Andrew Grice: The ghosts of Old Labour still haunt this Government
Some ministers think Mr Brown should just "go for it" and nationalise the major banks.
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Independent Minds
"We ran for office as New Labour and we will govern as New Labour." Tony Blair's words on the steps of 10 Downing Street after the 1997 landslide looked good at the time. But, when the history books are written, I suspect they will look back on Labour's long spell in power as an opportunity lost by a party which never quite managed to shake off its old ghosts.
New Labour has expended an awful lot of energy on convincing us that it is not Old Labour. It shied away from closing the gap between rich and poor because of its phobia about putting up taxes. It distorted its foreign policy to avoid any hint of past anti-Americanism; that embroiled us in the Iraq disaster. It railroaded through the renewal of the Trident missile system to squash memories of unilateral nuclear disarmament. It dithered for months over nationalising Northern Rock because it needlessly feared echoes of the party's traditional support for publicownership.
In all those areas, the ghosts of Labour past persuaded its new rulers to overcompensate. And, of course, they cuddled up to the City of London. The love affair was mutual. Financial services provided a quarter of tax revenues, allowing Labour to spend more on health and education. In return, Gordon Brown hailed a new "golden age" for the City, Ed Balls trumpeted Labour's "light-touch regulation," non-domiciles kept their protected tax status, tax havens were untouched and the top rate of tax was left at 40p in the pound until there was a deep hole in the public finances.
This week, Labour's affair returned to haunt it too. Two of Mr Brown's many new friends in banking resigned as government advisers, one of them accused of sacking a whistleblower who warned that HBOS was pursing a reckless expansion strategy. The Prime Minister looked powerless to stop bonuses being paid by banks – even when they were owned by the state. The regulatory system he set up in 1997 was called into question after it emerged that the Financial Services Authority did not tell the Treasury it was worried about HBOS.
These events matter because they will make it much harder for Mr Brown to avoid the blame for the economic crisis. So far, the Prime Minister has largely escaped responsibility. Many voters have bought the "made in America" label he is desperate to pin on to the recession. There may be fewer buyers now.
Mr Brown is right about the origins of the financial crisis. But, as time passes, the public will judge him on his response to it. Yesterday, a Populus survey showed that 89 per cent of people believe the Government should have stopped the banks it bailed out paying bonuses; 82 per cent want it to cap bonuses for senior bank staff and 64 per cent want senior bankers who made mistakes to repay their bonuses from previous years.
Despite the severe crisis, the old ghosts still rattle around in Labour's cupboard. Some ministers think Mr Brown should just "go for it" and nationalise the major banks, ensuring they restore lending to business and house-buyers to previous levels and taking control of bonuspayments.
There was a heated debate over what to do at the Cabinet's weekly meeting on Tuesday. Harriet Harman, Labour's deputy leader, argued for the retrospective clawing back of bonuses. In a sign of bad times, other ministers later accused her of positioning herself for a post-election Labour leadership contest – in other words, after a defeat.
In the cabinet meeting, Blairites such as Hazel Blears and John Hutton opposed tearing up bankers' contracts, which could dent Labour's hard-won reputation by penalising enterprise and success. Lord Mandelson said Labour should not be buffeted around by media squalls because people wanted to see steadiness and grip, not a government which arrived at a principled position and was not then pushed from pillar to post, which would lead to a lack of confidence in it.
Mr Brown proposed the compromise he announced on Thursday: no retrospective action on past bonuses but a system for the future under which they could be clawed back if the bankers'long-term performance does not warrant them. That will not stop bad headlines as the Royal Bank of Scotland presses ahead with bonus payments this year, despite intense pressure from the Government to halt them.
A younger generation of Labour ministers is less haunted by the old ghosts. They might be prepared to "go for it" if they were in charge. They say they will try to twist Mr Brown's arm to be more bold. Don't bank on it.
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Comments
They should be simple abolished (or allowed to go bust) and replaced with a clean unburdened state issued currency and state owned (not necessarily state run) high street banks to handle local savings / loan and cash handling services.
Legislation can easily (just as easy as it is to legislate the snooper state) be passed to protect the already doled out corporate welfare by seizing their physical assets as the produce of criminal conspiracy to incite / perpetrate / conceal mis/malfeasant conduct of public office etcetera (there's a long list of appropriate grounds
Further, what a lot of these banks were doing amounted to issuing insurance without a licence or even running gambling rings. (If I insure my own house, it's insurance, if I insure yours it's gambling. Appropriate licences are needed for both activities.) A few show trials are needed, with prominent bankers and FSA officals being jailed for running illegal insurance/gambling syndicates, or aiding and abetting same. But then the Met is too busy shooting innocent Brazilians and covering up such wrong doings to have time for catching the real white collar criminals who have wiped out half of the nation's savings.
