It is increasingly irritating to see politicians speak of making major changes to business, commerce, and the economy without a true understanding of the implications of the changes. Whether a politician actually lacks an understanding of business and economics or whether he or she is merely reacting to that which is under the political spotlight, a vast majority of the time the changes are either unfair or unfounded, which can lead to problems down the road.
Bloomberg reported last week that U.K. Prime Minister Gordon Brown promises to implement new curbs on the bonuses of bankers if he is re-elected next month. Although it needs to reminding, keep in mind that the financial sector and bankers in particular are under the gun in light of the credit and financial crises of 2008-2009. People are pissed off about how much employees of financial firms made during and after the recovery from the crisis. After all, it was the people’s tax dollars that were used to bail out and rescue nearly all of the major financial firms of the world. The people want change, and they want this to never happen again. However, the actions Brown promises to carry through are unfair.
As mentioned in the post regarding CEO compensation, it is common that companies within specific struggling sectors of the economy come into the public spotlight, appearing in the news and on front pages of newspapers, and invariably the negative sentiment finds its way to Washington. Congresspersons and Senators have an angered demographic, and change or punishments need to be executed to appease constituents. Unfortunately, different sectors struggle at different times, and it is unfair to attempt to place strict restrictions on compensation structures or firm profits.
Recall Obama before he was elected President of the U.S. During his campaign, while oil prices were high and oil companies were raking in massive profits, he vowed to tax profits and put a limit how much money these firms could make. In the end, oil prices fell, gas prices came down, and the public forgot about how much they hated big oil companies. This sounds eerily similar to that which Brown is saying now. Perhaps both used it to gain the support of those upset and requesting change?
When U.S. automakers began outsourcing labor and auto construction in the 90s, many U.S. workers lost their jobs and turned to government to make change. In a similar fashion to that of the automotive industry, this fell by the wayside as new material found its way into the news and at the top of the broadcast.
It is unfair to focus on just one sector and try to specifically reform, overhaul, or place strong restrictions upon it. As mentioned above, politicians may promise this in an effort to get elected or re-elected, or they may promise change during their tenure in order to appease the people. However, different sectors are targeted at different times, and serious change should not be enacted merely in reaction to public distaste. It may have been the automotive industry in the past, the financial firms today, or even the healthcare insurers and companies in the future, but politicians, make sure you know what you are doing.
A problem is still a problem whether it gains publicity and becomes a media sensation or not. Your posts talks about the rising and falling of the public's risk perception of the severity of these problems, but don't take into account that many of these issues are indeed real problems that have to be dealt with. Playing an innocent scapegoat during the times when your sector is affiliated is not going to change the fact that people's claimed stemmed from real issues. Obviously in today's society things can be exaggerated quickly, however this exaggeration doesn't mean something should not be done in the first place. The government isn't going to draw from a hat what the next target is going to be, nor is the public going to randomly decide to move on to another issue. Of course politicians are going to try and give the people what they want, isn't that the point of government, to work for the people and not for their personal gain...or is that just a businessman/banker thing ;P
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