HSBC chief executive Mike Geoghegan has made raised the predictable complaint about Vince Cable that his call for ‘restraint’ – rather mild when there are over a thousand City bankers earning more than £1m a year – might drive bankers abroad.
“We pay for talent and we have to pay the market rates,” he said.
But what is talent here? This is the question the political world needs to ask. Is this a good use of talent, to set it loose in the corrosive, speculative world, and deprive the real world of its imagination and knowhow?
There might be an argument that it is, because otherwise it will go elsewhere – if somehow the financial world was, slowly and rather badly, of benefit to the nation. What the coalition needs to decide is whether this is true.
Because, I’m not sure it is. In practice, the more we funnel our national talent towards the financial sector, the more we corrode our economy.
We create property bubbles (78 per cent of local lending in the UK went to property over the past four years). We corrode the abilities of small enterprise to compete. We finance the takeover of effective British companies by ineffective American ones. We funnel effort and finance into the pointless froth of the merger market. We corrode people’s pensions (£7 bn creamed off by the industry in hidden charges last year). We undermine the independence of local economies. We replace small employers with big multinationals which offshore their employment. We hollow out the UK economy and make it less able to compete in the future.
Is that a good use of talent?