Force of personality over the reason of rationality…

Since last penning my views on Europe & making some suggestions to our erstwhile politicians as to how to help and encourage the SME business sector to lead us out of this economic mess, we have seen nothing but a continuation of a circus act on grand scale.

We’ve also seen an average of a 49% pay rise amongst FTSE directors in the last year and the message that this delivers to the public during times of austerity is?

George “The Clown” Papandreou is giving his fellow clowns in Europe the complete run around; unbelievable. Business and particularly private SME businesses wouldn’t nor couldn’t accept the actions of such a loose cannon at the top of the management tree.

Shareholders (normally also board participants) would have demanded his removal and arguably would never have had him there in the first place. What does this say about democracy and politics?

I was enjoying a fine glass of red last evening in a local hostelry with my two sage friends, Francis of Assisi and Harry of Hexham. A phrase used by the Monk to describe the Greek parliament and particularly Papandreou was “Force of personality over the reason of rationality”……….

A great descriptive and how often do we see this in politics? Could it apply to Cameron? Did it apply to Messrs Blair over WMD and Brown over the economy even Maggie T? Hmmm…. one has to consider their motives, personal gratification or serving the electorate for the greater good?  Something to think about.

Whilst there are always exceptions to the rule, it raises the question as to whether these politicians have any idea of what’s really happening outside the confines of their comfortable worlds or indeed whether they have the skill sets do the job on our behalf. I sometimes wonder. Would you employ many (any) of them in your business?

Let’s hope that sensibility comes to the table very soon in Europe and that “rationality overcomes personality”. Otherwise the pain will get deeper and longer for most and it will be a continuing case of “I’m alright Jack” for the few who are meant to be representing the people.

Back to the business world. This time last year the FTSE was about 5800. As I write it’s 5540. On the basis that my maths is correct that’s a negative return of about 4%. So how can ANY pay rise be justified at this level let alone the average 49% apparently awarded to directors of FTSE companies last year? Whichever way we cut it, obscene is a polite comment. What do you think? Again there are always exceptions. Both Cameron and Clegg have spouted the usual rhetoric and made their usual “robust comments” but what are they actually doing about it?

We noted something in the Guardian in September along similar lines that is arguably even more obscene.

To quote –  “ 20 years ago, the average CEO of a FTSE 100 company earned 17 times than average employee’s pay. Now it’s more than 75 times”, said Tory MP Jesse Norman. “Most of this is non-merit related and is a matter of serious public concern”……Well my question is – how serious is public concern and what are the public servants doing about it?

On 1st Sept 2011 the FTSE 100 index was 5300 compared to 2621 at the same time in 1991. A rise of approximately100%. So how can we allow CEO’s pay to increase by 58 times that of the average employee’s pay over the same period? I would love to hear the rationale behind these figures and justification for it.

The knock on effect of such numbers mean that ten’s if not hundreds of millions of £’s have been added to these CEO’s gold plated pension and benefit pots –  where does the money come from? By artificially keeping average employees pay low? By plundering real profits? Fair or unfair?

For the record I am not against free market or trade and business owners or entrepreneurs (mostly in the SME sector) creating and earning profits as a result of their and their teams hard work, personal financial risk and investment. After all they have often put their own homes and lifestyle’s on the line. How many public company CEO’s have done or do that? Clearly there are exceptions, but how many of these people have destroyed wealth and futures? Just think of Fred the Shred and his fellow cronies & how many of them are still doing it?

In my last rant I made some suggestions as to how the SME business sector could help us out of this economic mess but they need help and encouragement from governments. Perhaps we should all write to our MP’s.

In summary I note with interest that the infamous duo “Merkozy” are now looking to our friends in China for some financial assistance. Given the shenanigans alluded to above, if you were in control of the Chinese household budget, would you bale out the West? If so I’m sure some pretty tough conditions would apply!

Interesting times, as ever the optimist – things are never as bad as they seem.

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