Assorted content for your Sunday reading.
- Eric Reguly opines
that the best way to ensure that banks (and other businesses) operate under the law is to make sure that individual executives are held accountable for failing to do so:
(I)f fines and the odd firing are no deterrent to bad bank behaviour, what is? The obvious answer is shareholder rage. The trouble is, shareholders are not enraged. They have not grabbed pitchforks and torches and stormed CEOs’ houses when the multibillion-dollar fines are paid to secure settlements. Instead, they meekly accept the fines as if they are a cost of doing business, a sleaze tax, if you like.
In some cases, the bank shares actually rise when the fines are announced. The reason? Because in each of the settlements, the fines could have been far worse and, in no case, have the penalties threatened to put the banks out of business. The era of destroying terminally vice-ridden companies is, apparently, long gone. The last time that happened was in 2002, when Arthur Andersen, one of the Big Five accounting firms, was convicted of obstruction of justice for shredding documents in the Enron case. Some 85,000 employees eventually lost their jobs. Regulators and the governments that employ them no longer have the appetite for collateral damage in the form of massive job destruction.
Unless senior executives are put on criminal trial or, at a minimum, marched out the door in shame, shorn of their lavish bonuses and corporate golf-club memberships, the rotten culture of the banks will not change. Why would it? The traders in the currency scandal who worked for HSBC, Citi, UBS and other biggies decided that the chances of them getting caught were minimal and kept going. And if they were to get caught, it would be the bank – that is, the shareholders – not them, who would be on the hook for fines worth fortunes.
The bank fines are getting so big and frequent that you can be forgiven for suspecting a mutually beneficial racket is in progress. The banks pay big fines for settlements that leave their businesses and executive ranks largely intact. The regulators typically pocket some of the fines and pad out government treasuries. Shareholders are the main losers. To break this absurd cycle, and to encourage banks to operate morally, a little prison time would do the trick.- And Bessma Momani reports
on both the unfortunate reality that governments haven't made the effort to cooperate in ensuring that corporate income is taxed at all, and the tentative steps being taken by the G20 to correct that gross loophole.
- Josh Bivens highlights
the fact that tax cuts and other giveaways to employers haven't done - and can't be expected to do - anything to improve wages:
Mr. Leonhardt pointed out the dismal wage trends for the vast majority of American workers in recent decades and how it would be a heavy policy lift to reverse them. This seems right to me. But then he wrote:
“Washington could definitely do more to help growth: better infrastructure, a less burdensome tax code, a less wasteful health care system, more bargaining power for workers and, above all, stronger schools and colleges, to lift the skills of the nation’s work force.”
As they might say on “Seinfeld,” you can’t “yada yada
“ more bargaining power for workers. It’s the most important part of the story.
The root of the U.S. wage problem (which is, in turn, the root of America’s inequality problem) is that most workers aren’t seeing their wages keep pace with overall productivity growth
. The policies on Mr. Leonhardt’s list are worthy, but most would not reliably close this gap between productivity and pay. Boosting the bargaining power of workers would.- Meanwhile, Andrew Jackson suggests
that employers need to bear the cost of building their future workforce rather than letting hundreds of billions of dollars sit idle. And Chuck Collins proposes
a combination of inheritance tax revenue, and an educational opportunity fund to ensure greater equality both between and within generations.
- The Hamilton Spectator laments
the woeful state of child care in Canada.
- And finally, David Miller writes
that refusing to do anything about climate change is no longer an option.