For a capitalist economy to work, we all need to believe that more money is better than less money, and that a pay rise is a good thing, writes Lucy Kellaway

'MERVE SHOULD get a medal!' wrote a reader on the Timeswebsite last week on hearing that the governor of the Bank of England had turned down a £100,000 pay rise.

Others agreed: "Well done Mervyn." "Good on him!" "A real hero - and from Wolverhampton!!"

Over on FT.com, the same feeling was expressed in more schoolmasterly fashion. Mervyn King, it said, "merits applause".

And applause he got, from nearly everyone. Mervyn was not only deemed a nice bloke, but columnists went so far as to argue that neither Northern Rock nor rising inflation were really his fault after all.

Mainly, though, everyone was impressed because the governor was setting a good example. By turning down his pay rise, he was shaming overpaid chief executives for being so greedy.

But actually Mr King wasn't setting a good example: he was setting a lousy one. We have to hope that CEOs are not tempted into following suit by the avalanche of positive PR Mr King generated through giving up a mere £100,000.

The Lex column wrote approvingly: "Mr King's caution . . . highlights how rarely chief executives demonstrate such tasteful self-denial."

This is sentimental bilge. Of course chief executives don't go in for tasteful self-denial; they would never have made it to the corner office if they did. Business is not about self-denial or tastefulness, and to hanker after either betrays a hopelessly British, screwed-up attitude to money. Like most Brits, I am inclined to tasteful guilt and confusion over money - but it is not a trait I admire in myself, and I am saddened if the governor of the Bank of England shares it too.

For a capitalist economy to work, we all need to believe that more money is better than less money, and that a pay rise is a good thing. To set a good example to the rest of us, chief executives must be sticklers about taking their rises, just as they must be sticklers about taking their holidays.

To commend them for doing otherwise is to get us into a mad inverted world that is like the bazaar in Monty Python's Life of Brian, in which Eric Idle attempts to buy something but confuses the haggling process and keeps bidding his purchase price up. The only reason for not taking a rise is if it was offered in error, or if it was arrived at by idiots.

In the case of the Bank of England one does wonder why the consultants, Towers Perrin, suggested such a big rise after a fairly cruddy year for Mervyn, especially when his counterparts at the Fed and the ECB were getting less.

In fairness to Mr King, he is not in charge of the system that determines his salary. But a CEO who turns down a pay rise should not get applause: he should be sacked for presiding over a pay system that produces a number so far in excess of what he deserves. The solution to excess pay at the top is not to curry favour by waiving rises, but to sack the remuneration committee and start again.

An even more objectionable thing about turning down a rise is that it muddies the moral waters. If the CEO doesn't take his money, is that a message to the troops not to take theirs? Or is it saying that the moral high ground belongs only to the man at the top; that only he can rise above the grubby business of money and that those below are lesser beings who can be excused for having their noses in the trough?

If CEOs started routinely saying no to rises, greed would not go away; the system would simply adapt. One imagines a ridiculous situation where remuneration committees would suggest even more ginormous numbers, knowing that the CEO would want to get some brownie points by publicly haggling them down to a lower figure.

And if one wants further evidence of the sort of thing that happens when one disallows people from taking pay rises, then one only has to look at members of parliament. They fiddle their expenses instead.

Words to the wise.

A few weeks ago, I wrote about some of the most sinister things that people say to each other in offices - the little phrases that look perfectly innocent but are actually toxic.

Many readers kindly sent lethal examples which I have added to my collection. Below are six of the best.

• "I know this is a big ask, but . . . " This makes the heart sink twice over: because it's never nice to be asked a favour, and because "ask" is not a noun and therefore cannot be graded by size.

• "Rightly or wrongly . . . " The person knows that what they are about to say is indefensible but they are saying it anyway.

• "We haven't made any final decision about this." This means we have made a final decision and you aren't going to like it. An alternative, even more sinister variation is "We want to consult you about some possible changes . . . "

• "Just so you know . . . " is an ominous way of passing on what people have been saying behind your back. It is made worse by the addition: "I don't believe a word of it but . . . "

• "This is a good first draft . . . " is devastating when you've been sweating all night trying to get a document into its final shape.

• "You're a true gentleman," means I have just trampled over you and you are a wimp not to have put up more of a fight. There is no known equivalent for female employees, though there are other put-downs that women have to endure. The best is: "I bet you were head girl at school." - ( Financial Times service)