Assume that a bank teller at JP Morgon gets paid $50,000 a year. Mr J P Dimon gets paid $30,000,000. That is – 600 times the pay of the teller.
This, we are told, is the free market at work. But the free market stops the moment Mr Dimon or his like find their wealth imperilled. Governments – you and I – must act, and the free-market ideology goes clean out the window.
In the meantime, what are we looking at apart from madness, greed and what looks like extortion?
Assume that Mr Dimon works five days a week for 48 weeks, a total of 240 days – that is a daily rate of $125,000.
For which Mr Dimon does not subscribe one cent of capital or assume one dollar of risk.
And I assume it would be grotesquely impolite to inquire if he pays much tax.
Well, the wealth of the world consists of promises. I work for you and you pay me. I buy your car and I pay you. I put money in the bank and take it out – possibly with interest. The bank lends me money and I certainly pay interest to it. If it fails, I expect my government to see that I suffer no loss as a depositor – I may have to take my chances as a shareholder. (The Swiss just reversed that priority with Credit Suisse – some say they did not want to upset a big Saudi shareholder.)
All of those relationships turn on trust or confidence – or what some might call ‘credit.’ The system would seize up instantly if people had to resort to law to enforce the relevant promises.
It follows that for the system to work, people must have confidence in – they must give credit to – banks and financial and government institutions.
You may have confidence in a banking system that sees the boss get paid 600 times what a teller gets, but I do not. He earns more in a day than the teller does in two years. Absurd or insane are among the more polite epithets.
And people who complain about surgeons’ fees might look at the comparison. Mr Dimon is not a member of a profession. Intrinsic to the notion of a profession is a sense of vocation or calling; a body of learning; and a collegiate commitment to a professional ethic which ultimately puts the public interest above the profit motive.
The embrace of public decency in big corporates has gone some way in the last generation, and some of it is real – but it will never bridge that gap.
Indeed, the bastion of capitalism is the home of the ideologues who say that trading corporations are there to make money – and that’s that. It is then heretical to talk about the public interest. Just as it would be inane to inquire after the tertiary achievements or community contributions of the boss. Mr Dimon is there to make money, and that’s all you need to know.
But some truths remain. What separates us from the lions and tigers is a shared underlay of sense, fairness and tolerance – including a sense of proportion, or restraint. We need all those qualities to have confidence in the way we do business and govern ourselves.
Well, one royal commission punched a mighty hole in our confidence in business. Now another is punching a bigger hole in our confidence in government.
What each has done is to justify our loss of confidence, and show, in unsettling detail, that too many people are getting paid far too much for doing far too little, and that even more people simply don’t know what they are doing – including company chairs and government ministers.
What we all saw in each was tears in the fabric as outrageous as the paycheque of Mr Dimon.
And you don’t have to have followed the Melbourne Football Club for half a century to know that once you lose confidence in something close, it takes a bloody long time to get it back.
Capitalism – free market – equality – J Dimon – J P Morgon – incomes of bankers.