21 April 2010

 

Saving the financial system

I today left the following comment on ft.com, in response to an article by Martin Wolf, "Halting the Financial Doomsday Machine"

As you so pertinently point out, the incentives of those who run the system are the engine room of the doomsday machine. It is on the incentives that the really radical change is required. A global cap on executive pay (say US$500,000 per annum) would remove the incentive for top earners to prioritise personal gain. This would give more constructive motivations (such as saving the financial system) a real chance of being heard in the boardroom. Voters might well like to see a cap on pay, and it would free up lots of cash for the banks, allowing them to recapitalise.
And why not? The whole point of competition is to drive out costs and increase efficiency, but this has totally and completely failed in the case of the market for executive talent.

For more on the Global Cap on Pay follow the link in the left hand column of this blog.

Labels: , ,


This page is powered by Blogger. Isn't yours?