Postal Strikes - Adam Crozier

[Rog]

Not at all. The market that affects executive pay includes parameters such as the capability of an individual to run his own enterprise and the need to make being salaried preferable to that, the market demand for scarce management knowledge, skills, and experience, and track record.

Worked well in the banking world, didn't it?

 

It worked fine in the Banking industry, the problem was that the remit to make money for the shareholders and make use of what was on offer in order to make money for themselves was unregulated by the government who entrusted them with the nations wealth.

 

It’s not the fault of the bankers, they were simply doing what anyone would in the same situation, it was down to firstly the US government and secondly the British government for not taking the steps they should have done.

[Sebrof]

Not at all. The market that affects executive pay includes parameters such as the capability of an individual to run his own enterprise and the need to make being salaried preferable to that, the market demand for scarce management knowledge, skills, and experience, and track record.

Worked well in the banking world, didn't it?

 

It worked fine in the Banking industry, the problem was that the remit to make money for the shareholders and make use of what was on offer in order to make money for themselves was unregulated by the government who entrusted them with the nations wealth.

 

It’s not the fault of the bankers, they were simply doing what anyone would in the same situation, it was down to firstly the US government and secondly the British government for not taking the steps they should have done.

 

Well, it was certainly true that there was a failure of regulation, but the primary fault lies with directors who managed companies for their own benefit, rather than for the shareholders' benefit. And a large part of the blame falls on non-executive directors whose role was to keep tabs on the executive directors, and who were often the people who approved remuneration schemes that encouraged excessive risk-taking and short-term thinking.

 

Essentially, people running big companies have become more crooked.

 

S

[La_Dolce_Vita]

How about a man who is the project director for the delivery of a turn key solution to deliver an alternative telecoms system for an NLO (new licensed operator) for a country....

How much salary and what other perks should such a man be offered as a remuneration package in your opinion?

Very hard to say, because wages are clearly not closely proportionate to effort (in work) and tied in to the level of responsibility in making company decisions.

It isn't really a good idea to ask me because I would want workplace democracy, not illegitimate hierarchical systems that we see today. Yet the higher up the hierarchy we go the less proportionate the association is between hard work and the more it all seems to rest on responsibility. I fail to see the justification of this. The Director makes responsible decisions, but there is little cost to him and making incorrect decisions. It is not a personal responsibility that engenders serious costs for the person involved.

[La_Dolce_Vita]

But part of the problem the postal workers have is that they don't want modernisation, they are actively protesting about Royal Mail trying to improve their working conditions.

They'll want modernisation if they can keep their jobs, have good pay, and decent working conditions. Or have the State transfer them to other jobs.

 

Yes the whole point is that they are taking advantage of their position, however as they are a vital part of the nations infrastructure they are able to force Royal Mail's hand in making unreasonable and undeserved increases in, for example, pay as if they don't the country is screwed and the Royal Mail will face fines and huge damage to their reputation. As it is the workers have done untold damage to their employer meaning in the future there could be even greater need for redundancy or pay cuts.

Whether the services they provide are vital or not, they are still workers, and are still affected by wage issues and working condition issues. To not take direct action would leave them powerless to whatever decisions are taken over their heads in regard to such things.

 

Where as the Police and Fire Service have to make do with lower pay for more demanding jobs because they are unable to strike.

The Fire Service can strike, I am sure. The police can't - which is wrong in a way, but then again it is tough shit - because these are the scum that get wheeled out to stop direct action when they are ordered to do so.

[pongo]

Nothing to do with the post and a bit random - but re the conversation about banks: I'm starting to see why rather than just how it all actually went wrong. The more I look at it, the more I am starting to understand how it was actually a technical failure of the implementation of exactly the excellent instruments (CDS etc) which were supposed to be used to balance risk. The thing being that the bet and the counter bet have to be kept apart or else they cancel each other out. Same as an old fashioned independent bookie would not offload a bet on the same bet* (or in this analogy on an accumulator which included the original bet). That makes sense, yes ?

 

* hang on he would - but you see what I mean

[La_Dolce_Vita]

I don't understand that Pongo.

 

I just see the Financial Crisis as an inevitability based on excessive risk taking in the finance industry which was made worse by the sub prime market and foolish de-regulation of processes under misguided free market fantasies.

[pongo]

an inevitability based on excessive risk taking in the finance industry

 

Maybe not so much about excessive risk LDV, as about risks not being adequately balanced. Hence my reference to how bookies offload bets.

