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Zoe Ward
Upper Sixth
Worcester House

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A Footballer, a Banker and a Very Rich Man

Fernando Torres, Stephen Hester and Lakshmi Mittal; what do these men have in common?

These three gentlemen’s earnings have all been highlighted in the media for their sheer enormity, and the question is often raised of the justification for it all. Lakshmi Mittal is currently top of the Sunday Times UK Rich List 2011 with a valued worth of £17.5bn, Stephen Hester was urged to waive his £963,000 bonus earlier this week, and there is a website which tells you how much money Fernando Torres has earned while you have been on the said website – as a point of interest, currently I have been on the website for 18 minutes...Torres has earned 884 Euros and 92 cents... and counting!

So I am asking you this, is it fair that a man who is Chief Executive of the Royal Bank of Scotland is subtly bullied and pressurised into refusing a bonus that he is legally allowed to accept? Is it fair that a man who left €70million worth of environmental damage at a harbour in Cork, Ireland (which the Government tried to sue him for) has a personal wealth of over £17.5bn? Or is it fair for a man who plays on average one football match a week to earn €46 a minute?

In 2011, it was measured by HM Revenue & Customs and Pay as You Earn that on average medical practitioners have an annual wage of £69,952 and the average surgeon can earn about £500,000. Fernando Torres earns the last figure in about 22 days. I personally believe this is preposterous, and I do not comprehend how society has come to treat this as normal. I cannot see the reasoning behind the fact that footballers are paid extortionately more than surgeons. Surgeons make life or death decisions every day, they work for hours on end and their work is crucial to the life expectancy of our population. Is it crucial for the premier league game on Saturday to be played? Will people die if Torres doesn’t pitch up to work? I think not. I realise that to some, football is a great passion, and I believe that indeed it is good for society to have a way of indulging our passions, and I am sure that many hard working people look forward to unwinding by ‘watching the footy’. However, I am unsure as to how many people would agree that football is of greater magnitude than for example cardiovascular surgery.

Banking is a touchy subject for many Britons – particularly with the current rate of economic growth at -0.2% and the grave fear of dipping back into recession very eminent. One only has to open a newspaper to find it emblazoned with declarations of Britain’s economic hardship. Therefore, when it was announced this week that Stephen Hester had refused his £963,000 bonus, politicians and union leaders were elated. The Royal Bank of Scotland, which is 82% owned by the taxpayer, however already granted £6.5 million in pension payments to Hester in 2010. An overwhelming majority of Londoners blamed City bankers for the recession that we are recovering from (and currently avoiding) in a standard poll in 2009. 85% of voters believed the "greed and short-sighted behaviour" of executives in the Square Mile and Canary Wharf "contributed significantly" to the downturn; only 8% believed they were not to blame. It should be understood that the recession is not solely caused by bankers, but a combination of reasons such as a decrease in consumer confidence and inflation. But, despite this, is it really justified for Goldman Sach’s pay and bonuses to equal the GDP of Albania? On the other hand, is it fair for Stephen Hester who took over failing RBS (they had just gone into liquidity) from Sir Fred Goodwin, or rather Mr Fred Goodwin, to have huge amounts of media and political pressure put on him to decline his, some may argue, well-earned bonus? Surely Hester deserves the extra £963,000 more than Torres, who would earn that in 342 hours?

Finally, Lakshmi Mittal, the world’s largest steelmaker is number 5 of Forbes’ list of World Billionaires and topping the Sunday Times 2011 Rich List, has inherited his fortune and it is still growing. Coincidentally, he also has a stake in a British football team – how nice for Mittal to give back to such a struggling industry. However, in 1998 Mittal purchased the Irish Steel plant in Cork from the government for £1million. In 2001, it was closed, leaving 400 people out of work suddenly. Not only this but subsequent environmental issues at the site have been criticised and the government tried to sue Mittal and have him pay for the clean-up of Cork Harbour. Unfortunately this failed and the Government was left with a £70million bill for the clean-up. Surely, Mittal could have spared some cash for the environmental destruction he had caused? Perhaps if businessmen like him did not earn and inherit so much, they would not be so callous in refusing to fix problems which they cause.

What happened to Stephen Hester is like setting an invisible maximum wage, a cap to how much a banker can earn. True, no regulation or law has been set, and Hester is 100% entitled to his pay package, but the pressure that was placed upon him, that compelled him to reject the generous offer, is somewhat similar to not being allowed that bonus. The newspapers were telling him off like a schoolboy for doing something wrong. So consequently, should a maximum wage be set? Not just to bankers, but to all workers, even footballers? Soldiers who fight on the front line are not even entitled to national minimum wage. Torres earns minimum wage in just over 9 seconds. Given this, should we cap the amount we can earn, should we deem it as unfair and unnecessary?

Indeed, fairness and equality would result. However, so would evasion, emigration and ultimately government failure. As the maximum wage rate would be set below the equilibrium level, there would be excess demand which would result in high-flying business with supposedly large marginal revenue products fleeing to other countries without government intervention in the market, causing a British brain drain. Or indeed football managers would buy gifts for their players which would amount to the sum of money that they would be deprived of due to the legislation. So, despite being perfect in theory, in reality a maximum wage rate is not an option... yet.

But ultimately we live in a capitalist society, not a communist one. Every man for himself. Take what you can get. Work hard, reap the benefits. Surely, in modern day Britain we should be living by these mantras? It’s up to you... but Fernando Torres has just earned €4,470.

8 February 2012

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