What is it with people and fighting the last war?
BQ's excellent preceding post on the UK military highlights how hard it is for people to break away from their pre-conceptions. We need a big army or a big navy, whatever, we say what we want then often try to fit that into the story we want to tell.
So today Mr Jeremy Corbyn, a serious candidate to the be next UK Prime Minister, is engaging in his old game of the politics of envy. In this FT article, he is quick to blame bankers for all our ills and also to suggest we don't need them anymore. Worryingly, the bankers quoted decide to play up to this with some very unhelpful statements which do them no good at all.
But overall the Corbyn critique of banking is a decade or more out of date. Did the banks cause the great crash? Yes and no, certainly the total mismanagement of the UK banks such as HBOS and RBS was key - but so was the complicity of the UK government (including the useless Bank of England at the time) in allowing this to continue as long as huge tax revenues came in.
We all know what then happened, bust banks and a bust economy that has struggled for 10 years to recover and indeed even in 2017 we are not close to having a stable economy. The structural deficit remains and so does a large QE programme with near zero interest rates. There is nothing normal about the asset bubbles created due to this monetary experiment.
However, this time, in 2017, the Banks are no responsible. Regulations are much tighter, derivatives are more closely regulated. So anaemic is bank lending and their attention to their balance sheets that a whole new industry of non-bank lenders is thriving and fintech companies are being founded at 30 a day in London.
Bankers pay has collapsed, very few now earn the millions that were on offer 10 years ago - only top management really earn it. But Hedge Funds are crazy, 20 people businesses often with a chunk of them taking tens of millions home each year. There are hundreds of hedge funds in London. All the real profits are in these trading and asset stripping businesses, often created with family office money from the Middle East and elsewhere.
The continued inequality in the UK is not driven by the army of compliance managers at Barclays, nor was it ever, it is driven by the use of London as the financial centre of the world's rich families and estates. As much as this causes angst, why would we wish this away? There is nothing to replace it were it to be regulated away. All we would see is a sharp decrease in bankers, lawyers and accountancy jobs in London.
A real far sighted government, of which there is no sign, would instead be looking for ways to either spread this business across the UK (unlikely due to the nature of personal networks) - or better harness the taxes paid to kick-start the more normal economy outside of the South East.
Corbyn as a populist is in fact far more dangerous than Trump. He is stupid in his analysis as show here, stuck in an out-dated world view which cannot solve the issues he espouses so highly and has nothing to offer but the politics of identity and envy.