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By Gerry Hassan, The Scotsman, March 9th 2013

This week something momentous happened for the future of the Britain, its economy and politics, for Europe, and our relationship with the continent.

The European Union proposed and agreed a curb on bankers bonuses, over-riding the predictable opposition of the UK Government and George Osborne.

The EU proposals supported by the European Commission, European Central Bank, and 26 out of 27 EU members, will put a ceiling on banker bonuses of one year’s salary, or two years if approved by a large majority of shareholders.

There was the usual outcries from the British Bankers Association, CBI and others: people who go by the description, ‘the business community’, but are actually corporate lobbyists for the big firms, which is not the same thing, looking to maintain the same market dominance for their members.

CBI said it would ‘damage the competitiveness of the EU financial services industry’, while ‘The Times’ were more measured, commenting that while parts of the City saw the proposals as ‘life-threatening’, they were more significant in exposing ‘the weakness of Britain’s position defending the City in the bigger battle to preserve its status as the financial centre of Europe’.

The City of London we are told is integral to ‘UK plc’, with its vital statistics continually rolled off. Financial services it is claimed contribute 9.6 of UK output, 12% of tax revenue, and 1.1 million jobs. However, the financial sector has cost taxpayers near to £1 trillion pounds post-crash; and the number of bankers who would be potentially affected by the Euro legislation is a mere 5,000 – 0.5% of financial services.

The British debate is portrayed by bankers and their political allies trying to get the rest of us accept that this is the way of the world: talent is mobile and global, and we should be lucky for the fact that London is the world’s premier financial centre. There is an element of blackmail in this, but more one of asking us to embrace a fatalist and determinist view of the world.

It just happens not to be true on any level. This is a story about what Anglo-American corporate capitalism has collapsed into: amoral, venal, short-term, about naked power and self-aggrandisement.

Politicians say we have to be pro-business and stand up for what the City contributes to the wider economy. Yet the era of New Labour and Cameron has bequeathed a political orthodoxy which actually has fallen for the mistaken assumption that whatever rich businessmen say is good for them is pro-business.

This is the opposite of being pro-business, which in reality entails standing up to monopoly and oligopoly interests, breaking up large corporate interests and preventing takeovers which allow too much power to accrue with one corporate in a sector, and using trust and competition laws, along with planning and funding, to positively discriminate in favour of small and medium firms.

The context of the evolution of British capitalism is seldom explored, even on the left. The rise of the mercantile classes and Britain’s status as ‘the first nation’ of capitalism, meant that its aristocratic and landed classes, who made their monies by fair means and foul in pre-industrial times, didn’t like the idea of real work, getting their hands dirty, and being part of the industrial classes.

Thus Britain historically has always had an establishment who are profoundly anti-industrial, and value much more making monies from either doing nothing, and living of landed wealth and inheritance, or by doing deals, hence the importance of accountancy and contract law and the City’s pre-eminent place in these in the global economy.

This is still the dominant view of the British elites, and why the City of London has grown so powerful and over-bearing: it doesn’t actually make anything, and only does deals, hussles and fizzes with a sense of its own power and self-importance.

The City’s pre-eminent position owes a lot to the legacy of Empire. The inter-connection of funding the trade and commerce routes of Britain’s global territories, all contributed to this, at the same time aiding the City’s disconnection from the domestic ‘real’ economy. It has left another legacy in the leading tax havens of the world: the Isle of Man, Guernsey, Jersey and Bermuda, all throwbacks to the zenith of British imperialism, and which aren’t actually part of the UK (instead being in the case of the first three, ‘Crown Dependencies’ or in Bermuda’s case, ‘British Overseas Territories’).

This is ‘Britain plc’, ‘the global kingdom’, which in the mind of market buccaneers and their apologists could float away from the coast of Europe, to the mid-Atlantic, Zurich or Singapore.

It is going to have trouble finding a long-term mooring. The tides are turning against the excesses and ruinations of Anglo-American capitalism – in Europe, North America, and Asia.

