The Hester Gesture

After all of the hysteria and hyperventilating Stephen Hester submitted to the inevitable and canned his bonus. All I can say is thank Christ for that. The hyperbole was becoming unbearable. We should be grateful to him for putting an end to the posturing that was already completely out of control.

There are some things that are worth pointing which were pretty much obscured in all of this fuss.

Firstly, RBS shouldn't even exist in its current form. It should have been allowed to go under. For those who are convinced that  the whole bonus fiasco is an example of unconstrained capitalism, think again. If we had unconstrained capitalism (or even capitalism just a little less restrained), then RBS, Northern Rock et al would have been left to sink or swim. Capitalism is an evolutionary process at heart. By deciding to intervene and part-nationalise the banks, Gordon Brown showed once more that he was no friend of markets or market processes, but a statist who believes that capitalism is dangerous because it is uncontrolled. His first instinct, and that of Obama, Cameron and the entire Euro class, is to intervene and take control.

The fact that the Labour government did intervene means we have the situation where what is effectivaly a state employee - Stephen Hester - is able to get a potential bonus of nearly a million quid. What rankles is that at a time when everyone else is fed a diet of austerity, this class of state employee is able to earn huge bucks. And remember, this was only 60% of the bonus pot, in theory he could have met his targets and earned the full lot. If this was just another bank and not a semi-state bank, people would have shrugged, got angry but there would never have been the same reaction. And perhaps, we would  have been spared the panto from political figures across the spectrum (a spectrum that stretches all the way from A to B, but never beyond that).

However, the fact is that the tax payer did rescue RBS, so arguing that it shouldn't be here is a moot point.

Having said that then, where were the politicians arguing the case that if we're ever to get our money back then RBS has to be re-privatised? Where was the case that Hester should be judged on how well that goes? His bonus should only be cashed after that privatisation. His incentives should be to get the most for RBS for the tax payer, and unless he does that his bonuses should be deferred. And what better way of making the case then to suggest that tax payers would benefit in the form of a chance to buy shares in the eventual privatisation ahead of institutional investors?