Following my article on the EU bonus curbs, I got so many comments that — with Switzerland “following suit” — who still believes that these curbs are wrong?
This is a great example of a non sequitur.
The Swiss curbs on executive pay are not an example of other countries following in the footsteps of the EU, but rather the opposite. The Swiss don’t have themselves over a barrel: They are in control of the situation. The Swiss debated and voted on the curbs as a measure worthy in and of itself, and therein lies a crucial difference: The rules are meant to protect everyone, and not meant to hurt anyone in particular for past mis-deeds.
Some of the detail that differs:
(1) The EU rules’ legitimacy under Article 153 (paragraph 5) of the Lisbon treaty is still being debated while the rules are “crystal clear” according to Mr. Barnier.
(2) The Swiss rules give shareholders more, not less power. There are no limits to what shareholders can approve. Let’s be honest: why should there be?
(3) The Swiss rules do not single out anyone for special treatment, not even the much-loathed bankers.
Let’s call a spade a spade: In Switzerland, it was driven by a desire to make shareholders — and not management — behave like they really do own public companies. In Europe, the public wants a system whereby they effectively own the banks.
As Article 153 at least strongly implies, in an economy based on free and fair enterprise, all kinds of social rules should be made centrally, but pay decisions should be economic, not political. There are many reasons why the wise men and women of the Lisbon treaty would have agreed on that. As it stands, the discussions in Switzerland leaves this truth intact.