Since then there has been misgovernment by factions of Blatcherism (which replaced Butskellism - the post-war consensus on a mixed economy with moderate state intervention to promote social goals, particularly in education and health) acting in ever closer collusion with the organised economic crime syndicates that have busted 'Murka and its poodle.
http://www.socialaffairsunit.org.uk/blo
So the Tories are equally to blame as Labour - their deregulating fingerprints are all over this crisis. They caused it, but Labour's failure was not to find a solution to the mess they had caused. The only solution is another party with some understanding of how finance works: the Lib Dems under Vince Cable!
Democracy is feasible for the first time, ipso facto no more supportable excuses for pseudo-democracy, which hung itself by turning from tolerable Buskellism to anti-social and suicidal Blatcherism
Further, what a lot of these banks were doing amounted to issuing insurance without a licence or even running gambling rings. (If I insure my own house, it's insurance, if I insure yours it's gambling. Appropriate licences are needed for both activities.) A few show trials are needed, with prominent bankers and FSA officals being jailed for running illegal insurance/gambling syndicates, or aiding and abetting same. But then the Met is too busy shooting innocent Brazilians and covering up such wrong doings to have time for catching the real white collar criminals who have wiped out half of the nation's savings.
In 1997, people were desperately looking for an end to the unfairness of 18 years of Tory rule. After a landslide victory, Tony Blair had the mandate to make significant changes. Instead, we've had nearly 12 years of quasi-Tory government. Labour ministers suck up to the rich and powerful and ignore their roots. Now the whole rotten system is collapsing, and they are being buried in the ruins. Serves them right.
I have no desire for a Tory victory led by Cameron, and I would never vote for them. But at least we know what to expect. I have utter contempt for New Labour because they are concerned with one thing only - power for its own sake.
The credibility of neo-liberal economics has been shaken to the core by the current crisis. Its high priests, the greedy bankers who have been paraded in front of us recently, can't even bring themselves to say sorry. Who knows what goodies they and the rich and powerful have stashed away in tax havens with a nod and a wink from government? Will the Tories, if elected, bring these people to book? In your dreams.
We need a new left of centre narrative, both in politics and economics. We must show that there is an alternative to the "winner takes all" system that leaves so many people struggling to make ends meet. Labour might once have been able to lead such a movement. But now it is just part of the problem.
I have a long Liberal tradition in my family going back generations, and it is that that gives me my values, though I am probably rather radical by today's standards. I bow down to no master, and certainly no government will ever get my unquestioning loyalty.
After 6 months, you own the crisis.
After a year, the crisis owns you.
Brown and darling had their chance in the Autumn. Courage and vision would have transformed economic prospects for the country. But they lacked the nerve to do a really big stimulus and they lacked the nerve to sort out the banks. Now they are paying for it. Unfortunately, we are paying more.
They are after all powerless stooges / poseurs, whose gang leaders and 'business' agents prostitute them to the highest bidder pre-erection time
Politics (real politics - actually forming or joining an organization that benefits the "people") is about the least cool thing to talk about over dinner, and real activity - DIY (for travellers), joining an existing political party (for real berks - geek hooray Henry or over opinionated student union organizers) is simply "not done". Indeed, "we can't change the system", because "It will never change" - my 63 year old father.
Unfortunately, this time, unless NEW BANKS ARE CREATED (letting the old go bust, like the corner cafe/shop/pub/hardware store/bookshop/newsagent, when they can't pay their creditors), we will be really shafted, as a good proportion of our future tax will go towards paying their creditors (who are they, exactly?).
For as long as we sit in front of our telly's, watching ever more banal rating driven output, and surfing aimlessly around the net, fretting about and distracted by a million and one things that do not really matter, we will have to pay to clean up the mess of a small number of very arrogant and smart financial salespeople. DO NOT let this happen - Britain IS a democracy, but your opinion does not matter a jot for as long as you stay home fuming and sweating by yourself.
Come on - we (us regular folk) can all fix the system without the oddballs, the bankers, and the current political parties - imagine 5 million people on a day of national strike/protest/uproar sat down peacefully in front of Westminster, singing or chanting MAKE NEW BANKS, SAVE OUR FUTURE, PROTECT OUR DEPOSITS, CLOSE THE FSA. etc.
Did you think going into Iraq was a good idea? Did you think Bushes' election victory was fishy? Do you want high tech ID cards when you (finally) go on a protest? Do you want your kids watching more X factor or more documentaries about how some great doctors help weak and defenseless people around the world? Do you want your pension/future to be invested in dodgy financial markets, to receive financial advice from commissioned salespeople, and to have your money(and leaders?) managed by (extremely intelligence, eloquent, and persuasive) yes, salespeople)？Have we been told what proportion of our future taxes might go towards supporting these failed companies? Do you want to continue eat food, and use products that are engineered and sourced in ways that you are not 100% comfortable with? Do you know why cancer and mental illness are becoming ever more common? Do you want you kids minds' to melded by marketers, brainwashed from babyhood because the advertising/media industry has gone totally out of control? Do you think it is okay to buy products made in China by workers living in dormitories 100s of miles from home, because the pittance the earn will keep their families fed(just), while ignoring the plight of raped and imprisoned African women serving the miners that supply those very factories with the raw materials in their cheap products? Do you wonder why people never discuss real issues any more, and why is our media so moderated it has become meaningless?
