It's over two years since the collapse of Lehman Brothers, the bail-out of some of the UK's biggest banks as part of the Gordon Brown(remember him?)inspired global financial stimulus and the disintegration of Iceland's spectacularly overstretched economy. While still undoubtedly sickly, with basement interest rates, high employment and draconian lending conditions, the UK seems to have moved off life support and has entered a period of cautious convalescence.
Yet what apparently hasn't changed at all is the attitude of 95% of the UK population towards 'the bankers', who have become a detested breed synonomous with all the ills of post-credit crunch society. What makes this even more galling for many other folk is the apparent lack of contrition from senior figures in the financial services sector about how close the arcane instruments of their trade came to plunging the UK into economic meltdown. Big bonuses are back, just in time to coincide with the increase in tuition fees and VAT and the coalition's decimation of public services spending.
The Sage worked in the City for many years, and like the vast majority of people in the Square Mile, was adequately but not lavishly renumerated, with a bonus that might stretch to a holiday in the sun rather than my own villa there. A century ago, the great manufacturing industries of Britain's golden age were still the main engines of the nation's employment, but those days are long gone with the emerging markets of Asia now offering a far cheaper workshop of the world. Like it or not, financial services is now the UK's leading industry - which was why the government had no option but to bail it out - and the legions of PAs, administrators, call centre agents and middle managers who commute into to the City every day to make a living do not deserve to be tarred with the same brush as the small number of bankers being paid astronomical sums. Yet in my experience others do not always see the distinction.
The other point I would raise is the element of culpability society as a whole has for the financial crisis. Since the 1980s, we have spiralled into a credit vortex, victims of the 'must have' material culture of entitlement in my view attributable to the every man for himself, 'greed is good' ethos espoused by Margaret Thatcher and her administration. The stigma of debt, whether it be through ever-increasing credit card limits or the availability 100% mortgages, gradually decreased, and our weakness in the face of temptation created the raw ingredients that allowed the bankers to concoct their ever more intricate and toxic potions. In short, it's not just the financial services sector's fault that we're in this mess. Lots of people in the UK and elsewhere in the developed world used credit to live beyond their means - a time bomb waiting to go off.
Having said all of that, banks certainly should feel a moral responsibility in the current climate to show more restraint in the payment of bonuses and at least acknowledge public opprobrium. But assuming that many of them don't, then the buck stops with the government as the representatives of the British people to do something about it. Higher taxation is a start, but that won't stop sky high bonuses. It also has to be accepted that Cameron and his colleagues are not in a position to dictate the behaviour of the many overseas banks operating in the UK, or even those British companies that didn't need to take taxpayers' money. But I find it hard to accept that the government can't flex its muscles more with those institutions where the taxpayer is the majority owner. Surely someone who has an 82% stake in any business should have the final say on how much its workforce are paid?? There's a persuasive argument that reducing renumeration at bailed out banks will lead to a talent exodus, which in turn will make the banks less competitive to the further detriment of the taxpayer. Yet in an industry the size of the City there's always hungry new talent coming through and that new talent can be given its head.
A cliche it may be, but it's also important to remember that the banking sector and its problems are truly global. So unless there is unanimous accord across the financial services sector worldwide to change their ways and scale down bonuses across the board, then there's only so much governments or anyone else can do. The Sage for one is not holding his breath on that one.
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