In the Daily Telegraph, Boris Johnson says: “At last year’s Tory Party conference I drew attention to a worrying statistic about the way our society is changing. It is the number of times the salary of the average FTSE100 top executive exceeds that of the average – the average – employee in that company. This multiple appears to be taking off, at an extraordinary, inexplicable and frankly nostril-wrinkling rate.Plato said no one should earn more than five times anyone else. Well, Plato would have been amazed by the growth in corporate inequality today. In 1980 the multiple was 25. By 1998 it had risen to 47. After 10 years of Tony Blair and Peter Mandelson – and their “intensely relaxed” attitude to getting “filthy rich” – the top executives of big UK firms were earning 120 times the average pay of the shop floor. Last year it was 130 times.
This year – cue a fusillade of champagne corks – the fat cats have broken through the magic 150 barrier. The average FTSE100 CEO is taking home 150 times as much as his or her average employee – and in some cases far more. Let us make no bones about it: these people have so much more money than other people in the same company that they are flying in private jets and building subterranean swimming pools, while many of their employees cannot afford to buy any kind of home at all. There is one gentleman out there who is on 810 times the average of his employees.
What is going on? Is it just greed, or mutual back-scratching of the remuneration committees? No doubt they will tell us, as ever, that this is the “going rate in the market”. But I notice one other point about these FTSE100 men (and I am afraid they are almost always men): that they are only too happy to parade through Downing Street and declare their undying devotion to the EU. They happily sign letters to the papers, explaining how vital it is that we Remain. They must think that the EU is good for their business.
But how, exactly? The Single Market is a microcosm of low growth. It is blighted by chronically high unemployment. The EU countries have been outperformed for growth by the rest of the OECD countries; and it is a stunning fact that there are 27 non-EU countries that enjoyed faster growth in exporting goods to the EU than Britain, since the start of the Single Market in 1992, and 20 that have done better at exporting services. Membership is far from conspicuously brilliant for UK Plc.
So what is it these fat cats like about the EU? Broadly two things. They like uncontrolled immigration, because it helps to keep wages down at the bottom end and so to control costs, and therefore to ensure that there is even more dosh for those at the top. A steady supply of hard-working immigrant labour means they don’t have to worry quite so much about the skills or aspirations or self-confidence of young people growing up in this country. And as denizens of Learjets and executive lounges, they are not usually exposed to some of the pressures of large-scale immigration, such as in A&E, or schools, or housing.
Then there is a more insidious reason – that the whole EU system of regulation is so remote and opaque that they are able to use it to their advantage, to maintain their oligarchic position and, by keeping out competition, to push their pay packets even higher.
In their brilliant book Why Nations Fail, Daron Acemoglu and James A Robinson explain how transparent political institutions are essential for innovation and economic growth. They make the distinction between “inclusive” societies, where people feel involved in their democracies and their economies, and “extractive” societies, where the system is increasingly gamed by an elite, for their own financial advantage. The EU is starting to take on some of the features of an “extractive” society. It is dominated by a group of powerful international civil servants, lobbyists and business people.
These people, on the whole, know who each other are. In the case of big business, they can afford to hire someone to follow the regulation that comes out of Brussels. They can fix a meeting with the Commissioner responsible. They may even meet him or her at some conference or event – Davos being the most famous. In that respect they have an immense advantage over the vast majority of businesses in this country.
Most businesses (in fact most Britons) have absolutely no idea who works in the Commission, or how to get in touch with them, and they wouldn’t know their Euro-MP from the man in the moon. Only 6 per cent of UK businesses actually export to the EU, and yet 100 per cent of them have to comply with 100 per cent of EU law, whether they are large businesses or small – a regulatory burden that costs about £600 million per week.
Last week I visited Reid Steel, a British success story in Christchurch, Dorset. They export steel for bridges in Sudan, hotels in Mauritius, aircraft hangars in Mongolia. The only thing that was holding them back, they said, was EU regulation – generated by an inscrutable process involving fat cat lobbyists and fat cat businesses and the governments of other countries. They are desperate to get out of the EU, and they are right. They believe the other EU countries would rapidly do a free trade deal, and an unshackled British business sector would probably export more to the rest of Europe than it does today.
Of course, the FTSE100 fat cats will sign up for remaining in the EU: they are getting personally richer and richer – by mainlining immigrant labour for their firms and manipulating EU regulation that only the big players can understand – while those at the bottom have seen a real terms fall in their wages. It is one of the reasons that the EU has such low innovation, low productivity, and low growth. If you want to back the entrepreneurs, the grafters, the workers, the innovators, the burgeoning and dynamic businesses of Britain – then Vote Leave on June 23, and give this cabal the kick in the pants they deserve”.