On Wednesday evening (1st july 2009) Jeremy Paxman devoted most of his BBC2 Newsnight programme to new reports of bonus payments in the financial sector. He had heavyweight guests: Nobel prize winner Joseph Stiglitz; Liberal Treasury spokesman Vince Cable; Sir Brian Pitman, ex-chairman of LLoyds TSB; and Paul Myners (Lord Myners), Financial Services Secretary to the Treasury. Gillian Tett of the FT, this year's Financial Journalist of the Year and award-winning author also played a walk-on part
Paxman's story led with the news that for the City the recession is over; "Bonuses are Back" and the good times are rolling again. Goldman Sachs has reportedly set aside £600m in bonuses for its staff and 430-plus Barclays managers will share over £732m in bonuses.
Now, neither of these two financial institutions talk government rescue money, so they are free agents as to how they remunerate their staff. But these bonuses are being paid within a few months of the near-collapse of the financial foundations of the Western world when the change in the culture was supposed to be shifting to long-term horizons matching bonuses with certain returns and was supposed (if it was going to work at all) to apply to all banks -- either by diktat or by osmosis.
Presumably neither Sir Brian nor Lord Myners are fools -- their positions in life would suggest that they can assess evidence; make rational and reasoned judgments and add up to twenty without taking their shoes and socks off. So why did they persist in insisting -- in the face of a billion pounds worth of bonus evidence -- that the bonus culture of the City had changed? Why aren't they devoting their energies to changing that culture with concrete actions rather than singing lullabies to send us to sleep -- again? and if they aren't fools or knaves or liars -- what do they presume we are?
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