Monday, 26 December 2011

The traditional Boxing Day hunting debate

It looks as if the Boxing Day hunting debate is becoming as traditional as the Boxing Day hunt. We have conservative minister Jim Paice taking care to go on record and say the act is unworkable and needs to be repealed. From my point of view it's only unworkable because hunters insist on breaking it. (I look forward to Paice saying the drugs laws are unworkable and need to be repealed, but I'm not holding my breath.)

Meanwhile the Telegraph reports that David Cameron is pushing back the point at which there will be Parliamentary time for the debate that pro-hunters want. The headline is inflammatory "David Cameron to ditch foxhunting U-turn", but we're used to that from the Telegraph now; they've been driving standards down for some time. Cameron still hopes to detoxify the Tory party, despite the active endeavours of some of his backbenchers to retoxify it, and he knows that it will be seen as the Tory party in favour of the toffs again. Say what you like about Cameron, and I often do, he is a skilful politician. He knows what he wants, and has been very skilful and in my view surprisingly successful at heading off pressure from the, shall we say, less socially liberal members of his party. (He doesn't always get it right; walking away from the EU negotiating table was his first big right wing inspired mistake. I hope there won't be any more.) More interesting is the Telegraph's reporting that Parliamentary mathematics are against the pro-hunting lobby winning the vote, with quite a few of the new intake of MPs being anti. Good for them. They're in tune with the public on this issue, though the Telegraph has an odd way of putting it: "A poll today suggested just nearly half of people believe a vote to repeal the Hunting Act should not be a top animal welfare priority for the coalition Government". It's the other way around (I think - if I've got their complicated negatives right): retaining the ban *is* a top animal welfare priority.

For what it's worth, let us rehearse the arguments for and against hunting animals with hounds. There are three questions that need to be answered, in my view:
1. Is there a question of civil liberties?
2. Is there a question of animal welfare?
3. If the answer to the first two questions is yes, which should outweigh the other?

For question 1 the answer is clearly yes. People should be able to do what they want, even if that is distasteful to other people. if that were all there is to it, then hunting would fall for me into the same category as Morris dancing. It's not for me, but if you want to dress up in silly clothes and prance around the countryside making fools of yourselves, then I will defend to the hilt your right to do so. I will even celebrate it.

For question 2 the answer is less easy to arrive at. There is conflicting evidence about how and how much pain and fear animals feel. But one of the reasons there is so much doubt is that the hunting lobby over the years has been vociferous in supporting and parading any evidence for their point of view. They have also been economical with the truth about their own behaviour while out doing their thing. In my view the weight of the evidence falls on the side that animals do indeed suffer both pain and fear. Hunting with hounds is not designed to be cruel, but is designed with complete carelessness as to how much pain and fear are inflicted. Proponents of hunting say that other methods e.g. shooting, sometimes leave the animal wounded and in pain. Yes that's true. But here it's a question of intention. A marksman intends to kill the fox and to do so as quickly and humanely as possible. Hunters with hounds intend to pursue the fox for as long as possible,  because they want to enjoy it, and they don't give a stuff about what the fox suffers meanwhile.

So in my view the answer to both question 1 and 2 is yes. In that case which should outweigh the other? It is philosophically possible to say that human liberty should outweigh animal suffering. In some ways anyone who is not a vegetarian must hold that position to some degree. And I do accept a minimum of animal suffering in order to have meat to eat. But I insist that there are clear and unequivocal rules about the amount of suffering that can be inflicted. Most of that is done for me by the law, but, for instance, I don't eat chicken if it is not free range. So for me eating meat is a fact of life (though I appreciate that that viewpoint is arguable), and a minimum of suffering is allowable to achieve that. Similarly a minimum of suffering of vermin is allowable to protect stocks and flocks. But hunting with hounds does not go for the minimum - if anything it goes for the maximum. And we do curb civil liberties for animal welfare. People like cock fighting, people like dog fighting, people like bear baiting, people like bull fighting. But we don't let them do it. In the same way the welfare of animals outweighs the civil liberties of those who wish to hunt them with hounds. If they want to dress in red and ride around the countryside, their liberty is only very minimally affected if they don't have a fox to chase while doing it.

Tuesday, 6 December 2011

Liberal Democrats and boardroom pay

This started out as a comment on somebody else's post, but it grew and grew. Nick Clegg has signalled the possibility of government action on high pay, and Charlotte over at DigitalPolitico says he's being “worryingly illiberal”. I don't see that. I think we need to be clear about what the issue is and about what a liberal response to it would be. Then in terms of a strategy there are two questions to answer. The first is does government have a right to interfere; the second is will it be effective.

