in riskier divisions and lose money.

    It's a decision that is purely political and has no grounding in any economic sense or reality at all.

    In my opinion, other companies should adopt the incentive models of banks - where the employees get a share of the profits they generate. Even at top banks, cleaners have part of their compensation allocated to overall performance of the institution.

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    (Original post by DaveSmith99)
    The reason why the public sector has no money is because of the market failure of the financial sector. When a market continually fails it needs to be regulated, I thought you studied economics?
    The banking sector took a turn for the worst after the sub-prime mortgage collapse, I don't disagree. It was a joint failure, due to lack of regulation & the risk culture the banks built up. Although, not all banks needed to be bailed out. Yet all banks are being forced to cap bonuses. I'm all for free-market allocation and if a bank couldn't survive, so be it, although it would've been detrimental to short-term economic stability if such banks were left to collapse.

    Some professional clubs make huge losses, Manchester United for instance but yet don't cap pay for their players. The regulation should be focused on risk culture and the compliance departments rather than capping wages. What purpose does capping wages serve other than to deter the most talented in the industry to move abroad?

    The argument here is that it's discriminatory to target bankers, as it goes against the free market allocation of wage rates.
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    (Original post by Abdul-Karim)
    You chose to work in the public sector. The public sector don't give a flying **** about the free-market allocation of wage rates. Welcome to the real world, the banking industry is the private sector and works purely on incentive functions be-it wage-rates & actually making money of these risky trades.

    I was referring to banks in general being pressured & forced to cap bonus pay.
    So capping pay would deter people who are purely motivated by personal gain. That would be tragic.
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    (Original post by TurboCretin)
    So capping pay would deter people who are purely motivated by personal gain. That would be tragic.
    Monetary incentives.. that's the primary reason people work. Not everyone wants to willingly help people who are suffering from mental illness.

    This government is asking for a collapse in our financial sector.. what next? Nationalisation of banking industry? The best bankers would simply move abroad. What then?
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    (Original post by Abdul-Karim)
    The banking sector took a turn for the worst after the sub-prime mortgage collapse, I don't disagree. It was a joint failure, due to lack of regulation & the risk culture the banks built up. Although, not all banks needed to be bailed out. Yet all banks are being forced to cap bonuses. I'm all for free-market allocation and if a bank couldn't survive, so be it, although it would've been detrimental to short-term economic stability if such banks were left to collapse.

    Some professional clubs make huge losses, Manchester United for instance but yet don't cap pay for their players. The regulation should be focused on risk culture and the compliance departments rather than capping wages. What purpose does capping wages serve other than to deter the most talented in the industry to move abroad?

    The argument here is that it's discriminatory to target bankers, as it goes against the free market allocation of wage rates.
    Some banks didn't need bailing out because others were bailed out. If we (by we I mean all of us and not just the UK) had let the failing financial institutions go bust then the entire system would have fallen down like a pack of cards. It didn't just 'take a turn for the worse', it was essentially a ponzi scheme built upon money that didn't exist.

    Football clubs and the financial sector are entirely different. If a football club goes bust very little happens. If financial companies start to go bust then we have seen what happens. The risk culture was built around bonuses, as they were the incentives for bankers to take excessive risks, they reward short term profit and short term profit only.

    Even the strongest supporters of the free market don't argue for an absolute, even Adam Smith argued that regulation was sometimes necessary. The financial sector very much does need regulation, you don't get much more of a negative externality than a global recession.
 
 
 
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