 

The idea of essentially partially selling on risks is not fundamentally stupid. It just went wrong.

[La_Dolce_Vita]

Well the finance industry is one where risks are constantly taken with the costs always considered in terms of the themselves (the companies making them) and not the costs to everyone else. Such companies don't calculate systemic risk. If they are well run and operate under capitalist practices then this is just natural. Therefore, these companies don't calculate the costs in terms of what will happen if they go bust to everyone else and the economy as a whole. Therefore, such risks are massively underpriced.

 

In such an environment the likelihood of problems is far, far greater than there would otherwise be were systemic risk to be factored in. Yet this is how the market works - it ignores such externalities. And then you have the barmy arguments for allowing free market principles to operate in a system that cannot even operate as one. Regulations disappeared thus making disaster all the more likely. But even if you bring back all the regulatory apparatus it still won't stave off future problems in my opinion.

 

It was going to happen.

[pongo]

I definitely see where you are coming from LDV. On the other hand markets are fascinating.

 

Financial markets deal in risks and what-ifs. Risk taking facilitates trade. What if the crop fails ? What if the ship sinks ? What if someone defaults on a debt ?

 

Financial instruments and the way in which the markets operate are an abstraction of real social, economic, agricultural and industrial activity. Abstract derivates (in general terms) facilitate important risk taking.

 

I suppose it comes down to whether or not you think that national and international trade is basically a good idea or not. All of the financial abstraction grows on the back of that.

[La_Dolce_Vita]

Markets are fascinating, but inefficient because of the negative externalities that are never factored in. This is the problem with capitalism.

 

I don't think your question on trade is the correct way to look at it at all. Trade in itself is fine, but the manner in which financial institutions operated should never have been allowed. And much is wrong with how corporations operate and trade in the world.

[pongo]

Markets are fascinating, but inefficient because of the negative externalities that are never factored in. This is the problem with capitalism.

 

Yes I definitely see what you mean - the wider effects and the unforeseen consequences; the what-happens either side of some contract.

 

But those 'negative externalities' are very difficult to quantify. And there would be equivalent or equal consequences under any alternative system. Is that not more about a world which is so complex and chaotic?

 

There are ways of tunnelling through capitalism. Grameen Bank and projects derived from the same idea are about lending (risking) small sums normally to women - with often amazing life improving consequences. Absolutely capitalism.

 

That would be about clever people trying to make lives better by directing their detailed understanding of market theory.

[La_Dolce_Vita]

Very difficult to quantity or take into account a system that operates with markets, but then we can't expect such systems to operate in any other way than dealing with the process of transfer from one entity to another. It is not a system that should factor all the externalities - it is pretty much impossible and makes the system even inefficient in other ways. It is why governments have to take it upon themselves to clean up the mess and establish regulatory apparatus.

But then it goes back to the political, because those in government are heavily influenced in state capitalist systems by the interests of business. It isn't a democracy. The government has the meeting of business interests (i.e. profit and wealth) at a high priority and this stands in opposition to the people's interests.

 

Moreover, risks are even further underpriced because the government undertakes to socialises all risk when the shit hits the fan. It is quite willing to bail out banks and corporations. Therefore, their risks are transferred to the populace - which is just outrageous, yet is accepted by the people because they think it is simply the ways things are done.

 

But the problem goes farther than just the area of lending. This is a finance industry created crisis, but earlier economic depression and bubbles are still caused by the failures of capitalism.

 

Non-capitalist and socialist alternatives would be better because they into account the human factor in all economic and political business. You can't tweak about with systems to make them work for the people when they are unpinned by some market practices. It has been tried many times. Nobody has actually tried real capitalism - free trade and pure market system, with no government. Really any system where government plays a role in the economy isn't really capitalism. But the current system of economics and politics needs to go.

[pongo]

Nobody has actually tried real capitalism - free trade and pure market system, with no government. Really any system where government plays a role in the economy isn't really capitalism.

 

It's a mistake to see free trade as a system without rules. Free trade is quite different from unregulated trade.

 

Free trade is about agreeing to, literally, trade freely with each other - ie equal access to markets. That means agreeing systems of regulation (taxation, standards, reporting, safety etc) in exchange for equal access to markets. Ultimately it means an end to some or all border - since borders are about artificially reserving ownership and access.

[La_Dolce_Vita]

I quite agree, but I don't know why you have given this explanation. I don't see what I have said that makes you think I believe differently.

[pongo]

I see what you mean. You're right.