Swiss show the middle finger to greedy failures Page 2

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  • Destria 4 Mar 2013 15:44:09 2,835 posts
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    It's not that jarring really, as the extra tax is only paid on earnings above that amount. Do you mean adding a few more grades (e.g. between 20% and 40%)?

    It's not as bad as stamp duty anyway. £249,999 house bought? That'll be £2500. £250,000? Well, £7500 then please!

    /may be bitter about house buying
  • LeoliansBro 4 Mar 2013 15:46:29 44,246 posts
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    Yeah stamp duty is a joke. The fact it hasn't changed in 15 years doesn't put a smile on my face either.

    LB, you really are a massive geek.

  • nickthegun 4 Mar 2013 15:47:21 59,937 posts
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    imamazed wrote:
    nickthegun wrote:
    Socialism is a separate issue. If we live in an, albeit moderate, capitalist society, they should be free to pay the bankers what they like.
    I understand why you say that, but socialism is irrelevant really. It's not a distraction; even in a capitalist country a lot of people are concerned about the growing inequality of earnings. Just because you don't see bonuses as a problem doesn't mean it isn't a problem for a lot of other people.
    Which is socialism, admittedly after a fashion. In a captialist society you have the choice of 'shut up' or 'get a better job'.

    Its not the governments job to dictate bonuses (although, you could argue that with the like of RBS, it is, which is fair enough).

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  • RedSparrows 4 Mar 2013 15:47:47 22,735 posts
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    Destria wrote:
    It's not that jarring really, as the extra tax is only paid on earnings above that amount. Do you mean adding a few more grades (e.g. between 20% and 40%)?

    It's not as bad as stamp duty anyway. £249,999 house bought? That'll be £2500. £250,000? Well, £7500 then please!

    /may be bitter about house buying
    Oh I didn't realise the first point. I was thinking it was more like the stamp duty. So you'd pay %40 on £2501 (if earning £37500 a year) and 20% on the £34,999? That sounds fairer.

    But yes, also, why not a more particular system, of increments of 5%?
  • imamazed 4 Mar 2013 15:49:30 5,621 posts
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    nickthegun wrote:
    imamazed wrote:
    nickthegun wrote:
    Socialism is a separate issue. If we live in an, albeit moderate, capitalist society, they should be free to pay the bankers what they like.
    I understand why you say that, but socialism is irrelevant really. It's not a distraction; even in a capitalist country a lot of people are concerned about the growing inequality of earnings. Just because you don't see bonuses as a problem doesn't mean it isn't a problem for a lot of other people.
    Which is socialism, admittedly after a fashion. In a captialist society you have the choice of 'shut up' or 'get a better job'.

    Its not the governments job to dictate bonuses (although, you could argue that with the like of RBS, it is, which is fair enough).
    I'm not necessarily saying they should dictate bonuses. Not even saying there is a solution necessarily. But it's still a real problem.
  • LeoliansBro 4 Mar 2013 15:51:11 44,246 posts
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    RedSparrows wrote:
    Complexity being a technical term, or what? Or you mean a curved line is overly complex? Blokey was saying that was the system in Germany.
    No, not a technical term. I mean it's overly complex and that kind of smooth curve firstly, isn't necessary because it is kind of replicated by the fact that tax is in bands in the first place, and secondly won't actually lead to an increase in tax revenues.

    Say £0 - £10k is 0%, £10k - £20k is 10% and £20k - £30k is 20%. If you earn £20,001 you're in the same tax band as someone earning £29,999, but the former has an effective tax rate of 5% and the latter 10%, just becaue more of his income is taxed at a higher percentage.

    LB, you really are a massive geek.

  • LeoliansBro 4 Mar 2013 15:51:57 44,246 posts
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    imamazed wrote:
    I'm not necessarily saying they should dictate bonuses. Not even saying there is a solution necessarily. But it's still a real problem.
    This is the exact fallacy I'm trying to get away from. Income inequality is not the same as bonuses.

    LB, you really are a massive geek.

