Hedge funds and Private Equity - PES

22
Coherence, co-responsibility and ethics
We need to remember that not only are the fees paid to LBO managers extremely high, but
also that their gains will be taken out not as income, but as capital gains, which has huge tax
advantages when the rate of income tax is high, in the UK, for instance, 40%. The Financial
Times reports rumours that leading British LBO partners pay taxes of scarcely more than 4-5%
on multi million incomes. As we can see, these leverage and business models are providing the
framework for the extreme enrichment of a small elite.
This in itself threatens the feeling of coherence and responsibility among stakeholders and social
partners in our societies. How can we seriously ask employees and wage earners to show
responsibility for society during trade union negotiations given these extremely high fees? There
is an enormous potential for all people in Europe in bringing our New Social Europe and the
global economy together in a new dynamic interplay. But there is also a need for change to
ensure a sustainable New Social Europe in relation to the financial markets.
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