[Peace-discuss] the joys of inequality - I Dream of Gini

[E. Wayne Johnson]

Interesting piece in Bloomberg -  Inequality, Tobin tax, Gini in a Bottle.


Goldman Sachs's Griffiths Says Inequality Helps All

http://www.bloomberg.com/apps/news?pid=email_en&sid=amGn6lOXMlNQ

By Caroline Binham

Oct. 21 (Bloomberg) -- A Goldman Sachs International adviser defended 
compensation in the finance industry as his company plans a near-record 
year for pay, saying the spending will help boost the economy.

"We have to tolerate the inequality as a way to achieve greater 
prosperity and opportunity for all," Brian Griffiths, who was a special 
adviser to former British Prime Minister Margaret Thatcher, said 
yesterday at a panel discussion at St. Paul's Cathedral in London. The 
panel's discussion topic was, "What is the place of morality in the 
marketplace?"

Goldman Sachs Group Inc., based in New York, set aside $16.7 billion for 
compensation and benefits in the first nine months of 2009, up 46 
percent from a year earlier and enough to pay each worker $527,192 for 
the period. The amount set aside this year is just shy of the all-time 
high $16.9 billion allocated in the first three quarters of 2007. 
Goldman Sachs spokesman Michael DuVally in New York declined to comment.

Banks in the U.K. and U.S. have been pressured by lawmakers to contain 
compensation after bailouts of financial firms by national governments. 
Goldman Sachs repaid $10 billion plus dividends to the U.S. government 
this year, and resumed allocating billions of dollars for year-end 
bonuses after slashing compensation last year when the firm reported its 
first quarterly loss.

Griffiths, 67, called on bankers to boost their charitable giving to 
help improve the financial industry's reputation following a worldwide 
crisis.

'Much Is Expected'

"To whom much is given much is expected," he said. "There is a sense 
that if you make money you are expected to give."

Griffiths said that banks should hire and promote people based on 
criteria beyond how much money they could or did make.

"It was the failed moral compass of bankers which was primarily 
responsible for why we had this crisis," he said. "The question is: what 
can we do in the culture of institutions to make them behave in a more 
socially responsible way?"

Financial Services Authority Chairman Adair Turner, speaking at the same 
event, repeated his call for a global tax on financial transactions, a 
so-called Tobin Tax. He said in August a tax could redistribute bank 
profits to the world's poor and to causes like fighting climate change.

"The role of regulation is to bring a concordance between private 
actions and beneficial results," Turner, 54, said yesterday. Central 
bankers, lawmakers and regulators bear the greatest blame for the seeds 
of the financial crisis, not traders or their senior executives, he said.

Tobin Tax

James Tobin proposed a tax in 1971 on currency trading to deter 
speculation in the wake of the collapse of the Bretton Woods system of 
pegging currencies. Tobin, who died in 2002, won the 1981 Nobel Prize 
for his work on financial markets.

Turner told U.K. banks last month that they should place "social 
usefulness" above profit. Prime Minister Gordon Brown and the leader of 
the Anglican Church, Archbishop of Canterbury Rowan Williams, have 
previously warned against banks returning to "business as usual" amid 
concerns that momentum for policy changes in the wake of the financial 
crisis will subside.

Turner and Griffiths spoke at London's 300-year-old landmark church 
where Winston Churchill's funeral was held. The event was organized by 
the St Paul's Institute, a group that "seeks to recapture the 
cathedral's ancient role as a center of education or public debate."

To contact the reporter on this story: Caroline Binham in London at 
cbinham at bloomberg.net
Last Updated: October 21, 2009 11:20 EDT
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