  • imamazed 4 Mar 2013 15:53:27 5,621 posts
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    LeoliansBro wrote:
    imamazed wrote:
    I'm not necessarily saying they should dictate bonuses. Not even saying there is a solution necessarily. But it's still a real problem.
    This is the exact fallacy I'm trying to get away from. Income inequality is not the same as bonuses.
    Why isn't it? (I'm not saying you're wrong, far from it, I just don't think I understand)

    Edited by imamazed at 15:53:44 04-03-2013
  • RedSparrows 4 Mar 2013 15:55:27 22,735 posts
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    LeoliansBro wrote:
    RedSparrows wrote:
    Complexity being a technical term, or what? Or you mean a curved line is overly complex? Blokey was saying that was the system in Germany.
    No, not a technical term. I mean it's overly complex and that kind of smooth curve firstly, isn't necessary because it is kind of replicated by the fact that tax is in bands in the first place, and secondly won't actually lead to an increase in tax revenues.

    Say £0 - £10k is 0%, £10k - £20k is 10% and £20k - £30k is 20%. If you earn £20,001 you're in the same tax band as someone earning £29,999, but the former has an effective tax rate of 5% and the latter 10%, just becaue more of his income is taxed at a higher percentage.
    I see. So in 'real terms' you're not actually in the same bracket for the majority of your income, if you're comparing yourself (at the bottom of a bracket) with someone at the threshold of the next.

    Edited by RedSparrows at 15:55:52 04-03-2013
  • LeoliansBro 4 Mar 2013 15:56:17 44,246 posts
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    Because all a bonus is, is a portion of your pay packet which is dependent on performance.

    If you want to talk about bankers being paid too much, them that's a different conversation. Are footballers paid too much? Actors? Politicians? The elite of those industries earn far, far, FAR more than bankers and the money they earn is not performance related at all (well maybe actors indirectly).

    LB, you really are a massive geek.

  • imamazed 4 Mar 2013 15:57:48 5,621 posts
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    LeoliansBro wrote:
    Because all a bonus is, is a portion of your pay packet which is dependent on performance.

    If you want to talk about bankers being paid too much, them that's a different conversation. Are footballers paid too much? Actors? Politicians? The elite of those industries earn far, far, FAR more than bankers and the money they earn is not performance related at all (well maybe actors indirectly).
    Yes....so unless I'm missing something here, bonuses form part of their pay packet...so contribute towards the vastly higher wages bankers get, and therefore to income inequality?
  • sunjumper 4 Mar 2013 15:58:46 3,197 posts
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    LeoliansBro wrote:
    It's a)

    Banks want it to be a) because it attracts better candidates, and they can flex their cost base more in line with revenues which allows for smoother trading profile and less volatility. Bankers want it because they see the opportunity to earn £500k rather than £300k.
    The problem with this is that monetary incentives have, when compared to a scenario where no bonus is paid, a negative impact on performance.
    This phenomenon has been observed in a great number of experiments and the date has been reproduced time and again for over five decades now.
    Furthermore the increase of bonus pay also leads to a greater decrease of performance.

    Extrinsic motivators, such as bonus payments also erode the effectiveness of intrinsic motivators (that is the motivation of doing something right for the sake of mastery).

    So even if the better salaries do attract the best people, which is also an assumption that remains to be proven, it would just lead to these people becoming worse as they work at their new work place.

    So actually b) would be the better choice in this case.
  • LeoliansBro 4 Mar 2013 15:59:49 44,246 posts
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    OK, if you want to put it like that, we could just incorporate bonuses into banker wage packets (like Barcap did in 2008) and there would be no more headlines.

    I see what you're saying but I'm trying to point out that the bonus structure is actually a good thing. Hence, I'm not talking about income inequality, and you're not talking about performance-related pay.

    LB, you really are a massive geek.

  • Psychotext 4 Mar 2013 16:01:28 54,209 posts
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    Aargh. wrote:
    I'm in charge of a company that makes £20k profit a year and I get paid £50k

    I'm in charge of a company that makes £5bn profit a year. It's not that much harder so I should also get £50k.
    I suspect my sarcasm detector might be broken.
  • Armoured_Bear 4 Mar 2013 16:01:38 11,268 posts
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    RedSparrows wrote:
    LeoliansBro wrote:
    RedSparrows wrote:
    Was just discussing that today, with a German economist.

    Can someone explain to my why we don't have a curved line when it comes to tax bands, rather than the jarring 'step' system where crossing a threshold puts you in the same tax bracket as someone earning thousands more than you?
    Complexity.
    Complexity being a technical term, or what? Or you mean a curved line is overly complex? Blokey was saying that was the system in Germany.
    Complexity my arse, we have it in Switzerland as well.