Look at Switzerland, long cited by Tory free marketeers. They held last Sunday a national referendum which became known as ‘the fat cat initiative’, on the subject of restricting director pay, curbing golden handshakes and severance packages, which produced a 68% vote in favour of the proposals.

Change is going to require a very different British politics. For a start, the progressive pessimists who conflate short-term bailouts with long-term demographics, sometimes deliberately, sometimes not, and come to the analysis that ‘we are all doomed’ and cannot afford existing public services, have to be challenged.

Then there is the problem of the Treasury and Bank of England, who disasterously got us into this mess, and have then pumped billions of pounds of taxpayers money into the economy and bankers pockets, to no effect for the rest of us beyond making us considerably poorer as a nation.

These are the two shining institutions the SNP want to let safeguard the fiscal autonomy of Scottish independence, which can hardly inspire confidence given they are a major part of the problem.

Fortunately reform is coming, from Europe and global institutions, with this week’s initiative on bonuses one of several measures, others already agreed including regulation of hedge funds and a financial transaction tax, the latter of which the UK opted out of.

The question is whether British and Scottish politicians have the courage to overturn the conventions they grew up with over the last couple of decades, and see the new vested interests for what they are: a group who in a way no trade union ever managed to do at its peak, practice a restriction of trade which misshapes and distorts the entire economy and society. We can either join the reform movement, or have it done to us by others.


Courtesy of Gerry Hassan - http://gerryhassan.com

Comments  

 
# Jamieson 2013-03-12 00:10
Quote:
These are the two shining institutions the SNP want to let safeguard the fiscal autonomy of Scottish independence, which can hardly inspire confidence given they are a major part of the problem.


C'mon Gerry. I know you're not much of an economist but that is dire. Your weasel words are implying that the Bank of England and Westminster Treasury might control an Independent Scotland's fiscal and monetary policy.
Those words could be straight from the pens of the Bitter Together mob.
 
 
# chicmac 2013-03-12 03:15
The London casino is only the no 1 financial centre because the Yanks immediately took three steps backwards when the proverbial hit the fan.

Proving, one again, exactly what they mean by using the word 'special' in the phrase 'Special relationship', i.e. what they normally mean by it.

I suppose though, it is a testament to the propaganda prowess of the mainstream media in the UK that such exceptional levels of cognitive dysfunctionalit y can be maintained in an insular population.

To be able to sell the idea that allowing an inbred elite, emotionally husked by an anachronistic public school system and then filled with notions of birthright, right to rule, expectations of entitlement and with no experience of the real world, are the right people to dictate macro-economic and micro-economic policy, is truly astonishing.
 
 
# CharlieObrien 2013-03-12 06:10
I always wonder if these Anglo-American deals include those of us British citizens who are not Anglo? or is that just another method of reinforcing the claim that Britain is really England to the world? just my wee gripe.
 
 
# Jo Bloggs 2013-03-12 09:06
Good article Gerry, apart from the gratuitous jibe at the SNP. What is to be done about the City of London then? Here's a thought. How about a YES vote in the referendum, Scotland goes its own way towards normality and sanity, and England is forced to sort out the charlatans who have been robbing us all blind and starving industry of investment for centuries?
 
 
# Alan 2013-03-12 18:36
Keeping the pound/bank of England after independance is pragamtic. It ensures economic stability at a time of change. However, at a later date, an independent Scotland can decide to change the arrangement if it is no longer proves fit for purpose. As part of the UK there won't be that option.
 
 
# Jo Bloggs 2013-03-14 09:38
Abolutely Alan. And at such a later date Scotland can be assured of expert help from sympathetic professionals the length and breadth of Europe, for instance when it comes to setting up our own central bank. As an employee of a national central bank within the European system of central banks I have been impressed with the pro-Scottish sentiments I've heard expressed when attending courses in different parts of Europe. And people always comment on how strange it is the Brits never send anyone to these courses, even the ones they themselves organise.

Scotland will be welcomed with open arms, whether in or out of the euro.
 

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