Friday 16 December 2011

Money: why the UK political classes are deaf to the problem

Why is Merkozy so jealous of the City of London? Isn’t it obvious? It’s because:

1. It is so focussed on short-term fluctuations that it corrodes the value of businesses that think ahead (a nasty continental habit).

2. It allows a handful of none-too-bright traders to spend £70,000 on an office Christmas lunch, using profits won from betting against their fellow countrymen (that’s competition, right?)

3. It completely ignores the financial needs of the businesses of the future (why should we want hundreds of tiny banks investing in every community like the French and Germans – that’s socialism, isn’t it).

4. It sucks talent and investment from the productive economy (that’s the modern way).

5. Every generation or so, it requires bailing out, using most of the tax revenues generated from their activities (that is the unfortunate consequence of buccaneering Anglo-Saxon risk taking).

Yes, it is dysfunctional. Yes, it is corrosive. Yes, it does immense harm to real, productive business all over the country – and pays £53 billion into the exchequer so that its leading members are allowed to carry on getting repulsively rich. But at least it’s British. It must therefore be the Envy of the World.

All of which explains a little about why Sarkozy and Merkel and their colleagues are jealous of Britain’s financial sector. The answer is: they’re not – but they would prefer not to let the City of London corrode their economies like it corrodes ours.

But (seriously now) there is a pattern here which needs articulating.

The criticism which the new economics levels at the City of London, and the rest of our supremely dysfunctional financial service sector, is not understood by the political classes – not even really heard.

We are not arguing that the City is privileged (though it is). Nor are we just arguing that it isn’t fit for purpose (though it clearly isn’t). We are saying that it is actively corroding the UK economy.

Why do the chattering classes not grasp this, and thereby see David Cameron’s ‘veto’ a little more clearly?

The answer, I think, is that they assume the arguments about the City are traditional UK political arguments – that they derive from class envy – and they therefore discount them.

It is precisely the same with two other crucial arguments about the economic future of the nation.

We are not complaining that the concentration of economic power in a handful of mega banks because of class envy – we are saying they are actively failing the UK economy.

We are not complaining that clone town mega-retailers dominate too many regional economies because of class envy – we are saying that they are actively dismantling local economies.

The mainstream media, including the BBC, are so stuck in the traditional UK political groove – the game the political classes play with each other – that they don’t hear the argument.

Nor do they hear the real debate about the City, because they assume it is a familiar move in a familiar game: Britain versus the continent, the UK versus Brussels, England versus Rome.

Somehow we have to break through this political complacency. If we want a thriving economy, somebody is going to have to tackle the City so that it does what it says on the tin – providing finance to new business and innovation.

Someone is going to have to tackle the banking oligopoly so that we can have the benefits of an effective local banking infrastructure that they enjoy across most of the continent.

Someone is going to have to tackle the huge privileges given to supermarkets so that we can have thriving local economies.

The bottom line is this: why should Britain have a more dysfunctional economic infrastructure than those on the continent? Why do we allow it?


Liberal Eye said...

Exactly right.

We have to choose; do we want a system optimised for big retail - in which case we can't have a thriving manufacturing sector?

Do we want to favour a financial sector that bears the same relationship to the real economy as a cuckoo chick to reed warbler parents?

I think not but the establishment is not noted for flexible thinking at the best of times and there are enormous vested interests at play.

Jen Dratman said...

All the things you say you dislike are the results of neo-liberal capitalism, as embraced by all 3 political parties over the last 30 years. Of course politicians don't listen - they are owned by the corpocracy