More on bonuses - 5 comments

I had planned to comment on Peter Hain's plea (actually, it was a veiled demand) a fortnight ago that City firms donate "two-thirds of their bonus pots to charity rather than giving employees six-figure bonuses", but I didn't take it seriously. However, city bonuses seem to have become a cause célèbre for politicians who seem to have lost the will to talk about genuinely egalitarian politics.

Chris Dillow cites Ian Gibson MP's recent comments [via]:

I don't think people should have bonuses at all. They are unacceptable. I think it’s got worse. If the Labour Party recognised this problem then they would have more support today.

Well, why might bonuses be offered? Sure, there are fiddles, but the most plausible reason is to make it worth workers while to work harder (without compulsion), to improve the running of their organisation, take responsibility for its success, and to come up with ideas for making it more efficient. Without making it too obvious which one is which, I will have worked in:

1. An organisation so large that my personal contribution couldn't possibly affect my bonus.
2. A tiny organisation, unable to offer any incentive at all for a greater contribution.
3. A small organisation that was able to offer large bonuses in successful years.

Clearly the incentives are non-existent in (1) and (2), but where they do apply - in (3) - do they promote greed? Well, not necessarily. I don't see why any of the above would not apply just as strongly in a future socialist economy/society, characterised by cooperatives, a one-off equalisation of wealth, and controls on inheritance. People need reasons to do anything, and to make it impossible for them to benefit from their actions is a nail in the coffin of the legitimate economy, whatever economic system is in place. In the case of City bonuses, The Treasury/charities might be lucky enough to earn a windfall in Year 1, but the fund will swiftly dry up, reappearing elsewhere in a different form.

The real danger comes about when these "bonuses" are entrenched, allowing the recipient to gain economic or political power in this generation, or giving their offspring an undeserved head-start in the next - but these abuses can be tackled in other ways (inheritance tax, for one), as they very well should be.

Tom S lists a number of practical objections to bonuses in a comment left at Chris' blog above, and to deal with one of those here: of course we hope that human beings would work hard and innovate for the sheer love of the State it - their colleagues, their profession, the public they serve, their community, and so on. Perhaps this is an impulse it's harder to imagine existing if you believe that work is "alienating" (in the Marxist sense). Surely, though, our society should benefit as a result of human benevolence, rather than being dependent upon it.

So the challenge as I see it is to find some way of encouraging (or perhaps, rediscovering) benevolent and charitable behaviour - a feeling in people that they ought to contribute to society because it makes for a more contended place for all, rather than leaving this decision entirely to governments, and concealing your wealth whenever you have enough of it. I don't accept this is just a "City" problem: the lack of benevolent behaviour ("greed", if you like) is not the preserve of the super-rich - it increases with income, from a low base, and particularly affects the non-religious - even though the sums involved here are huge. Moreover, for too many on our side, "the City" is a place of fear, mystery, and conspiracy, and it's too tempting to single it out rather than tackle a society-wide problem.