October 21, 2009

Let the financial franchise owner charge the operators a percentage of their earnings.

Sir Martin Wolf in “How to manage the gigantic financial cuckoo in our nest” October 21 mentions “a ‘windfall tax’ or special curbs on bonuses” but perhaps the starting point should be a ‘windfall tax’ on bonuses. The current real owner of the financial sector franchise, the government, should have the right to extract a windfall fee from those operating individual franchises, if that helps to improve operations and strengthen the public image of the whole franchise. That said one needs to be careful the tax does by means of netting, does not castigate those investing in the franchises, especially when you want to attract more capital to them.