As for what Nick Clegg has actually done, this is what the BBC website says: “The government is to publish new proposals to curb "unjustified and irresponsible" pay rewards in the private sector, Nick Clegg has said. The deputy prime minister said ministers would announce plans to "get tough" on excessive boardroom pay in January and may legislate if necessary.”

And this is what Robert Peston says: “... it is highly likely that companies will be forced to publish the numerical relationship between senior directors and other staff pay.

“But I would be staggered if any Tory prime minister and chancellor - even those who have repeatedly said that "we're all in this together" - would legislate a legal maximum for bosses pay.

“As for the other two proposals, on giving investors the formal power to block pay awards and on forcing the remuneration committee to have a workforce rep as a voting member, goodness only knows whether they will be enacted or squished.”

What problem is this action answering? It is not just high boardroom pay and a growing divide between top and bottom pay levels. If it were just that, I would be with Charlotte – there is no need to interfere and no rationale for interfering. (Just tax the rich buggers more and the poor buggers less.) It is more that boardroom pay, and traders pay in the financial sector, has become divorced from performance. People are paying themselves and their friends large sums of money which they have not earned. I have no objection (and I doubt very much if Nick Clegg or Vince Cable does either) to people earning very large sums of money. What I do object to is them being paid sums that they have not earned.

Should a Liberal interfere in such a case. Well, if it were just that I find it objectionable, the answer is no. People are free to do what they want provided it doesn't harm other people – the usual liberal principle. But this activity does harm other people. It puts money in directors' pockets at the expense of employees, shareholders and customers. Logically, employees, shareholders and customers should do something about that if they really care, but the history of this recession demonstrates, if it needed demonstrating, that they are not able to (and those that are able to, namely the representatives of large investors like pension funds, have been unwilling to, probably because those representatives benefit from the same gravy train).

It goes wider than that as well. This is not just a matter of distribution of spoils between a few people directly concerned with specific companies. These practices led to, or at the very least contributed to, the recession from which the majority of us are now suffering. This is actually a market failure, and it has become a prolonged and persistent one. In an efficient market, people get paid what they're worth. If people are paid more than their worth, their business loses competitiveness. The company loses market position, or those people lose their jobs and more effective managers come in. But this is not what is happening. People were being paid vast sums of money for poor performance before the crash – Fred Goodwin one of the most notable examples. (I would really enjoy being able to drive my company off a cliff and walk away with a pension pot the size of his.)

Generally speaking such a crash would be seen as a wake up call, the directors responsible for the bad decisions made that led to the various crashes around the world would lose their jobs, with little compensation, and new managers would come in and would manage better. But that is not what is happening. Directors are still getting paid very large sums, with little evidence that they have earned those sums. Directors pay in the UK went up 50% on average in the last year. The companies they work for are not performing 50% better than they were a year ago. You might argue that actually seeing 50% increase in profits is unreasonable in a recession, and what these directors have been doing is helping their companies ride out the storm better. I have not examined the figures in detail, but I will take a bet that if you compare companies that have given their directors large increases with those that have given their directors small increases, you will not find any difference in performance. No, they have not suddenly become 50% more valuable than they were last year, they have just waited for a decent interval before turning back to their old ways. The market has not worked in this case and is not working.

We often forget that markets actually rely on governments. Without government rule making, markets would not exist. Without the enforcement provided by national and international law, nobody would be able to trust that a contract would be honoured. Excessive rule making squeezes markets; effective rule making enables them. When markets fail, governments not only have a right to intervene, they actually have a duty to intervene, to enable the market to work again. The rules by which directors pay are set have become ineffective and unsustainable – they are very sustainable for directors, but not for the rest of us. And they need to change, so that the people to whom the money belongs, primarily shareholders, get the primary say in who is paid what.

So Nick and Vince are proposing changes to the rules. They are not proposing legal caps on directors' pay, which would be illiberal and ineffective. But they are proposing to change the balance of power by three possible measures. This summary comes from Robert Peston's blog quoted above.

to make shareholder votes on remuneration packages for directors binding, rather than advisory (as is the case now);
 to force big companies to include an employee representative on the committee that sets directors' pay (the remuneration committee);
 to force companies to publish the ratio of senior directors' pay to the typical or median pay in the company, and even (perhaps) to prohibit pay rises that bust a mandated threshold for that ratio.

These measures seem to me to be eminently sensible and liberal. I hope all three get enacted. I hope they will be enough to bring boardroom pay under control, and to see that directors earn what they are being paid. Boards, though, have been so careless and intransigent throughout the recession that I fear they will need their heads knocked together before their behaviour will change.