Dec 21 2011

UK politician speaks truth to the City of London

Posted by: Nick Shaxson in: Thoughts

Vince Cable of the UK Liberal Democrats has said out loud what is known in the U.K. as the bleeding obvious.

“In the UK we need to put the whingeing of the City to one side and concentrate on delivering our core narrative, to achieve growth by rebalancing the UK economy. Towards advanced manufacturing, creative industries, higher education and professional services – and therefore with less reliance on banking – from London to provincial Britain. The bankers don’t speak for Britain; the coalition will not put their interests above the rest of the country.”

Of course he is right. Everyone, bar a clownish London Mayor or two, knows it. But still, I think these words are, despite being obvious, remarkable. The reason is that so few politicians in the UK dare speak out against the City. While researching Treasure Islands I remember having a lunch in the House of Lords and trying to get my interviewees, whose background had led me to suppose would be worried about the power of the City of London, to criticise it.

They wouldn’t do it. The City is the Golden Goose, they said: don’t knock it. Even after all that had happened. More recently, I spoke to an influential and well known Labour Party official. Same story. The fear that the City of London in the corridors of power is palpable. A third UK politician described it to me in simple terms: cross the City, and your career starts to look risky. (I describe the sellling of the Labour Party’s soul in Treasure Islands.)

And in fact, if you read Cable’s article in full, he rows considerably back from the bold statement I’ve highlighted here. He rightly identifies the City as being not a monolith, but a “complex ecology” of interests: some more harmful than others:

“Even within the banking sector, which has caused so much reputational damage to the City, it is a small number of rogue institutions and the sub-caste of traders in investment banks who have caused most of the damage.”

But overall I think that he is too timid on the City: the harm caused by over-sized financial services is bigger than Cable supposes: not just in terms of the instability and the financial crisis, but even before the crisis hit (more on this soon; hopefully next month). Still, it is truly courageous of Cable to stand up and say what so many British polticians are afraid to say. He is quite right to explain that the interests of the City of London do not, repeat not, equate to the national interest.

I notice that attacks on the financial industry in the Cayman Islands or Jersey, for instance, are nearly always dismissed as ‘anti-Cayman or ‘anti-Jersey. It is an insidious argument, which too many people swallow. It must be confronted. And one of the best ways to speak about it, in political terms, is to fight for the importance of a rebalancing of the economy. This is a vote winning strategy.

There is, as I mentioned yesterday, a whole new type of politics opening up here, which straddles the left-right divide.

It is unfamiliar, but it will be a measure of the courage of politicians whether they grasp this politics, as Cable tentatively has, or run away from it, whimpering.

One can think of catchy ways to describe the new politics. How about

“Ignore the City’s whingeing, and rebalance the economy?”

“Rebalance the economy to attack financial corruption.”

“The bankers don’t speak for Britain.”

You know, stuff like that. It can be done. The new politics: it’s there for the taking.

one comment

Bill Kruse 12st December, 2011 10.55 am

One way of rebalancing the economy would be for government to take back the right to create money from the bankers who are currently allowed to create money out of thin air, and do, and then lend it to the government at interest, as they do, which we are then expected to spend our lives working to pay off, as (largely unknowingly) we do. I wait for Vince to put flesh on the bones of his declaration in this regard… but I don’t hold my breath.

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