James Dempsey is a Research Fellow from the Politics and International Studies Department at the University of Warwick. His work focuses on the financial crisis and James is currently developing a theory of responsibility for the financial crisis that explains which individuals and institutions can be held accountable, and why, and the implications of these conclusions for obligations that arise out of the crisis.
“In an interview with the BBC today David Cameron’s former director of strategy, Steve Hilton, has said that the bosses of large banks should be paid no more than £100k to £200k a year, the same as senior civil servants. His reasoning is that any company that is so important to the economy that it would require a state bailout if it was at risk of failure should be considered part of the public sector, and so be subject to public control.
“He is right. The idea that control of an organisation should rest solely with the owners of that organisation does not represent either reality or a sensible approach to managing an economy. We already accept greater or lesser public control of businesses and their activities depending on various features, such as how essential the service is that they provide, and how much the market tends towards a lack of competitiveness that harms consumers.
“In arguing for direct control of bankers’ salaries Hilton is simply recommending a sensible extension of public control on the basis of a relevant feature of those businesses – public money underpins an implicit guarantee against failure. To say that such banks are part of the public sector is perhaps to go too far, but on the sliding scale of control, between public and private interests, there is certainly a strong case to move further towards the public.
“Ultimately, this is an issue of principle; an issue of accountability – to whom should senior bankers be accountable? The claim that Hilton is making is that, unless steps are taken to make the sector more competitive and individual institutions less systemically important, the public have a right to hold leaders accountable, part of which involves influencing how they are remunerated.”
Notes to Editors:
James Dempsey is available for interviews.
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