If politicians are now waking up to voters' increasing intolerance of excessive remuneration, then it's about time
To dismiss it as rough justice is to miss the point: public anger about the vast sums handed out to many bankers and bosses is great, growing – and justified. One can see the difficulties in the case of Stephen Hester, who didn't cause the mess at RBS but now has to clear it up. And even Mr Fred Goodwin deserves some sympathy: why should he alone be stripped of his honours, when so many others responsible for the banking crash still clutch on to their knighthoods and peerages?
Then again, injustice on the way down is usually matched by injustice in the ascent. A truly fair system would not have awarded Mr Goodwin his gong in the first place, while, as head of a state-owned bank, Mr Hester remains the best-paid public servant in Britain. More to the point, if politicians are now waking up to voters' increasing intolerance of excessive remuneration, then it's about time. Even during Britain's long boom, the public was never as "intensely relaxed" about people getting filthy rich as the political classes.
Granted, there is a definitional problem here. Salaries for those at the top have been soaring away since the 90s, rising at a rate faster than ministers or regulators can generally track. Instead, excess pay fits that test set by the US supreme court justice Potter Stewart who admitted in 1964 that he could not define hardcore pornography, "but I know it when I see it". Some may find that too imprecise a standard, but public sensibilities do tend to shift about, a bit like labour markets. For Sir Philip Hampton to say that he and the others on the board of RBS could not foresee the backlash that would follow the award of a near-million pound bonus to Mr Hester beggars belief. Similarly, when Sir Philip talks about "switching" from big bonus payments to even bigger basic pay or option giveaways to "make it more palatable" to the public, he demonstrates an unfortunate combination of being out of touch and rather cynical.
Over the past two decades, top pay in America and Britain has gone from being a question of how much bosses can earn, to how much some can extract from their companies. This does not apply to all firms, especially those outside the FTSE 100. But when the median FTSE CEO is earning 219 times the median worker, something has gone badly wrong. This is money that could have gone back into the company, either to investors, or to workers, or simply have been reinvested. For a long time, even progressive politicians were nervous about broaching how much private-sector executives should earn. That's changing, as recent speeches from Ed Miliband and Chuka Umunna, and from Nick Clegg and Vince Cable, demonstrate. This has a long way to go before translating into meaningful action; but the transformation is to be welcomed.