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  1. #1

    Default Lottery winnings vs. bonuses

    I was thinking the other day, the current expected pay outs for lottery winners in the UK, including roll over weeks, is equal to the bonuses paid out to failing banks, the same failing banks which had been key to financial fraud on a grand scale (mis-sold payment protection insurance, there is a whole trade based on redress of this it was so widespread, companies exist only to get clients compensation for this).

    Sometimes the bonuses are two or three times the expected million or thereabouts a winner can expect.

    That is the bonuses, they dont need the bonuses to make ends meet, and their earnings/incomes are millions already.

    Does this seem wrong or does that seem like too much inequality or ridiculously over the top pay?

    I mean the argument since before the mid-eighties in every field of commerce has been downsizing, if you cant sack them you cut their pay or expenses, with the exception of board rooms and executives, I can see no real reason for the exemption.

    I'm not sure that the arguments in support of the obscenely high earnings and bonuses make sense even were the banks not failing, I dont know where these people would realistically be lost to.

    I dont believe they will take flight to the US (or even china) because most of those countries are going to mandate some sort of domicile status for their executives, so their earnings are, in theory at least, still part of the GDP and going to factor into the "trickle down" because they spend it on services and good in their territory.

  2. #2
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    Bonuses paid out to failing banks? You mean bonuses paid to bank employees, like CEOs, right?

    There is some understandable confusion about the term 'bonus'. Bonuses are really just part of the expected compensation in these occupations, kind of like tips are expected by waiters and waitresses. To most people, in most professions, a tip or bonus isn't something you count on, but rather a pleasant surprise for a job well done. But in a few professions, tips are expected; wages and salaries are often lower than otherwise because workers expect a significant part of their income to be from tips. Bonuses are to these corporate CEOs what tips are to waitresses. If such "bonuses" were outlawed, then other ways of delivering that compensation would be found instead, e.g. higher salaries, nicer workplace perks, or they'll just use different words.
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    There really is no school of "trickle-down" economics. There are a few economic theories that kinda sorta look a bit like something one might call trickle-down economics, but they're really not. It just doesn't exist. Some people associate it with capitalism, free markets, and laissez faire, but no economist ever proposed such a hypothesis. Trickle-down economics appears to be an invention of politicians and journalists, and it's normally referred to derogatorily.

    Mentioning trickle-down economics is usually betrays ignorance of basic economics. It's kind of like when someone says that Einstein proved that everything is relative or Darwin showed that we're all just chimps: you immediately know they don't know shit about physics or evolutionary biology. But I'm not saying you're one of these people.
    A criticism that can be brought against everything ought not to be brought against anything.

  4. #4

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    Quote Originally Posted by reason View Post
    Bonuses paid out to failing banks? You mean bonuses paid to bank employees, like CEOs, right?

    There is some understandable confusion about the term 'bonus'. Bonuses are really just part of the expected compensation in these occupations, kind of like tips are expected by waiters and waitresses. To most people, in most professions, a tip or bonus isn't something you count on, but rather a pleasant surprise for a job well done. But in a few professions, tips are expected; wages and salaries are often lower than otherwise because workers expect a significant part of their income to be from tips. Bonuses are to these corporate CEOs what tips are to waitresses. If such "bonuses" were outlawed, then other ways of delivering that compensation would be found instead, e.g. higher salaries, nicer workplace perks, or they'll just use different words.
    Tipping is only a recent thing in the UK and it hasnt made its way to northern ireland at all, at least not in any substantial way.

    The thing about bonuses is that these are being paid as you say as a perk and they are expected but the bonuses, incrimental rises in wages have been denied to public service workers for some time now, there's been effectively a pay freeze for about three years now and its being extended with cuts in pensions and rises in taxes, meaning people need to work harder for longer.

    Its when this is the norm, and supposedly unsustainable and overly generous norm, in one sector compared with the other in which bonuses of millions are the norm that it seems incredible and wrong.

  5. #5

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    Quote Originally Posted by reason View Post
    There really is no school of "trickle-down" economics. There are a few economic theories that kinda sorta look a bit like something one might call trickle-down economics, but they're really not. It just doesn't exist. Some people associate it with capitalism, free markets, and laissez faire, but no economist ever proposed such a hypothesis. Trickle-down economics appears to be an invention of politicians and journalists, and it's normally referred to derogatorily.

    Mentioning trickle-down economics is usually betrays ignorance of basic economics. It's kind of like when someone says that Einstein proved that everything is relative or Darwin showed that we're all just chimps: you immediately know they don't know shit about physics or evolutionary biology. But I'm not saying you're one of these people.
    Its derivative of Hayek and Friedman, another way of putting it is the idea of "a rising tide, raises all boats" although that relates to economic growth benefiting all income groups as opposed to have a disproportionate benefit on the wealthy or resulting in income inequality.

    The trickle down effect is supposed to be based upon the idea that money once accumulated is spent, when rich people spend it on employing others they are spreading or sharing the wealth, it puts the rich, private, individual in the role of the state in terms of determining the distribution of wealth.

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    Quote Originally Posted by Lark View Post
    Tipping is only a recent thing in the UK and it hasnt made its way to northern ireland at all, at least not in any substantial way.

    The thing about bonuses is that these are being paid as you say as a perk and they are expected but the bonuses, incrimental rises in wages have been denied to public service workers for some time now, there's been effectively a pay freeze for about three years now and its being extended with cuts in pensions and rises in taxes, meaning people need to work harder for longer.

    Its when this is the norm, and supposedly unsustainable and overly generous norm, in one sector compared with the other in which bonuses of millions are the norm that it seems incredible and wrong.
    You're not expressing yourself clearly. Do you think corporate executive compensation is too high (particularly in finance), or do you think civil servant compensation is too low? One doesn't imply the other. How would even know what is too high or too low?

    If shareholders are willing to pay executives these salaries and bonuses, then what does it matter what you think? It's their money, not yours. Of course, one might point to recent bailouts and say that taxpayers weren't given a choice, but then that is always the case with ostensibly underpaid civil servants, so that would be a rather self-defeating objection.
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    Quote Originally Posted by Lark View Post
    Its derivative of Hayek and Friedman, another way of putting it is the idea of "a rising tide, raises all boats" although that relates to economic growth benefiting all income groups as opposed to have a disproportionate benefit on the wealthy or resulting in income inequality.

    The trickle down effect is supposed to be based upon the idea that money once accumulated is spent, when rich people spend it on employing others they are spreading or sharing the wealth, it puts the rich, private, individual in the role of the state in terms of determining the distribution of wealth.
    Except that's nonsense, and it has nothing to do with Hayek or Friedman--seriously. Wealth isn't spread when wealthy people spend money: that notion just butchers basic economics. Trickle-down theory is an invention of politicians, journalists, quacks who don't know what they're talking about. I'm sure it's been attributed to Hayek and Friedman, but it might as well have be attributed to Keynes and Samuelson for all the sense that makes. No such notion exists in the writings of any respected economist, whatever their politics; none of them have ever claimed that wealth is either created or distributed in a trickle-down fashion.
    A criticism that can be brought against everything ought not to be brought against anything.

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    If we distribute wealth evenly there will be no wealth. lolol.
    “Some people will tell you that slow is good – but I’m here to tell you that fast is better. I’ve always believed this, in spite of the trouble it’s caused me. Being shot out of a cannon will always be better than being squeezed out of a tube. That is why God made fast motorcycles, Bubba…”


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