Will Hutton is too quick to dismiss the idea of a ratio to cap high pay (“A pay cap is not only unworkable, it also detracts from the goal of a fairer society”, Comment). He assumes a particular definition of fairness yet he himself in the past has acknowledged that it is an “elastic” concept.
True, it can, as he argues, reflect perceptions of desert. But fairness can also be judged in relative terms and research suggests that both approaches are deployed in judging what constitutes fair pay at the top. Indeed, a number of polls indicate strong public support for a wage cap based on a ratio. Hutton rejects a ratio on the grounds that it would be “arbitrary”. Yet it would be quite possible to base it (or a range of caps for different sectors) on a process of public deliberation.
This would also have the advantage of encouraging public debate about what a fair pay structure would look like, thereby furthering, not, as he argues, detracting from, our shared goal of a fairer society.
Ruth Lister
Labour, House of Lords
London SW1
Will Hutton makes the moral case against gross inequalities of income, but misses an important economic argument. It goes like this: give a 10% pay rise to workers on the minimum wage and the chances are they will pay tax on it then spend the remainder in the local/national economy.
Give the same rise to the mega-rich and the chances are they will seek to avoid whatever tax they can, then spend the rest abroad, “invest” it in UK property – driving up house prices – or stash it into yet another offshore and dodgy tax-avoiding “trust”.
Dr Tony Rea
Ivybridge
Devon
Will Hutton might also have mentioned the tendency of gross inequality of wealth (salaries and assets) to drive boom and bust.
Although some inequality is inevitable, even desirable, researchers such as Thomas Piketty have shown that after a certain level the very wealthy tend to start hoarding or speculating, thus raising the cost of assets for the rest of us, especially in property, whether it be the cost of a place to live or to do business, and raising the volatility levels of the exchanges.
It is, after all, usually Britain and America, two of the most unequal countries in the developed world, that seem to set off these syndromes.
It’s time that the social democratic parties and pundits started making these points often and loudly instead of constantly being wrongfooted by cries of “politics of envy”.
David Redshaw
Gravesend
Kent
Exposing company executives to the rigours of open competition in the much-admired free market, rather than the current cosy club arrangements of pay consultants and remuneration committees all benefiting from absurd pay settlements, should do much to restrain high pay by increasing the supply of capable candidates.
After all, it seems to work at the corporate basement level, where the supply of labour, kept high by unemployment and squeezed benefits, acts to drive down pay and conditions.
What is sauce for the goose should surely be sauce for the gander. Or are the talents of corporate managers so rare as to make comparison redundant?
Roy Boffy
Sutton Coldfield