Do you want to continue to avoid the reality of the world you live in?
To me the alternatives are not alternative, nor even radical. Salespeople get paid salary plus a capped commission, if they don't sell they get fired, they can't just continue pushing. Law. Bonuses in ALL banks are limited to less than 50% of salary. Law. Large media companies are independent , with individual corporate stake holdings limited to 5% up to a maximum of 32%, and are overseen by an jury style comitee to guide impartiality in all but . That way hopefully they will do their job next time... I could go on, and on... and on...
People make the mistake of only focusing on banks in this crisis - they are wrong - it is about society, an its present apathy - for if we do not change our path, it will be Watling Street for us...
What Murdoch and the others did so cleverly was to place a Tory (Blair) in charge of the Labour Party, then swing the main stream media behind him. Of course he was elected, he was hand picked! The Left were so grateful to be in power(!) they did not inquire too closely into his war crimes and lies, and of course the Tories were stuffed because he implemented their policies.
It is true that many of us felt a surge of excitement and relief as the corrupt old Tory regime was swept away in 1997. Then the years rolled by and the truth emerged. Blair would walk across the street to start a fight - 5 wars in ten years: Bombing Iraq 1998 and Yugoslavia 1999, troops into Sierra Leone 2000, Afghanistan 2001 and Iraq 2003. Human rights: torture, cctv's, ID cards. Corruption: selling peerages, arms deals, tobacco advertising. Lies and murder: dodgy dossiers, Dr David Kelly, Jean Charles de Menezes. Epitaph: "I'm a pretty straight kind of guy".
Now we can add dodgy bankers to the list and see that the present government, having sold it's soul to the world view of these shallow and ignorant little financiers, has nowhere to go.
Reality is that which prevails.
As I see it banks have two main purposes, to be a safe depositary for savers and to lend money to enterprises. Making large profits are not one of the primary purposes of banks and indeed for savers to see their interest plundered to provide those profits and for lenders to have higher costs than necessary again to provide those profits there is a definite and clear conflict of interests between large profits and the primary purpose of a bank.
It seems to me obvious that share holders who demand large profits are not compatible with banking, the ideal banking structure must be the old cooperative (mutual) where savers provide the capital and lenders borrow that money and pay the interest which covers bankers operating costs and the savers interest. There is absolutely no need for share holders to take an extra cut.
If this is so then why are we not letting the banks go to the wall making all the shares worthless and letting the receiver set up the existing deposits and borrowers as a cooperative? With the receiver all the bad assets would be put in a government bad bank where eventually some may come good to repay the government for it's efforts. The complex derivatives would be in default since the bank was bankrupt. The idea of eventually selling the nationalized banks eventually to a new bunch of shareholders is a very bad idea indeed!
At the moment all the governments are doing is maintaining the present system which has been demonstrated to be a failure and we are not using the time proven legal system of getting rid of bad business models.
Really?
The best analysis of the crisis I have come across suggests otherwise:
http://www.adamsmith.org/images/pdf/fin
It concludes:
" ... the collapse was primarily the fault of a dysfunctional tri-partite regulatory regime, and particularly the Bank of England within that. We should reform their roles and ensure they carry them out. It may prove beneficial for the National Audit Office to monitor that performance."
And who was the author of this shambolic 'system' Andrew?!
Nationalisation is theft, in fact it is robbery backed by the use of force. This government already resemble robber barons, without that final indignity.
So glennin "fine principles of common ownership, economic justice and equal opportunity".
How is your common ownership to be realised ? by taking from those who have earned what they have and given to those who have not . That your economic justice ? to aim for the lowest common denominator. As Churchill said "The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."
Your fine principles may accomplish the first of your aims, at the price of the other two.
You are correct glennin, there is no ghost of labour, unfortunately, it never died. It became a weak and embittered shadow of its former self.
Why give them billions without any taxpayer benifit?
It clawed back overpayments for tax credits - when of course the recipients had already spent the money.
Will labour retrospectively also give back (to the banks) the taxes it has taken out of the bonuses ?
Everyone at the moment is talking about how to restore the system. I don't want the old system restored. It was exploiting most of us, it was inherently unstable, and it was built on negative trade figures and massive, unpayable debts.
I want the old system replaced. New policies please; new visions;