Dominic Lawson: You don't have to make lots of money in the City to be despised, but it helps

It is bizarre that luck should be considered more honourable than work
Click to follow
The Independent Online

In this, my last column before Christmas, I invite readers to think about those among us who are most shunned and despised, the social outcasts for whom no one seems to have a kind word. I refer, of course, to the directors of Goldman Sachs.

Last week the London-based workforce of the financial firm were allocated their share in the record bonuses awarded after Goldman's most successful year of trading: on average, the managing directors received about $5m (£2.54m) each. That is a great deal of money, but not enough to satisfy the vicarious appetites of the press. So somehow it was invented that one particular Goldman director, Driss Ben-Brahim, the head of its London "proprietary" trading operations, got a bonus of £50m - almost $100m.

Cue outrage. The Bishop of Worcester emerged from his 13th century palace to describe such payments as "insulting"; and it was not just the usual suspects, such as Ken Livingstone, who fulminated against Goldman Sachs. Hard-bitten financial journalists professed themselves to be almost as outraged as the Bishop of Worcester. The Daily Mail produced a leading article as scandalised as only it can, accusing the likes of Mr Ben-Brahim of "distorting the housing market, particularly in the South-east, where hard-working families can't get a toehold on the bottom rung of the ladder" and "presenting a revolting spectacle of greed and self-indulgence".

The Mail also sent its reporters in hot pursuit of Mr Ben-Brahim, although, perhaps disappointingly, neighbours said that the 42-year-old Moroccan "is not showy. He doesn't have a chauffeur. He gets cabs to work. He keeps a very low profile."

Against this, the only whiff of decadence that the Mail could establish was that Mr and Mrs Ben-Brahim "live close to the financier and historian Robert Lloyd-George, a great-grandson of the former Prime Minister David Lloyd George". Cor.

Let us now assist Mr Ben-Brahim in regaining the obscurity to which he wants to return by pointing out that he did not receive a bonus of £50m, or anything like it. Goldman Sachs' chief executive, Mr Lloyd Blankefein, received emoluments amounting to $53.4m. He is the highest paid executive officer; although a handful of traders are thought to have earned slightly more than Mr Blankfein, their number does not include Driss Ben-Brahim. When you consider that Goldman's traders were the men primarily responsible for the company's earnings of $14.56bn in 2006, it's hardly surprising that a few of them would be paid even more than Mr Blankfein.

What makes these profits so astonishing is that they were achieved in a ferociously competitive environment; but it was also turbulent, which tends to lead to the most dramatic gulf between winners and losers. This, after all, was the year in which one American hedge fund, Amaranth, managed to lose its backers their entire investment, amounting to $9bn. If you had entrusted the management of your assets to Goldman Sachs, rather than Amaranth, you would not be complaining that a small percentage of your capital gains was paid as a bonus to the traders who had made such brilliant decisions with your money.

My oldest friend has recently retired after many years at Goldman Sachs, and so I have observed a little of the culture of this most mysterious of firms: its employees tend to be ferociously driven people, who typically work 100 hour weeks across a bewildering range of time-zones; it is intensely meritocratic, although it is true that the vast majority of its staff will have had the benefit of a good education. Lloyd Blankfein is an archetypal Goldman Sachs man: his father was a postman, his mother a school dinner lady. He was born and brought up in public housing, and scholarships paid his way through Harvard.

Such a career path is less esteemed in this country. One successful British investment banker of my acquaintance had noticed that he appeared to be considered socially undesirable by his neighbours in a prime Notting Hill garden square. So he delicately, if dishonestly, let it be known that it was inheritance, rather than his own work, that had bought him his fine house. After that, he was treated with much more respect.

It is bizarre that luck should be considered more honourable than skill or hard work; but such a warped view of society is reflected in the British tax system. A Goldman Sachs partner who earns a bonus of £5m will pay £2m in tax on it. Someone who wins £5m in the National Lottery will pay no tax on it - and yet will receive none of the sneers that are directed at the one who has generated wealth both for his family and for society as a whole, through his or her own efforts.

It amazes me that some government politicians, who spend their waking hours dreaming up new ways of spending the £20bn a year or so that the City hands over by way of tax, are so resentful about their benefactors.

At the last Labour Party Conference, Ms Harriet Harman, who thinks she should be the deputy leader of the party, called for action to "stop these excessive, ridiculous bonuses". Mr Charles Clark accepted that the bonuses were a reflection of the City's success, but complained about "the conspicuous consumption of some of the people who get these bonuses. I think it is deplorable and dreadful."

As it happens, Goldman Sachs - perhaps out of an almost genetic Jewish fear of being a target of envy - strongly disapproves of conspicuous consumption by its employees; one of the characteristics of the long-time Goldman Sachs man (although few last at the firm beyond their late 40s) is a cultivated anonymity. Even if other City firms are less po-faced, why should it be any concern of politicians how such people spend their money?

Premier League footballers are not stigmatised by the Labour Party for driving Ferraris; why should 25-year-old bond dealers be treated differently?

It is true that many of the people who chose a career in the City were principally motivated by the desire to make as much money as possible. Compared to people whose ambition was to have as much power as possible, theirs is a fundamentally harmless ambition. If those whose original career aim was to achieve some sort of power or public recognition - politicians and journalists - now feel vicarious envy at the riches of those who wanted only financial success and made it - well, that is their problem.

When such people irrelevantly cite their sympathy for underpaid nurses and pensioners as vindication for their feelings, we should realise that this is just to disguise their misery at the fact that they can't afford to buy a house in Chelsea and someone they went to school with can: or to put it in another way, this is not the season to be envious.

d.lawson@independent.co.uk

Comments