Tuesday, 31 January 2012

The Unacceptable Face of Capitalism

Ted Heath coined the phrase over forty years ago and two events within forty eight hours might, just might, be the start of people actually beginning to understand what it means. I have no sympathy for Fred Goodwin, something which I think I have already made clear but interestingly enough, it is not just his own "class" and fellow Knights who are expressing sympathy for the man. Some are upset that this may set a precedent, which could mean that some of them may be targeted next or, that in order to receive the big K in the first place in future, it will be required to do something useful, other than simply seek and find favour, with the government of the day.

There are other ordinary, decent people who feel sympathy for the man, because they see him as having been made a scapegoat for the entire banking industry. They argue, with justification, that Goodwin was not the only one at fault and wonder why the Chairman of RBS and the head of the Financial Services Authority (FSA) are not also being stripped of their titles. It is a good point and if any organisation deserves to be pilloried, not just for its failure to regulate the banks but for successive failures such as the collapse of Equitable Life and a whole plethora of completely useless pieces of legislation, it is the FSA. Ironically, the current head of that organisation - about to be abolished - Hector Sants, argues that Goodwin and his management colleagues in the banking industry should be banned from ever holding posts in the industry again. He should apply that also to his management colleagues in the FSA.

To watch  Ed Milliband and the Labour Party dance on Goodwin's grave makes me want to throw up. The hypocrisy of that collection of sorry individuals should be thrown right back in their faces. Milliband sat in the Labour cabinet, as did many of his colleagues, which set up the system by which Goodwin et al were rewarded. They built that system which rewarded not just mediocrity but failure, and have sat in stony silence while the man who led them throughout eleven years of toadying to the rich and powerful, has himself used the system, since leaving office, to join the rich club to which he pandered. Those who condemn the humiliation of Goodwin on the grounds that it is "political", somehow forget his elevation was political, as are all the other elevations.

The other significant event is the decision by Stephen Hester to forgo his share bonus of almost £1 million. As the man given the task of turning around the Royal Bank, on an annual salary of just over a million, his rewards seemed scant, compared to those "earned" by others in the private sector or even some of his colleagues at the Royal Bank. The pressure which moved Hester to give up his bonus, an example already set by his own Chairman SirPhilip Hampton, eventually proved to be too much and whether it leads to others  at the bank, such as John Hourican - set to receive £4 million bonus - to make a similar sacrifice. has yet to be seen. Now it is being seen as the growth of an "anti-business" attitude, being deliberately fostered in the UK, something which is causing real concern. Others, including the Prime Minister, see it as the end of the crony capitalism which saw chief executives and directors, rewarded out of all proportion to their contribution, by committees of their peers set up specifically for that purpose. As the gap between rich and poor in this country has widened, as people have witnessed the destruction of their pensions and the withering of public services, so the revuslion has grown, at not just the way in which the rich rewarded themselves but also the way in which it was rubbed in the noses of those who were made poorer or unemployed to make it happen.

Is this the end of the madness of the greed culture? I doubt that, unless we now see a similar backlash against the ludicrous rewards enjoyed by the sporting "heroes" of professional soccer. It is the irony of ironies that many  of the same people who have been howling for the scalps of Goodwin et al, not only see nothing wrong with paying Wayne Rooney or John Terry, more in six months than most of them will earn in a lifetime, they also pillory the owners of any club which refuses to spend that kind of money. No one ever said that football fans were rational, especially when it comes to affairs of their be-loved clubs, but surely now there has to be some sanity brought back into professional sport, before many of the clubs go the same way as the banks. Perhaps the demise of a Manchester United or a Rangers is what is needed.

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