Monday, December 07, 2009

Class and Bonuses

I noticed at the weekend that Brown's depressing class war gambit - to which Cameron badly over-reacted - has somehow got entangled with bankers' bonuses. This plays into the hands of those in the City who are desperately trying to preserve their income by gambling with our money. Ah, they can say, it's just the politics of envy, people don't understand the real needs of the economy. Actually, the real need of the economy is to reduce financial services to an afterthought and thereby free up the rest of us to get on with making stuff and prevent us becoming the next Dubai. The point is that issue of bonuses is not moral, it is practical. Bonuses encouraged people to take risks they neither understood nor cared about and those risks brought down the banks, put people out of work and made us all poorer. Nobody disputes this and yet, somehow, nobody talks about it any more. On both sides of the Atlantic the financial systems are returning to the status quo ante. This is plainly suicidal so why is it happening?


  1. How about making the bankers personally liable for the debt? That might slow 'em down a bit.

  2. It's happening for two reasons. Firstly, capture of government in the US and UK by financial interests (not a bit of lefty paranoia: the former chief economist of the IMF Simon Johnson believes this).

    Secondly, governments need the risky, bonus-linked trading activities to continue as they're desperate for the associated taxes. In the case of the UK government they also need the nationalised banks' profitability to be high so they can sell them at a reasonable price.

    So the Government is in the position of St Augustine: it wants to be made pure but not today, Lord. Being practically insolvent, the taxes, whilst dodgy, are too important to it in the short term.

  3. Don't wish to bring a dark cloud along this morning, no doubt you are still basking in the afterglow from seeing Darcy on Strictly, the ATM in the RBS St Andrews Square HQ yesterday, the machine was empty.
    No doubt the crisp tens and twenties earmarked for some other, more meaningfull purpose.
    Our mole in the Gogarburn half empty complex abandoned ship last week, when asked "if the new job didn't turn out as expected would he consider returning" his reply was "and work for a shit like you?"

  4. Yet that depressing class war gambit might just pay off. It may be low politics but we're in an age of low politics. Not that I think it's ever been any different but now it's all so calculated. The Tories spin whatever their focus groups tell them works. They'd promote flogging if they thought it hit the right demographic. Labour are no different. Policies are more about the pragmatics of the ballot box than doing the right thing given a set of circumstances.

    The problem with the Tories is that they also do their utmost to conform to stereotype. I know that I'm finding it hard to look kindly on a party represented by Zac Goldsmith.

  5. I'm sure Gaw is right, the aim is to keep the tax take going and boost the value of things the government wants to turn into money. "We had to bankrupt the village in order to save it," as General Broon may come to write in his memoirs if it all goes horribly wrong.

    I don't see much point in appealing to pragmatism, though. The banksters will always out-argue you, especially in a climate of opinion where Lord Mandy can sport a £30,000 wristwatch (or so it is claimed) while his government's policies are throwing people onto the streets. I wonder if it is pragmatism that creates cathedrals or string quartets or throws off tyrannies. Hmmn, the ethics of revolution ...

  6. I know you're not after a scientific answer. inertia and relativity.

  7. Because a $50 million bonus tends to make people not give a rat's ass about being out of work next year.