Oh well done Ritchie, well done!

How much should Thiam have been paid then as CEO of Prudential? Not asking for an exact number, a ballpark figure will do.

Richard Murphy says:
April 1 2015 at 12:54 pm
A couple of hundred thousand or so

Little more

Tell me why he earned more

Not because he could

But the economic justification

And don’t claim market rates. There is no such market

That one set of shareholders poach a successful CEO for a greater amount of money from the first set of shareholders shows that there is no market in the services of CEOs.


He also manages to get terribly, terribly, confused about the outcomes of tournaments. Book writing (Rowling,) Soccer (Messi) and CEOs (Thiam) all share significant features of being tournaments. There’s many people who try to succeed at the three. There’s very few who do and their rewards when they do are very high.

The attrition rate for authors and footballers is of the same order for example. There’s hundreds of thousands who try and only a few hundred earning millions a year. But Messi is apparently exploiting the fan base and Rowling is not. Rowling is an entrepreneur deserving of dividends and Messi is not: despite both taking comparable risks when they sat down to decide upon a career.

And we might well note that Rowling is appropriating a rather larger portion of the total revenue from the economic activity she partakes in than Messi is: there’s no way he’s getting 20% of the total revenue of the club, is there?

67 thoughts on “Oh well done Ritchie, well done!”

  1. Could it be that he, as a sometime author, has some understanding of how that works (and would like to make £££££s doing it) and is thus OK, whereas he understands nothing of the other two cases so is intellectually free to let his prejudices run wild and free?

  2. Yes I think Barcelona has one or two other football players. As a group they may be taking a similar prorption of gross profit.

    Anyway, look the fact people won a tournament does not justify their income. Suppose in feudal Britain the king ran tournaments to choose dukes. The winners deserves their places in the sense that they were stronger and more cunning. This does not tell us dukes are rightly so much richer than serfs.

  3. But arguing that “this sort of tournament” justifies high income but “this sort of tournament” does not is, umm, well, a bit hypocritical maybe?

  4. Its the same as Monbiot’s ‘argument’ yesterday.

    All the people he likes deserve their wealth, for some unexplained reason, but all those he doesn’t, don’t.

    Should self-awareness be taught in schools? Discuss.

  5. I sneeze in threes

    I would argue the question is not does someone have the right to be paid a lot, but rather does someone have the right to pay someone else a lot. If they don’t then they don’t own the property (money) they think they do.

  6. @I sneeze in threes:

    “If they don’t then they don’t own the property (money) they think they do.”

    Nail. Head.

    Ritchie believes that the State owns all money.

  7. There was a study recently showing that the stock excuse for skyrocketing CEO pay (globalisation innit – the poaching of top talent across borders that was supposedly formerly confined to a national market) was bunkum. You must have seen it.

    Of course the owners can pay these sums but I suspect much of it is a voodoo premium, a sacrifice to the gods to keep someone with “the midas touch”, which is basically someone who was both talented and lucky and might continue to be both.

  8. Rowling doesn’t get 20% of the income of Hachette either.

    I suspect that players get a bigger fraction of football revenues than authors do of publisher’s revenues.

  9. @Tim, I don’t think Ritchie is looking at the differences in pay between the tournaments – just at the top people in each tournament because it’s easy to pick on them. And the most talented footballers (or perhaps the pretty ones of above average talent with underwear to sell), and most talented writers (or perhaps those who can produce garbage that turns into decent enough films) vastly out-earn the most talented/lucky CEOs.

  10. Luis Enrique

    If you read the Tax Research blog – sorry to suggest that, but you may have to – you will see Ritchie has got in a terrible.tangle and is trying to draw a distinction between self-employed authors and footballers. I think Tim’s point is this is a transparently false distinction.

  11. Surely the basic answer to Murphy’s questioning of what a private enterprise decides to pay its staff is ‘unless you’re a shareholder, who gives a toss what you think, so you can therefore fuck off’

  12. The Meissen Bison

    There’s many people who try to succeed at the three

    That’s astonishing – are there any who manage this bizarre triathlon?

  13. Not wishing to denigrate JK Rowling at all, but the comparison with Messi, regarding tournament theory, isn’t that flattering to her or Ritchie.

    Professional football and children’s publishing (until very recently) are, and apologies for the pun, not equally level playing fields.

    A supremely talented footballer doesn’t really have that many unnatural obstacles standing between them and top of their particular tournament pyramid. Talent – barring accident, corruption or health issues – will out. Look at the racial, social, financial (and sometimes criminal) backgrounds of the world’s greatest football players. There’s a pretty open demographic there. The money is following the talent.

