The big question – Are multi-million pound salaries ever justified?

I have just finished watching “The Big Question” on BBC One and one of the questions posed was about whether multi-million pound salaries are ever justified and in particular in relation to the bankers.

There were a number of socialists on the show and what appeared to be people advocating communism, as they were saying that governments should cap what people are paid and that the likes of nurses and teachers should be paid more. I think it has been proven that societies that utilise communism are not popular and on the whole do not work – people are simply no equal and people have and should have choices!

I agree that nurses and teachers do a great job and we all need them and one could argue that we don’t need footballers on these huge salaries, but at the end of the day everyone has a choice. People that become a nurse, for example, choose to do this job knowing full well that their annual salary is what it is at the time; they also know that they will never get paid millions.

However, I would lay a bet that the majority of these nurses probably do the lottery every week too and if they were to be asked the question – “Would you like to earn millions of pounds?” the majority of these nurses would answer yes. Those that say no are simply not telling the truth!

The people that make millions or earn millions very likely do not do the lottery because for the first instance they don’t need the money, but secondly and probably more importantly they are prepared to go out and work hard for the money they have.

The other point that was not really picked up on The Big Question show was that the majority of millionaires create jobs. What was discussed is that if they earn more they pay more tax towards the government and society, which in turn pays towards nurses and teachers, but not that the likes of Richard Branson employ some 55,000 people who all pay tax towards the system.

There was one socialist person saying that the people that earn more seem to be able to avoid paying tax and yes this is true to a certain extent, but where they employ people there is no getting way from paying employment taxes under the PAYE system. So if a multi-millionaire is able to get away with paying a bit of tax through clever tax planning then good luck to him, as this simple goes with the territory. In other words a person that likes to make money also likes to retain as much of this as possible to re-invest in the business and so on.

Fair enough, millionaires may well save tax on their own income so as to get paid more, but why not, as they are the ones taking the risk and they are the ones employing hundreds and sometimes thousands of employees – who not only have tax deducted at source themselves, but they all then pay and contribute towards society from their net salaries.

Largely jealousy comes into the equation and people are simply not prepared to take the risk to set up their own business or to put their reputation on the line to go for these high paying jobs.

Nicky Campbell did ask a very good question to one socialist asking what should the likes of Paul McCartney be capped on what they earn from their record sales or that a book seller be capped on the sales of a best selling book. Should these people earn up to a certain level and then after that point the income be stopped? What Nicky Campbell didn’t ask is where this extra money should go if this were the case? What was interesting is that this person could not truly answer this question and quite frankly this would make a nonsense of any economy.

At the end of the day it is very unlikely that things will change from what they are now and there will always be a free market system through most economies and the world, subject to government meddling and intervention – case in point the recent government ‘nannying’ over the bank collapse with governments bailing out huge corporations in order to keep the capitalist wheel rolling!

The big question – Are multi-million pound salaries ever justified?

5 thoughts on “The big question – Are multi-million pound salaries ever justified?

  1. The thing that bugs me is some of these ‘directors’ are running monopolies or oligopolies and as such there isn’t any talent in just increasing prices to make the shareholders money.

  2. If I was to write and sing my own song in my bedroom, I could be great, but poor. If Ising to a group of friends, the same applies. Over time I could go up and down the country gigging and cut some cheap CD’s and make a little. But If this continues to grow because I am great and I reach a larger audience, the little they pay per head ( for the CD will make me and a few others rich.

    Does a nurse want to help the masses. Has she opened up centres up and down the country to spread her help. No she does a good job. Even a ceo, not a business owner or artist affects a change so dramatic based on its effects on such a number of consumers, suppliers and employees etc that they are valuable.

    Value is the price we perceive. Bonuses are usually related to success as well.

    Thanks

  3. I have recently read a post in one great economy journal – in a few words the author says the following: In order to make the CEO work harder firms have to pay them big bonuses and option shares. So there is a rational mechanism why CEO’s (and bankers) get such a big salaries.

  4. Yes I agree with you on that one – there is a but though and I guess if these ‘state owned’ banks need to attract people that are good at what they do in order to get the banks out of the mess they are in, then they will need to pay a market wage. If this market wage is in the millions, then so be it. Thank you for your comment, Russell

  5. If companies are going to pay these exorbitant salaries they should also take the risk of not being bailed out by the government. It seems that they have it both ways. If the government is going to be the backstop then the government should have more say. You can’t have free market and government safety. It’s either one or the other.

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