Saturday, February 14, 2009

The Nuremberg Defence 2

Christopher Caldwell says the bankers were not malevolent but mediocre. Unfortunately, he doesn't say what he means by 'mediocre'. I don't think he means what I mean, which is that, before the Treasury Select Committee, Andy Hornby and Fred Goodwin in particular looked and sounded like decent middle management material but emphatically not somebody you'd want to run a bank. Also Caldwell goes along with the Goodwin-Hornby line that they bore the same losses as their shareholders. I presume this refers to shares they owned as a result of bonus schemes - in which case, they have born no real losses at all. Overall I think what we have here is a sophisticated version of The Nuremberg Defence - everybody was at it, I had no choice, it was the system that was at fault, not me. This would be a mildly mitigating circumstance in the case of a car maker or engineering company, but banks are different. They exist and we give them our money because they are assumed to be repositories of a certain special kind wisdom. One essential function of that wisdom is to detect dangers or wickedness in the system and withdraw. If they can't do that, then they are not qualified to be bankers and, if they don't do it, then they should be excoriated and exiled from the City.
(This reminds me that in the course of my first job as a financial reporter, my editor assured me that the City would have nothing to do with wrongdoers, they would never work in the Square Mile again. 'Jim Slater?" I said. He harrumphed and said no more.) 


  1. Slater probably first registered as a teenager in Monty Python's invoking of the good firm of Slater-Nazi in a famous sketch.

    That was all about a lack of any concern for the needy in the money-makers in the City of that day. Somehow I never bought that extreme view, never became a raging marxist, leninist or other kind of -ist. I guess it was out of fashion by the time I bowled up at Cambridge in 76, in any case.

    But by that time I did have fundamental questions both about the banking system and certain key individuals within it, at least in history. Bretton Woods had only broken down five years before, around the time John Cleese was strutting his stuff. But I buy the argument that some of what we're suffering now goes right back to that moment. The leads and lags are hard for those of conventional life-span to get hold of. The good times seem so good, as if they'll last forever. And the gurus thereof.

    The Nazi trial analogy is interesting in many ways, not least Arendt's famous observation of banality. Many Jews - even otherwise mild ones like Isaiah Berlin - have objected to that description. The man was vicious anti-semite as well as boring pen-pusher. And somehow the banality of the bankers - the apparent mediocrity - doesn't convince either. The Shred was not always as meek as shown this week, I strongly suspect. And, thank God, the system in which he once got ahead was not as bad as the milieu within which Eichmann wanted to make his name. Still, the analogy seems worth pursuing.

  2. Good point, Richard about mild-mannered versus Alpha Male/Rambo type. Both are aspects I am sure, of Fred. But I don't think it invaldates the mediocrity/banality point. Alpha Maleism is usually, in my experience, both banal and mediocre. I know plenty of tales of Fred's behaviour in the office - truly non-mediocre people don't behave like that.

  3. Accepted, the mediocrity should have dissuaded others from following, even if they enjoyed the bullying

  4. Slater now writes children's stories?.
    Pardon me for a while, I feel a Victor Meldrew moment coming on.

    The Gogarburn mole tells me that the problem wasn't just Goodwin the man, it was Goodwin the culture. The building was stacked to the roof with apprentice Fred's.

  5. what struck me about them is that none of them had every failed in their lives, good grades, good uni, good job, good prospects all the way to the top.

    I think we need to look very carefully at higher indeed all education and we should start with a bonfire of the "social sciences?" depts.

  6. It takes far more than good education to make good business leaders, passer by, education makes up about 10% of the requirements

  7. never said it did malty, my point is that they never knew what failure was or is, the very thing that would have shaped them a little better to the real world.

    I am an engineer and have nearly failed twice before partial succeeding, what I have noticed mixing more and more with proper business types is they have a very schizophrenic personality.

    I think as a general rule they have very good social skills and can network better than most And they can be ruthless killers and stick the knife in when it matters.

  8. Your assessment of business types is accurate passer by, schizophrenia was an asset I found most usefull. Looking back over 30 years at the people I knew, the most successful had single mindedness as their greatest asset followed by the ability to follow through on the details, and weigh up people in a flash. But above all else, and this applies to any company from a one man band to the largest multinationals, is the ability to know, on a daily basis where you stand financially. I wonder how many people now keep a cash book, or its multinational equivalent. David Murray, Scotland's most successful businessman still does this, he knows on a daily basis and within a few pounds exactly where he stands. His companies will survive.
    I will wager that Phillip Green does the same.
    Incidentally, Murray's companies belong to him, not a bunch of shareholders.
    A cash book by the way = how much you owe, how much you are owed, how much you have (or don't have) in the bank. The fancy mob talk about gearing / profile etc, these are relevant more so when you ain't doing well, but not that relevant.

    I wonder if any of that's in the Harvard MBA course.

  9. Dont you think a lot of this, bad management in business, politics and life in general is a result of more of less guaranteed economic growth and peace over a long period of time.

    In politics the compulsion to micro manage, and over complicate. Govts used to worry about M3 money targets, now they worry about litter targets. (up until a few months ago at any rate)

    Bringing in hundreds of thousands of migrant workers to do hard boring jobs with little or no debate was when I got worried.

    We have just become lazy, the bankers and politicos are just a reflection of that fact.

    This is what I dont like about all the banker baiting, its distracting from the fact it is in the final analysis it our fault, and thats a very uncomfortable fact.

  10. A lot of this basic wisdom is going to be insisted on by the next generation of bankers, as long as they're not completely captive to party politics and petty bureaucrats by then. That's why the greater regulation theme sounds right but mostly isn't. Even the dumbest middle manager has learned something radical in these days. Let those that have learned best rise and - yes - even have a decent bonus or two in years to come.

    Channeling rage is a interesting game right now. We need to be better at it than the Germans in the 20s and 30s. (Default example but still true.) Perhaps like the black man I got talking to just now outside my local WH Smiths. He said he was from Rhodesia. I noted not everyone would say that these days. He said it was so much better in the old days. I replied I hoped the new guy in charge (at least nominally) will at last do better. There was deep sadness but not I sensed either the end of hope or blind anger. I had much to learn from that.

  11. I've just been hauled before my professional disciplinary committee and accused of overcharging my clients, dipping into my trust funds and managing their legal affairs to maximize my fees rather than keep them out of trouble. It's all true. Clearly my mediocrity has caught up with me.

  12. Someone with more than passing familiarity with the breed contends that those on this side of the Atlantic are probably psycopaths.

  13. Malty, I really don't think it is an issue of cash books or monitoring daily financial performance. Fred the Shred's background is pretty hardcore in terms of accounting skills - these guys knew the numbers all right. That is what made their legacies even more shocking. 'Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.' I've met many very succesful businessmen who have merely abided by this dictum and have treated cash as king rahter than fancy accounting techniques.