here, disctracting the public with something irrelevant; in Europe from the catastrophe of the Euro and in the UK from the Government who fashioned the economic disaster now seemingly totally pinned on 'the bankers'.
First, it plays well in a recession to bash the rich. It's a shame, but it's true. When people aren't doing so well, it's far easier to look to blame others and demand more from them than to introspect and to do something for oneself to improve one's own position. This is the default setting for much of the country it appears. It plays nicely to the lower financial layers of society mockingly sympathising with those with £1,000,000 wages being restricted to just £2,000,000 bonuses.
The reality, naturally (not a concept Ed Milliwho is too familiar with) is vastly different. What both Eds frame as a great new law to stop high pay does exactly the opposite. All the bank bonus limit does is mean banks will have to increase base salaries. It won't really affect gross pay. It will just mean that their baseline costs, those which they are contractually obliged to pay out every year are higher. The bit they have discretion over, will be lower. So even in the poor years when they could severely restrict bonuses, they will still find themselves vastly overcommitted to their payroll. They will be less flexible, more cautious and have to hold onto more of their funds. Thus not only will they not be able to be as competitive, but thy will likely decrease lending too. It's very, very simple. You can't claw back salary like you can bonus, you can't link it as easily to long term performance, and you can't incentivise working harder as easily.
The problem is as usual, the policy goes after the easy headline win rather than the issue. Nobody is doubting there was a lack of restraint with pay and a failure to link pay to long- not short-term gain. This has been taken in hand though; it was the area needing revision and it has more than received it. Despite the banks having done what we asked, we are now to cut off our nose to spite our face. This is a foolish populist policy that will only do damage when the real problem it pretends to be solving has actually long been addressed.
Second, the production of virulent anti-UK policy at a time when we are rightly making noises about the actual worth of being in the shady underworld that is the EU is blatantly punitive. London is by far the financial centre of Europe, and at the same time, a vitally important contributor to our GDP. This policy will do nothing but undermine all European banks and thus hit us hardest. If you were looking for any current examples of being ruled by moronic people you never did or would vote for in a way that is totally contrary to the interests of the UK, one can only say thank you to the EU for providing one so obviously.
The third reason, which Boris elucidates in his article, is to distract everyone from something more important. As he discusses, the EU is desperate for everyone to focus on these evil bankers and how they ruined everything, when it is increasingly clear the central tenet of a common currency for vastly uncommon economies (size, type, development etc) is completely and fatally flawed. Yes 'the bankers' deserve some of the blame, but nobody should be fooled (yet many are) by this clear distraction act. In the UK, Labour pounced upon this intervention like manna from heaven.
"The Tories are going to have to defend the bankers - number 10 here we come" - you can almost hear Labour's delight. It presented another opportunity to pretend that their tax and spend election buying hadn't placed the economy in such a perilous position that when the bust came, there was no money to deal with it. That and to gloss over their complicit part in lax ragulation and the encouragement of the housing boom that was so important to the crash.
All in all a pretty unedifying affair. A terrible law with petty political motivations and no grounding in financial common sense. It is as disappointing as it is unsurprising that it finds support from the usual suspects like Balls and Milliband, as like most of their previous policies (I don't think they have any current or future ones) it will be nothing but economically damaging.