    Publishing is not like this. Children’s publishing is pretty much a middle-class, liberal pastime. And is still very heavily policed by its gatekeepers: the publishing companies. If you didn’t get in through the door when Rowling first wrote you did not get published. Period. And even she nearly didn’t. The Internet has changed that to a certain extent, but there are many, many fantastically talented writers who have never, historically, had the chance to even place their wares in front of the readership.

    So, if anything, Messi is an infinitely more democratic representative of the rewards available to talent than JK Rowling is.

    But since Ritchie himself is part of the middle-class, liberal elite, and Rowling is one of the ‘good people’ he can turn that on its head.

  14. Ritchie calls himself an economist. Surprising then to see him completely blinkered by the terms ’employed’ and ‘self-employed’ and fail to recognise there might even be a bargain being struck at all.

    Actually, not surprising at all; he isn’t an economist any more than he is a tax expert.

  15. All you need to know about the current attitude to writing children’s books is in the Black Books episode where Bernard and Manny write about an elephant losing its balloon. “It’s easy – anyone can do it”

    Rowling got lucky. Would the likes of Arthur Ransome be published today?

  16. BiG,

    “There was a study recently showing that the stock excuse for skyrocketing CEO pay (globalisation innit – the poaching of top talent across borders that was supposedly formerly confined to a national market) was bunkum. You must have seen it.”

    Was this written by people who had hired those CEOs?

  17. Dunno, I’m looking for it but without success. Maybe that’s why I don’t get paid as much as them!

  18. Glenn Doran

    Speaking as a member of the children’s publishing industry I can assure you that it’s a great deal harder than it looks. That episode of Black books is a particular favourite of those of us who work in this industry (because there are — not naming any names – people that this reminds us of).

    As you say, Arthur Ransom probably wouldn’t be published today. But OTOH JK Rowling never would have been published five years before she was. Wizards and boarding schools were toxic then. She was very lucky with timing.

    Yes, there are undoubtedly absolutely appalling piles of drivel being published in the children’s publishing market. But then the same applies to philosophy, academic publishing, politics, economics, mainstream fiction, Booker prize winning fiction.

    As Theodore Sturgeon said: “99% of science fiction is crap. But then 99% of everything is crap.”

    I personally don’t like JK Rowling’s work, but there’s no denying that millions of people do. So, as a believer in free markets, she’s welcome to her vast piles of gold.

  19. One suspects that RM’s support for JK Rowling’s success would be less if she was a serial donor to the Tory party and well known supporter of the Right.

  20. @BiG:

    “There was a study recently showing that the stock excuse for skyrocketing CEO pay (globalisation innit – the poaching of top talent across borders that was supposedly formerly confined to a national market) was bunkum”

    If this is true (I don’t know one way or another), then the question is “so what?”

    As far as the football wage argument goes: Scottish football is currently going through the adjustment to the realities of finance.

    Rangers went bust after years of mismanagement (and are likely to do so again despite being bailed out);Celtic are paying far less and not making big signings; most of the other teams are following sensible financial polices. Hearts also went bust but are now run by a proper businesswoman (ie she knows how to read a balance sheet) – the club is being turned around and it looks like they will have a far better business model for the future.

    The standard of football is still very poor, but the leagues are more competitive and fans are showing more interest compared to the days when Rangers/Celtic bought the title on tick.

  21. Meanwhile, over in TaxResearchLand, Ritchie is now saying his point is about mediocre people being paid more than they’re worth and talented people not being worried about money. That’s his whole point see!

    I think in the process he has implied that Lionel Messi is mediocre.

    But this is a conflation. The point isn’t about outside judgements of talent or worth ti society, much less HIS judgement, it is the calculated judgement of those doing the paying.

    There is also a lovely subplot involving him describing any trading deduction for tax as ‘State Aid’.

    All in all, he’s having a stormer.

  22. Stuck-Record

    Hope I was clear: I was referring to the attitude of would-be authors who were sent up in Black Books rather than publishers themselves.

    I know two people who were convinced they could be the next JK Rowling, based solely on the fact they could write a reasonably coherent management report. One wrote a book in their spare time; the other actually gave up work for a time. I tried to read both books; both were absolutely awful.

    Writing fiction well is a rare talent.

  23. bloke (not) in spain

    “As you say, Arthur Ransom probably wouldn’t be published today.”
    With a lead, pre-AoC female lead character called Titty – highly unlikely. And AR’d have the Yewtree mob seizing the contents of his wastepaper basket.

