Wednesday, 2 February 2011

The Banking Debacle & Quaker Capitalism

I have been puzzled by something for what must be at least a year now, and it concerns this economic mess, in the midst of which we find ourselves currently. At first when things started looking a bit dodgy (remember the queues of people outside branches of Northern Rock bank demanding their savings, 1930's German style?) I think none of us really had any idea of what had been going on inside the banking business. I certainly hadn't. Things seem to have moved on apace since then. We've been through a change of government and you and I [tax payers] are now propping up major high street banks. Whole nations (Eire, Greece, Portugal etc.) are almost bankrupt.

I think that the most galling thing for me about this situation is that it seems that running a bank, being a bank, looking after the money, however you choose to define it, is not exactly operating in a competitive market, being dominated by just five big banks. With that in mind it really ought to be a most profitable business, although particularly disadvantageous to the consumer. How have these banks failed us so badly and continue to do so despite being propped up with billions of pounds of taxpayer's money? O.k. this is of course a bit of a rant, but not without good reason. In January our rate of Value Added Tax rose to 20% in the U.K. in order to mitigate the effects of the huge debt foisted upon us by the banking sector's misadventure. This will affect us all, rich and poor significantly as V.A.T. is pretty much an unavoidable tax (unless of course you run your car on custard and choose to wear children's clothes!). The central question I suppose I have is why on earth are we not aiming to recoup the billions of pounds lost from those who are responsible for the loss in the first place? After all they seem to me to be the very highest earners in society and therefore most able to put back into the system as it were.

What I think could in part be going wrong is, at some fundamental level, and over several generations the very nature of our capitalism has changed. It has to be said that what I truly think is we need some seismic shift back to the kind of principles central to those Quaker capitalists like Joseph Rowntree and George Cadbury. These men were brilliant entrepreneurs by any standards but unlike today's business leaders and bankers (who see no harm in pocketing huge personal profits while their companies collapse) were disciplined and far sighted, guided by their Quaker principles. For these men I'm sure the idea of wealth creation for personal gain would have seemed offensive and to whom the very catalyst of our current financial crisis (i.e. reckless & irresponsible debt) would have been shameful. It's easy to dismiss such principles as antiquated isn't it, when today's measure of one's success is purely projected by material objects. It would be hard to imagine the CEO of one of the afore mentioned banks building a huge financial empire whilst writing ground breaking papers on poverty, or campaigning against a multitude of human rights abuses, but, that's just what the likes of George Cadbury did.

I was amazed to learn that in the nineteenth century Quaker families in Britain ran seventy-four banks, and I'll bet they were not for the benefit of shareholder dividends or bosses bonuses! I guess what I feel really strongly is once again we need this kind of leadership to replace the rampant greed at the centre of our banking industry we have today. It may seem naive, but tweaking taxes ever upward is not going to solve a great deal for the debts of our wider society, it's high time the bankers started putting something back into the system that, like it or not, they are now indebted to themselves.


Suzy - SuddenLunch said...

So true and also debacle is such a yummy word!

Brays said...

No VAT on custard! Hoorah, it's not all doom and gloom then!!
TTFN Fay & Ray

James and Maggie said...

Brays, as big custard fans ourselves no VAT on custard is indeed a reason to be cheerful.