It seems an odd task for a Chancellor of the Exchequer. Mr Osborne is off to Brussels to trying to convince the European Community that its plans to restrict bankers’ bonuses to the equivalent of a year’s salary are wrong. The public have rightly identified that the economic problems which followed the bank’s bail out are largely laid at the door of bankers who used our money to gamble, and in gambling lost, as all gamblers do. The bankers were motivated to gamble by huge bonuses, so, the public perceives, anything that makes gambling with l’argent des autres is undesirable and should be restricted. Capping bonuses is simply a modest proposal to restrict (we hope) some gambling in future.
The British Government has taken the view that the world might collapse (or at least the British Banking Industry might suffer) if bankers’ bonuses are capped. They fear a mass exodus of people who spend their days in banking gambling. Most people in their imperfect understanding of the detail but alive to the principles of what the bankers have done would say “good riddance to bad rubbish” if such an exodus were to occur.
if the cap is part of law then many bankers would leave. They will not go to Switzerland, that bastion of banking in many bad and good forms, because the Swiss have voted to cap bankers’ bonuses. Perhaps the Swiss understand that it is better to have a less successful bank than a bankrupt bank. Bad decisions, such as a decision to gamble on something where you have no underlying interest, turns a profitable bank into a rubbish bank, as events at the Royal Bank of Scotland and Lloyds TSB have shown.
The Swiss it seems do not want to take our bad rubbish.
The only reason why banking is so important an industry is because we have allowed the banks to steal and defraud people, as the Swap scandal and the Personal protection Insurance scandals show. Gambling on derivatives is simply another example of how banks have moved away from buying and selling money to quasi legal and immoral activities. Instead of an honest trade they have looked to garner money in ways which would be illegal if those ways were carried out by less wealthy and important people and institutions.
Mr Osborne seems to like the bad rubbish and is fighting to keep it in these shores. It is an odd occupation for the Chancellor.