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  • LeoliansBro 4 Mar 2013 16:02:11 44,246 posts
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    sunjumper wrote:
    LeoliansBro wrote:
    It's a)

    Banks want it to be a) because it attracts better candidates, and they can flex their cost base more in line with revenues which allows for smoother trading profile and less volatility. Bankers want it because they see the opportunity to earn £500k rather than £300k.
    The problem with this is that monetary incentives have, when compared to a scenario where no bonus is paid, a negative impact on performance.
    This phenomenon has been observed in a great number of experiments and the date has been reproduced time and again for over five decades now.
    Furthermore the increase of bonus pay also leads to a greater decrease of performance.

    Extrinsic motivators, such as bonus payments also erode the effectiveness of intrinsic motivators (that is the motivation of doing something right for the sake of mastery).

    So even if the better salaries do attract the best people, which is also an assumption that remains to be proven, it would just lead to these people becoming worse as they work at their new work place.

    So actually b) would be the better choice in this case.
    Ha! This does ring a bell, there was a study done a while back. TBH I'd happily trade in my £0 - £whatever bonus (which is currently at £0) for a salary increase of £anything.

    But, as I wrote in the post you quoted, there's far more to a bonus structure than incentivising the banker once he's in the role.

    LB, you really are a massive geek.

  • LeoliansBro 4 Mar 2013 16:04:41 44,246 posts
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    Aargh. wrote:
    I'm in charge of a company that makes £20k profit a year and I get paid £50k

    I'm in charge of a company that makes £5bn profit a year. It's not that much harder so I should also get £50k.
    Well, no.

    Given the choice between those two jobs, which would you rather have.

    LB, you really are a massive geek.

  • Psychotext 4 Mar 2013 16:10:44 54,209 posts
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    sunjumper wrote:
    The problem with this is that monetary incentives have, when compared to a scenario where no bonus is paid, a negative impact on performance.
    This phenomenon has been observed in a great number of experiments and the date has been reproduced time and again for over five decades now.
    I would genuinely love to see if that data covers sales people, because I've worked with salaried salesmen and they generally do the absolute minimum they have to. The ones on bonuses bust their arses to earn more money, and in my experience significantly outperform those not on performance related bonuses.
  • sunjumper 4 Mar 2013 16:13:22 3,197 posts
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    @LeoliansBro
    It is interesting to see the motivation of banks to do what they do. Thanks for pointing out these things which under other circumstances would never even enter these ind of discussions.

    The bank has to rethink its position though. By getting rid of the bonus system it would save a considerable amount of money and at the same time it would increase the productiveness of their employees. Which again would mean a greater revenue.

    While in the short term it would indeed make calculations somewhat more difficult in the long term these would even out. The economy rises and falls and with them the profits. It might be that the bank will have a shit revenue stream during some lean years, where it yearns for the days when it simply would not pay their employees as much money (and to be fair to the bankers for a change, most of them aren't really responsible for these fluctuations) but this would be recouped in the fat years.

    Another point would be to reduce the salaries to a more sane amount of money. While I am sure that it must be fabulous to earn 300k a year, it would be entirely sufficient to pay a more sensible salary of say 120k which is still very generous compared to what most other mortals earn.
    It would also guarantee that the people working for the bank do so because they actually have an interest in the job and are not primarily in there for the money. (which again would reduce the quality of work again)
  • Chopsen 4 Mar 2013 16:21:09 15,999 posts
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    imamazed wrote:
    nickthegun wrote:
    Socialism is a separate issue. If we live in an, albeit moderate, capitalist society, they should be free to pay the bankers what they like.
    I understand why you say that, but socialism is irrelevant really. It's not a distraction; even in a capitalist country a lot of people are concerned about the growing inequality of earnings. Just because you don't see bonuses as a problem doesn't mean it isn't a problem for a lot of other people.
    Income inequality is a red-herring. A convenient moral argument for governments to allow to happen as it it actually quite easy to tackle (income is easy to tax) and distracts from the real problem: wealth inequality.

    you may feel the two are the same, but they're not.
  • LeoliansBro 4 Mar 2013 16:21:29 44,246 posts
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    sunjumper, I thought it was just that the size of the bonus bears no relation to how hard you work. If there's more to the conclusion I haven't seen it, linky?

    You also need to consider;

    - the relationship between how hard you work and how well you perform (vs. for instance how clever you are, or how experienced).

