Edictum De Pretiis Rerum Venalium

The rise and fall of the Roman Empire European Parliament

Diocletian, or Gaius Aurelius Valerius Diocletianus Augustus, a Roman emperor who ruled from 284 to 305, issued the edict on maximum prices (in Latin, Edictum De Pretiis Rerum Venalium) in 301.

In an outburst against a European Union cap on bankers’ bonuses, Boris Johnson, the mayor of London, said “the most this measure can hope to achieve is a boost for Zurich and Singapore and New York at the expense of a struggling EU. This is possibly the most deluded measure to come from Europe since Diocletian tried to fix the price of groceries across the Roman empire.”

Here at Vox Sapiens we really don’t understand what this measure is supposed to achieve.

Modern technology means that many banking jobs can be performed remotely. Even when physical presence is required, Europe is a tiny place – most of the major locations are within a two hour flight of each other. So it is very easy to work in any of the major locations, including those out of reach of the legislators and politicians in Brussels and Strasbourg. Boris’ Zurich can easily be joined (or replaced – given the Swiss vote on limits to executive pay) by many other European cities such as Oslo, Andorra la Vella, Vaduz, etc. as an alternative location for the top earners. So the non-European banks get the best employees and the European banks get what’s left.

Well unless the European banks get smart on structuring pay and bonuses. And given the success of banks in other areas, it would not surprise us to find the banks always one step ahead of the legislators.

Either way, we see this as unnecessary interference. If followed at face value, this will increase base salaries, leading to higher fixed costs, and greater losses (jobs and P&L) during downturns. Is that the intended outcome?

At Vox Sapiens we are not saying that the global banking system is not in need of remedial care. It most clearly is. But the EU proposal is not going to fix the problem, it is just going to accelerate the decline of the EU banks and the EU states.

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