14 Jan 2010
Can someone please explain to me this argument that we have to pay bankers huge salaries and bonuses in order to get them to stay in the UK?
Apparently, these bankers are such brilliant financial supermen that they can't be replaced. We need them so much, they are so fantastically knowledgable and adept, that we have to bribe them constantly with incomes many times that of less skilled and less necessary people like, say, surgeons or scientists.
I heard this yet again on the BBC Breakfast programme this morning.
Will Hutton pointed out that, if banks had held back around £80bn of the £400bn they paid out in dividends and bonuses, then the banking crisis wouldn't have happened. Banks would have had sufficient capital reserves to ride out the problems.
The British people are suffering (many by losing their jobs with more meagre but more vital salaries) because bankers have been lining their pockets for years.
But then up pops some dull, grey sockpuppet for the City (whose name my brain didn't register - he really was that grey) who agreed with Hutton but rolled out the cliche we've heard a lot about the banking crisis, whenever the subject of ways it could have been avoided comes up. "20-20 hindsight," he whined. "No-one could have anticipated this crisis."
There's some disconnect here, isn't there? These bankers (and, oh how my fingers want to start that word with a different letter) are inconceivably brilliant but they didn't see it coming?
This problem didn't come out of nowhere. It isn't like an earthquake or hurricane. The bankers themselves caused the crisis with inept and greedy lending practices. They made it inevitable and savage by dipping their fingers in the till, so that the banks didn't have enough cash to deal with the problem. They were unable to come up with any solution other than borrowing from us, the tax-payer. And yet we're meant to believe that these same people are somehow a special, super-intelligent breed who need to be maintained with fat pay packets.
It's a lie. The fact that these people failed to foresee a problem they created is all the proof you need that, for all their preening and self-adoration, they are, in truth, useless, jumped-up bean counters with a messiah complex.
The UK economy has made itself ludicrously dependent on the financial sector. This started with Thatcher and the culture of greed she created in the UK. She began the short-sighted and self-serving destruction of UK manufacturing industries. New Labour [sic] continued this trend. Gordon Brown, first as Chancellor and now as PM, has had a long love affair with the City. And so financial services are almost the only sizeable industry left in the UK.
These idiotic policies have now come back to bite Britain. If the banks desert the UK for Europe or elsewhere, the UK will be left with nothing. It would be a disaster.
The solution proposed by Brown and his City cronies (or is Brown the City's crony?) is to continue as before. Bribe the banks to stay in the UK by allowing bankers to stuff their ears with cash while pretending that they are worth it for their brilliance. In truth, as we now know, they are profoundly and dangerously incompetent. Frankly, most of them should be on minimum wage - or in jail.
Maybe a better solution would be to concentrate on developing other industries. The banks could then resume their proper role - as a service supporting worthwhile industries where real people with real skills do real jobs and are paid accordingly.