Vice in the boardrooms

It is no doubt an example of that old socialist vice, envy, which causes us all to take such an interest in the high remuneration of boardroom executives, and particularly in the £3.06m annual remuneration and £15m-£23m pay-off entitlement of Jean-Pierre Garnier, head of GlaxoSmithKline. This, we are told, is a question of market conditions; just as David Beckham can command enormous rewards because only a few footballers in what is now a world market possess his level of skill, so Mr Garnier's genius for running companies that operate at an international level deserves similar recognition. Just as Real Madrid would snaffle Mr Beckham if Manchester United did not pay him the top rates, so Mr Garnier could be poached by some other drugs company. To be sure, shareholder returns at GlaxoSmithKline are down 27.5 per cent in three years. But who is to say that in a global recession they would not have been down 30, 40 or 50 per cent if someone else had been in charge?

That is the best that can be made as a case for Mr Garnier and other such monstrously awarded executives, and it is complete nonsense. Sportsmen, like other entertainers, are in an entirely different category (which is not to say that their pay shouldn't also be questioned): the pre-eminence of their skills and their appeal to the public are directly verifiable in matches won and turnstiles clicked; their careers are short and often made even shorter by injury; and they do not have direct responsibilities for other people's jobs and other people's money. Executives' pay is not, in fact, determined by market conditions at all; it is determined by other members of the boss class on remuneration committees and on the boards of the big institutional investors (the latter having stepped in to veto Mr Garnier's package only after a series of public outcries). Such people have every incentive to keep directors' pay, and particularly golden handshakes, at high levels lest anyone question their own rewards.

The executives of the largest western companies are in effect operating a price-fixing cartel. Over the past 20 years, high managerial salaries have become as much a part of Anglo-Saxon culture as corruption is part of the culture in many African and Asian public services. Indeed, the belief that greed is good, or at least that selfishness and materialism are not always vices, has become part of the ideology of market liberalism. To decline a colossal salary is not only to let the side down but also to create doubt about the driving force of the system that sustains you. A Gates, a Soros or a Buffett may occasionally allow himself the luxury of questioning the prevailing ideology, but paid executives are no more likely to do so than members of the Soviet politburo were to question the works of Marx and Lenin.

Just as Soviet leaders became blind to their responsibilities to the masses they were supposed to serve, and gradually eroded public confidence in the Soviet system, so western business leaders become oblivious of their wider responsibilities, thus undermining the capitalist system itself. Over the past year, the heads of Britain's top 100 companies have taken average pay rises of 23 per cent while, in several cases, laying off hundreds if not thousands of workers. In nearly all cases, investors in their companies (mostly indirect investors through pension funds) have watched their prospective retirement incomes shrinking at an alarming rate. There are wider social effects: teachers, nurses, police and manual workers in the London area have seen themselves priced out of the property market by the whole class of big business and City executives whose pay, even at junior levels, is carried upwards in the slipstream of soaring boardroom salaries. But the central point is that top managers have ceased to manage in the traditional sense. Their focus is on squeezing value out of shares, stripping assets, bringing off mergers, screwing down costs. The fattest cats are deal-makers, not managers, with no obvious talents beyond making a quick buck. The loss to the fabric of western companies - in employee loyalty, customer and investor trust, consistent research and development - will only become apparent in the years to come.

British governments in particular have concentrated for the past 15 years on reforming the public sector. They have strived to change its culture, to make it more customer-conscious and efficient, to set targets for its employees, to impose accountability, to relate pay to performance. Many of those ambitions were justified. But the focus is now wholly wrong. High executive pay is just a symptom of what is wrong with the private sector. Inefficiency, lack of accountability and a crying need for a culture change - all those vices now reside in the nation's boardrooms.

Bus studies: a curriculum outline

One of the miracles of the 20th century (surely not the century of the common man, but the teacher's century) was that the education industry never got hold of the driving test. The notion that one should be allowed just to take the wheel of a complex machine and learn to operate it is anathema to professional educators. The science of the engine, the semiotics of road signs, the physiology of the pedestrian, the mathematics of traffic flow - these could have formed a three-year course, with written exams and a period of "work experience" standing on the hard shoulder of the M1. But educators are getting closer. Ken Livingstone, the London mayor, has ruled that bus drivers should take a Business and Technician Education Council qualification. Passengers will be grateful that when a bus fails to turn up, or comes with two others after an extended interval, the driver will have a full theoretical grasp of why this should be so.

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