  24. In a past life I read a bunch of the Harry Potter books in Dutch translation to help me learn the language.

    Having now read parts of the same books in English, I can say that the Dutch translator improved on the writing by a substantial margin.

  25. I’m a substantial shareholder in Prudential. Since I bought the shares, following the unsuccessful bid for AIA,, the share price has more than tripled.

    Pay the man FFS, pay the man.

  26. As someone who is an utter mediocrity in his field, you can see why he would have a seething resentment of the successful ones.

  27. “Utter mediocrity” suggests a base level of competence and an ability to do an adequate, but not impressive, job. Better than the worst, not as good as the rest. I am more than happy to be described as mediocre (or less pejoratively, average) in my job; it’s a fair judgement of my ability compared to peers.

    I don’t think Ritchie meets this definition.

  28. @Meissen Bison

    ‘That’s astonishing – are there any who manage this bizarre triathlon?’

    I know what you mean but I’m willing to bet one D Beckham was the best paid footballer for a while, had a No1 publishing hit and is CEO of his own services company!

    I hate football, and I got no further than the second page of the first Rowling book (when one of my daughters was reading it), but unlike Murphy I don’t consider it any of my business whatsoever what any footballer or author earns.

    One of his many problems is he’s so fucking nosey.

    Given that he is supercilious with it, I would wager a fairly large sum that one of these days someone will spread that nose all over his face.

  29. GlenDorran

    Got it. Thanks. My mistake. You’re right of course.

    There are diamonds buried in every publishers slush pile. Just as there are diamonds amongst the millions of self published books out there.

    The problem in the past has been finding them and then risking publishers money to bring them to the public’s attention.

    The problem now is just finding them!

  30. “I really have difficult with you right wing Stalinists”.

    He’s simply spiteful and jealous and tries to mask this with pseudo intellectual bullshit that most people with a modicum of intelligence see right through.

  31. Stuck-Record,

    “I personally don’t like JK Rowling’s work, but there’s no denying that millions of people do. So, as a believer in free markets, she’s welcome to her vast piles of gold.”

    I’m convinced I could write books as good as Rowling’s and that’s not a kind thing to say. I think the attraction of them is simply about that kids escape from this world and all the spells and artefacts. The storytelling in them is pretty average.

    They’re not read much by the kids who were a few years younger. Kids books seem to be a bit like crazes or boy bands, that they belong to a particular group of kids. My kids were more into things like The Hunger Games series (which is a well-written series).

  32. miles dean

    He is still trying to argue that Messi’s money comes from rent-seeking. His argument is helped by deleting a comment that notes Barcelona is owned by its fans; dishonesty never having been a barrier for him.

    Even taken on his own terms, however, he is left arguing thay Lionel Messi is a rent seeking mediocrity. He is quite quite hilariously shameless.

  33. @Ironman: he deleted that comment? Really?

    What a spineless little weasel.

    It did completely destroy his argument though. I don’t understand why he pre-moderates comments, publishes them and then deleted them.

    He simply can’t accept any correction: his response to someone putting him right about the scale of the HNWU was “you are entitled to your opinion”.

  34. @Ironman: that comment on Barcelona is still there…maybe something to do with your (or my) browser?

  35. “If he followed the football news he’d be using Neymar as the analogy, not Messi: the former is better paid.

    So; Messi to Stoke then?

  36. Glendorran

    There is a reference, you’re right. However, I mentioned it again in another comment, which he did delete.

    I actually styled myself Johnny Haynes ( first £100p/w footballer) and I think he might have spotted it this time.

  37. on a previous thread a couple of weeks ago (again in respect of footballers and in particular Messi who he seems to dislike because presumably he is better at football than Murphy) he claimed that such huge sums were being earned on the back of broadcasters selling broadband packages to desperate punters. It was all very odd / bonkers and I wasn’t under the influence at the time.

  38. So there is a product for which there is a high demand (quality world-class footballers)

    ….there is a very limited supply (of said footballers)

    I wonder if there’s anything which could explain the outcome of this scenario?


    The only thing I can think of is something I’ve heard called “economics”. But Ritchie has ready said that it is all wrong, so it can’t be that.

    Anyone else got any other ideas?

  39. Ironman: that comment may still be there, but I’m sticking by my description of him.

    Spineless little weasel.

  40. Glendorran

    It’s rent-seeking obviously, “exploiting millions”.

    Take those neoliberal bastards from the Ivory Coast, Drogba and Yaya and Kolo Toure. Those privileged monsters come to the UK to exploit – exploit I tell you! – helpless consumer purchasers of Sky and BT football packages. As for the poor innocents who attend matches, what choice do they have?