    - whether it is fair for the bank to look at the balance of the flexible reward between the bank and the employee and say 100% for me, 0% for you.

    - whether it is better for the economy for the bank to take the profit and pay 28% tax or the employee to take the profit and pay 50% tax.

    It is certainly interesting to see the relationship between reward and motivation, but it would be very dangerous to act unilaterally based on that single factor alone.

    Edited by LeoliansBro at 16:22:00 04-03-2013

    LB, you really are a massive geek.

  • Chopsen 4 Mar 2013 16:24:14 15,999 posts
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    There's some research that shows that financial incentives don't help insentivize people to solve problems in novel or interesting way, or to work smarter. However, we're not asking people to work smart, we're asking people to be bankers ;)

    Or less argumentatively, you're incetivising people to do a specific thing. So it works.
  • Armoured_Bear 4 Mar 2013 16:25:01 11,268 posts
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    The issue here isn't whether bonuses are paid on performance, it's whether they are still paid when performance is terrible.

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  • rudedudejude 4 Mar 2013 16:25:59 2,178 posts
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    LeoliansBro wrote:
    Because all a bonus is, is a portion of your pay packet which is dependent on performance.

    If you want to talk about bankers being paid too much, them that's a different conversation. Are footballers paid too much? Actors? Politicians? The elite of those industries earn far, far, FAR more than bankers and the money they earn is not performance related at all (well maybe actors indirectly).
    Chris Moyles on rumoured a £600k for example. Of BBC tax-payers money. Eeek! o.O

    I think that's a bigger issue than the bonus issue, at least these people are doing something 'productive' and you would imagine their pay in some roundabout way will be related to their performance Better than simply being dictated by 'the market', such is the case with footballers / entertainment etc.
  • LeoliansBro 4 Mar 2013 16:27:04 44,246 posts
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    ...and I've already answered why that can happen, why it's simplistic to look at it in total terms (much less monetary terms) and we've put that to bed and the conversation has moved on.

    LB, you really are a massive geek.

  • Chopsen 4 Mar 2013 16:33:03 15,999 posts
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    Armoured_Bear wrote:
    The issue here isn't whether bonuses are paid on performance, it's whether they are still paid when performance is terrible.
    Depends on how it was agreed up front.

    If you had an agreement in place to hit X many Ys, and you do it, why should your employer be able to turn round and say "sorry dude, you colleagues all fucked up, so we've got to punish you as well."
  • Armoured_Bear 4 Mar 2013 16:33:35 11,268 posts
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    Are football clubs laying off huge numbers of their workforce as they pay the top players massive bonuses despite being relegated?

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  • Psychotext 4 Mar 2013 16:35:49 54,209 posts
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    They do have a tendency the pay the players first (and the backroom staff never) when the shit hits the fan. I've seen that happen twice at my local club.
  • nickthegun 4 Mar 2013 16:37:35 59,937 posts
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    Armoured_Bear wrote:
    Are football clubs laying off huge numbers of their workforce as they pay the top players massive bonuses despite being relegated?
    Yes

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  • sunjumper 4 Mar 2013 17:37:20 3,197 posts
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    Psychotext wrote:
    sunjumper wrote:
    The problem with this is that monetary incentives have, when compared to a scenario where no bonus is paid, a negative impact on performance.
    This phenomenon has been observed in a great number of experiments and the date has been reproduced time and again for over five decades now.
    I would genuinely love to see if that data covers sales people, because I've worked with salaried salesmen and they generally do the absolute minimum they have to. The ones on bonuses bust their arses to earn more money, and in my experience significantly outperform those not on performance related bonuses.
    Actually it does, in principle.
    There is the example of Robert Rodin CEO of Marshall Industries.
    He went from incentive pay and management by results and objectives, to a flat salary for all salesmen. The company went from a 400 million dollar revenue to one of 1.8 billion.

    It has to be said that people at work still need an incentive to do work.
    If the workers are used to work for incentive pay and you take that away, they'll stop working. If there is no inner incentive to replace that nothing much will happen. And everyone here I am sure had to suffer through the 'service' provided by all kinds of bureaucracies.

    Rodin's success is not only because of getting rid of the old structures but installing and fostering a system of cooperation. And so in time the salesmen stopped cannibalizing each others territories or trying to sell something to a costumer no matter if there was a need for it or not.
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