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REGULATE UBER ALLES

By David Vance On February 28th, 2013

Let’s get a fundamental proposition straight. In a free market, private business SHOULD allowed to reward those who work for it in whatever way it sees fit. The concept of a bonus payment is perfectly sensible and is no concern of Government. Unless, of course, you live in the EU.

European Union officials have struck a provisional deal on new financial rules, including capping bank bonuses. Under the agreement, bonuses will be capped at a year’s salary, but can rise to two year’s pay if there is explicit approval from shareholders. The deal was reached late on Wednesday. EU ministers must approve it, although this is considered a formality. The UK, which hosts Europe’s biggest financial services centre, was opposed to any of caps on bank bonuses.

Such opposition means nothing.

The EU exists to regulate, to control, and it knows that this new regulation will drive business OUT of the UK,  as the City of London has made clear. To the Eurocrats, that is a price worth us paying.

But beyond that there is the deeper point as to who controls the decision making process of business. The EU has decided it will set the standards. What can go wrong with that then?

4 Responses to “REGULATE UBER ALLES”

  1. What exactly are these bonuses for and where does the money come from?

  2. The problem is not the size of the bonuses, it is that they can encourage reckless behaviour in the process of obtaining them. If the banks had the ability and the inclination to go after the workers who superficially looked good in the short term, but set in motion events that in the long term sunk the banks, then it would not be so bad.

    A solution? Pay bonuses in stock that cannot be sold for ten years. Should encourage far more prudent behaviour, and if not then they get nothing anyway.

  3. Surely the term ‘bonuses’ whould be renamed. These payments appear to have become an automatic entitlement year after year in the banking industry regardless of performance . Far from regarding them as what the word Bonus is meant to be – an exceptional extra reward for superlative work, they have instead become as regular as the main salary and staff are outraged and angered if they don’t get them.

  4. The EU is in the business over ” overregulation “, not ” regulation “.

    Anyone with a brain is in favor of regulation of banks, stock trading, pure food standards and many other things, with the lightest effective hand.

    But your EU goes beyond that, and having that layer of bureaucracy over your own dead hand bureaucracies, makes the problem even worse, as it does here, where there are sprawling state and federal bureaucracies can at times do the same things.

    David, some here say that all regulation is bad. You here speak of regulation as if it was a bad thing. Do you agree that the UK government should regulate to protect banks, stock trading, food consumers in any way?