  41. Ironman:

    A Sky Sports package costs around £30 a month. For that, you can see hundreds of hours of the world’s finest sportsmen and women performing. Football, rugby, cricket, tennis, golf, boxing …nearly every sport you could want to watch. If you are a sports fan who watches even 15 hours a month (2 or 3 games a week maybe) then you are getting entertainment at the cost of around £2 an hour.

    Compare that to the cost of cinema, opera, theatre. Even a paperback book will cost around £8. One book a week and you are up to the Sky Sports package.

    Yes, Ritchie is right. All those poor sports fans, all being ruthlessly exploited.

    I suggest we need an Office for Sports Responsibility.

    Note that I agree with Ritchie, we don’t need one for Authors, unless you are talking about nasty populist right wing writers like John le Carre.

  42. I think the problem many of us have is that we don’t speak Murph. Consulting my Murph to English phrasebook, perhaps I can help:

    ‘Now stop wasting my time’ – You have raised a point I can’t answer

    ‘I will feel free to delete your nonsense in future’ – You have raised many points I can’t answer

    ‘So you are making all that up’ – I don’t understand the answer you have given

    ‘I repeat the points I have made to another commentator’ – I would refer you to where I have previously avoided answering your question

    ‘I assure you, quite a lot of academic economists do seem to think I have a very good grasp of it(economics)’ – Ivan Horrocks agrees with me

    ‘But it’s not the way the world works’ – I acknowledge that is how the world works, but it doesn’t suit my argument

    ‘If the chart does not say anything clearly to you then you clearly have nothing useful to say here’ – You have understood the chart better than I have, but its too late for me to backtrack on my stupidity

    ‘Shall we deal in facts?’ Let’s ignore the facts

    ‘respectfully ..’ I am about to resort to being a cunt

  43. @worzel:


    I may write a small script to automatically put his responses through your translator.

  44. With regard to the football / Messi, isn’t this just wilful trolling of his own blog?

    And on today’s “special”, trying to mislead people over relative borrowing and deficit levels, he now chips in with this little gem:

    “There is no such thing as a structural deficit”

    People have asked where MR went. I actually think I know… 😉

  45. @ worzel
    “You are making all that up” means “I cannot begin to answer the points that you have made so I’ll exclude them from the discussion.”
    I then proceed to provide references

  46. OK, let’s put his salary in context.
    Over his 5 years, the FT reports that the stock price increased 185%. it is currently £42.84 billion and would have been £15.03 billion or thereabouts this time five years ago. The FTSE index over the five year period has increased by 18.5%; so if the market cap had kept pace with the index, it would be about £17.8 billion. For simplicity, let’s say £20 billion. So under his tenure, the stock market capitalisation has increased £22.84 billion more than if the shares had simply tracked the market.
    For this “outperformance”, he is paid a salary of £1.06 million, plus a £8.25 million from his LTIP, which would be achieved if he raised the stock price and a bonus equal to 2 x his salary.
    Of course, we can question whether Thiam actually created all the value increase himself, etc. but to suggest that he is appropriating all the benefits of his position is silly.
    The only question is whether the rewards for participating in the tournament to be CEO (all those hours, etc.) are sufficient to attract individuals of Thiam’s calibre.
    The football analogy is flawed in that it is clear that highly skilled footballers can and do extract most of the profit from the game because it can be demonstrated empirically what all football clubs know: talent wins games, and the very best are better than the best at winning those all important goals.
    Management success is more akin to writing and acting. In these creative industries, there is a huge value in being successful as publishers and producers know that prior success is likely to have a strong correlation with future success, and are willing to reward previously successful writers and actors accordingly.
    Hence, management is more akin to acting and writing than footballers as a profession and why the rewards are what they are.

  47. Goddamn it but I’ve seen some stupid things said on this blog down the years, but miles dean has taken the biscuit, eaten it, regurgitated it and wiped the whole soggy mess over the Internet with his ridiculous assertion that Lionel Messi is better at football than Richard Murphy.

    Candidly, if Pele and Maradonna weren’t good enough to lace Murphy’s boots then Messi isn’t either.

  48. bloke (not) in spain

    ” I suggest we need an Office for Sports Responsibility.

    Note that I agree with Ritchie, we don’t need one for Authors, unless you are talking about nasty populist right wing writers like John le Carre.”

    Have you actually read John Le Carre, Glen? Candidly, he’s not far off the Richard Murphy of the espionage genre. Although he does know how to construct a sentence…

  49. @b(n)is

    As soon as I pressed Post I knew I’d had a brain fart.

