Paying the bill : Financial crisis

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SOCIETIES have often distinguished between the deserving poor (afflicted by sickness or disability) and the undeserving sort (the feckless and workshy). These days they also seem to differentiate between the deserving and the undeserving rich.

Ordinary people do not seem to mind that sports stars or entertainers make millions; they also seem to respect genuine entrepreneurs who have built businesses that are obviously useful. But they have little time for bankers, hedge-fund managers and other financiers. Society as a whole may benefit from the efficient allocation of capital or the increased liquidity that financial markets provide, but the public cannot easily see the gains.

A Populus poll in February, for example, found that 64% of Britons thought that the staff of banks part-owned by the government should not get any bonuses at all; the same proportion thought that senior bankers who made mistakes should repay past bonuses. A remarkable 82% thought that pay for senior bank staff should be capped (see chart 6).

As governments are forced to step in to save other sectors of the economy, it seems plausible that the public will take a similar attitude towards executives of other failing businesses. The intellectual argument that high pay is needed to create incentives probably rings hollow with most people at the moment. What is clear to the public, though, is that bankers and businessmen earn fortunes in good times and shout for help from the taxpayer in bad times.

A special report on the rich: The rich get poorer | Paying the bill | The Economist

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