Rob the Gob

Yesterday afternoon (depending on where you are, I suppose), Barack Obama announced that there would be regulations placed upon banks whereby the riskier investment activity would be more tightly controlled, and would have to be separated from the  more vital and socially supportive activity of banks. Furthermore, bank sizes will be controlled so that the collapse of a single institution can’t collapse the world economy. Uncontroversial, you’d think – except that a lot of people have made a lot of money with the way things currently are. And still are. The stock markets reacted predictably, and a lot of people stated to complain. Especially bankers.

There are many social structures that we have created to facilitate human interaction. One of these is banking. At the most basic level, banks exist to enable those with money to lend it to those without, with the hope that they will use that money to flourish, and so be able to repay the lent sum with interest, thereby making more money for the person who had it in the first place. Everyone’s a winner, right?

Well, fairly obviously, given the events over the passed two years, no.

Let’s put this plainly. Some time ago, the governments (and, therefore, the people) in almost every country in the developed world, were held to ransom by a small group of people so intent on making money that they were prepared to risk the financial provisions we all make to provide for us when we can no provide for ourselves. Not only that, but the places we live and companies we work for. So far do the tendrils of this industry extend that, if allowed to collapse, it’ll take everything with it, through the developed world and beyond. Because we’re all involved. These are the same companies that lend us money for our houses in Wolverhampton and Wyoming. These are the companies that have our savings, traded across the globe. They own everything we do, and have connected it to everything else.

Given that, you’d think they’d try to act responsibly, but no. In fact, this structure has a form almost opposed to stability. These ‘masters of the universe’ (self named – and if you ever needed proof that these institutions were being run by the kind of egoistic megalomaniacs you should be ashamed to share a genome with, there it is) see it as their duty to take control of as much as possible and then take the biggest risks possible in order to generate the biggest profits possible.

Are they doing this for you? No. they are doing it because it makes them money. Huge amounts. Steady, sustainable growth is completely possible, but undesirable. Sudden, rapid growth, which enables you to gobble up everything around you, makes you more money and sod everyone else. They use this structure to be savage.

And how do they justify this abhorrent behaviour? They tell you that it is natural. They appeal to principals such as ‘survival of the fittest’, and use terms like ‘dog-eat-dog’ to try and paint the global financial system as some sort of savage environment. And it is. But only because that’s how they behave. In and of itself, it is nothing. It has no existence independent of us.

So then they appeal to human nature. We know, at base, human beings can be vicious, savage, self-interested things. But we also know that we have the capacity to love, to be artistic, to care for their neighbours, to create nothing but beauty. Human beings can be Adolf Hitler and Attila the Hun, but they can also be Mother Theresa or Buddha if they are allowed to be. And civilisation is surely a collection of structures that allow this; structures that help our better aspects to flourish. We could all be savages beating each other to death with rocks and eating what remains, but we have institutions and cultures precisely to allow us to be better than that, to find our capacities for caring, our sense of community. The point of civilisation is that we don’t have to be that heartless, brutal thing. And whether your weapon is a rock, a policy or a laptop displaying current share prices, if you act without heart, if you are that radically senseless thing, you are as much of a brute as the BNP thug in footy shirt or the sweary teenage muggers you look down your nose at. Being rich and well educated doesn’t automatically make you a better person.

Why, then, should we allow the brutish, uncaring attitude to so dominate one of our most important social structures? Well, we shouldn’t, it’s as simple as that, and that’s why it needs to be regulated. That is embracing the idea of community – controlling the actions of the vicious and selfish to benefit the whole. This is also human behaviour and just as ‘natural’ for being precisely that.

When we let the banks bully us, that is a bad system. When we let a system turn us upon each other, that is a bad structure. It should be restructured, or removed. Sometimes we have to recognise that certain social structures are bad and need to be revised. They do not exist independently or spontaneous, like some creature adapted to its environment, and they are not shaped by forces beyond our control. These are our structures, and we can change them and remove them as we feel like it. If something is against the very notion of social utility, if it is acting against the very purpose of civilisation, then it needs to be changed.

It is often said that the banks have made a huge amount of money for Britain. In the most basic analysis, they have. More specifically, however, they have made a huge amount of money for a very small number of people. The ‘trickle-down’ economic model (Thatcher’s failed approach) would have you believe that this, in turn, should slowly make everyone richer, as these few rich people will buy more goods and services, all of which will flourish, thereby employing more people, increasing wages for the upper echelons, who then in turn spend more money and so on and so on. Also, they pay more tax, right? So we should be able to pay for better public services? No, because, largely, it doesn’t work like that.

The rich pay so little tax that it’s laughable. Indeed, there is a whole minor industry – tax accountants – who exist solely to make sure that they pay as little as possible. Quite a lot of them use international banking to avoid paying tax on their savings. Many of the companies that trade in this country aren’t even registered here, and pay us no tax at all. And even the money they spend, like it or not, is very commonly spent in ways that can’t possibly benefit the community as a whole. Expensive foreign cars? Nope. Buying property abroad? No. Buying a property as an investment to let, or outright for one of their children? No. Like buying a second home in Cornwall, all that does is drive up house prices, stopping anyone as modest as say, a teacher or a nurse from being able to do anything but rent… from someone who just bought an investment property… Going on fancy holidays is generally only good for the airline companies and occasionally a travel agent. I’m all for spreading the wealth to exotic countries, but in this context, it can hardly be used support the argument that it’s significantly benefiting ours.

In short, then, we aren’t getting much for the damage that these people do. The argument for higher taxation is there, but people always say ‘well, then the talent will take itself abroad!’ So what? Let them go. Many of the companies and people are already registered outside the UK anyway. In our current economic model, we have extreme wealth and extreme poverty. The average standard of living in comparably developed countries with higher levels of taxation is almost always higher than ours. Our low-tax low-regulation Reagan-Thatcher model has attracted talent only in the sense that it’s attracted people who have a talent to be brutish, savage and exploitative. If you want to attract actual ‘talent’, sponsor investment programs into alternative fuel technologies like the Danes do. The current structure of banking is a bad structure that does not benefit our society as a whole, all it does in its current form is ensure that a few of the richest people in the world continue to get substantially richer.

So, broadly, I support the ideas that Barack Obama has put forth. The idea that we should try our best to ensure that important things like you and your wife’s pensions are protected from the potentially volatile investment markets is a no-brainer. But I think there’s something else here that we’re not discussing.

The savings that we put aside for our old age should not be used primarily to benefit one small section of society. That kind of thing is not what banks are for, it’s what governments should do, and this Anglo-American ‘everything must be floated on the stock market’ attitude places us at the mercy of the savage. We should separate the provisions for our old age entirely from this game of rich ungentlemanly gentlemen. We need to come up with some alternative to our current pension schemes. We haven’t always done it this way. Why we should ever think that we could trust banking institutions with something so vital is beyond me. Despite, theoretically being partially owned by almost everyone, they are almost impossible to hold to account. The idea that we should connect something so vital to something so volatile is ludicrous. It’s our world, not just theirs. It’s a bad and foolish structure that doesn’t help us. Let’s change it.