    I meant Frederick Forsythe.

  50. @Peter. – that reminds me of a good point I saw in similar discussions in the past.

    Thought experiment: Imagine it was as easy to judge how good someone is at their job, as it is for footballers. How would that change how we paid them, particularly if they were in a role that would have a big impact on profit margins?

    I suspect the gap between best and very best would widen considerably and those at the top end, now seen as even more indispensable, would capture much more of the profit.

  51. The Meissen Bison

    GlenDorran: I meant Frederick Forsythe

    When I read that post I said “poor old Glen’s a bit confused, he means Freddie Forsythe”.

    And then I wondered if Richard Murphy would approve of Adele and give her the Fair Music Mark.

  52. This is Ritchie at his self-parodying worst, and Monbiot needs shooting. However, there is a point to be made about executive pay. It almost certainly is too high, unless there is a rational explanation for the relative growth in executive pay. Let’s not forget that executive pay is generally set by fellow executives, and not the mass of shareholders.

    Besides, we should not be comparing the likes of Messi and JK Rowling with top CEO’s. The world’s top entrepreneurs, like it or not, are people like Siralan and Branson (It’s usually quite easy to tell them apart; the CEO’s went to university).

  53. @worzel

    Brilliant – but to paraphrase GlenDorran even
    ‘Rent-seeking’ – being paid more than I think is fair and nit working in an industry of which I approve

    ‘civil Society’ – everyone who shares my way of thinking

    But as a guide to his phraseology it is on a par with one from one the blokes (in Costa Rica) I think a few years back…..

  54. He’s reposted his moderation policy today. That usually happens after he’s had his arse kicked.

  55. Jack C,
    You state:
    “Besides, we should not be comparing the likes of Messi and JK Rowling with top CEO’s. The world’s top entrepreneurs, like it or not, are people like Siralan and Branson (It’s usually quite easy to tell them apart; the CEO’s went to university).”

    Well, maybe. But I should point out that the “pay” these guys get makes CEO pay look like small change.

    This is what is said about alan Sugar’s wealth: “He famously started out with just £100 in 1967, selling aerials out of the back of a van and the journey to success and his current £730m wealth is charted in minute detail in his recently-published 600-page autobiography What You See is What You Get.”

    Read more: http://www.thisismoney.co.uk/money/article-1711658/How-rich-Alan-Sugar.html

    So the odd millions being earned by CEOs pales compared to the rewards to successful entrepreneurs, etc. It is clear (and whether you approve or disapprove of it) that globalization is showing that the rewards to talent (be they artistic, managerial or entrepreneurial) are huge.

    If you can add 5% to the turnover of a business with sales of $100bn, thats $10bn. How much would you pay the individual to bring this about? A couple of million is lose change? A 10% commission would be a cool $1bn in reward.

    We can all argue about the relative income/wealth between the top and the bottom of society and ask entrepreneurs, etc. to pay their fair share. I think that Tim does that all the time on this blog, but there are limits to how much redistribution we can have without killing the golden goose of innovation and growth. That is what the dismal science has grappled with and the results have been chewed over and mostly ignored because the balance between what can be taxed away and what must be retained to incentive risk taking, etc. are not the conclusions redistributionists want.

  56. The best I’ve seen is that you can move Gini by about 13 points before you start to kill that golden goose. There’s a bit of flexibility in it sa you can change the damage done by the method you use to do it and other strucural bits of the society.

    13 points is about what the UK does today and a little more than the US does, and less than most of continental Europe.

  57. Peter,
    Have a look at pay for CEO’s and sports people in the US.

    “If you can add 5% to the turnover of a business with sales of $100bn, thats $10bn.”

    Ignoring the typo, much would depend on how much I expected revenue growth to be, and how much was down to the CEO (and how many other, similar people were available).

    Besides, and this is the point really, a CEO capable of adding $10bn revenue to an established business would be working for him or herself, not for me.

  58. @ MBE
    In some jobs that is possible, which is why Tidjane Thiam, who is one of world’s star CEOs was the second-highest paid employee of the Pru. Neil Woodford has at last decided to cash in on his value. For over twenty years I did not “hold down” a job – I was protected by my bosses from HR, which discriminated against me as far as they could, because I was visibly worth more than either my pay or any available alternative. That is not to suggest that I ever was the best in the world, just that all but one of those better at my then job were not available (he had already been promoted to an even more valuable role until he got headhunted and was replaced by a visibly inferior colleague).

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