Steve Richards: Too much money is as bad for bankers as for footballers

The Premier League brings to life the dangers of lightly regulated sectors where a form of crazed hysteria replaces the disciplines of more effective markets

I recall a conversation with Ed Miliband several years ago in which he posed an interesting question. No doubt he has raised other interesting questions since, but this one stood out because it veered away from orthodox politics, or appeared to do so. Miliband wondered whether progressives should be worried or enthused by the success of the Premier League, England's top football league.

New Labour was at the height of its power then and its leading lights were obsessed by football. Alastair Campbell's diaries show that Alex Ferguson was rarely off the phone, the two of them exchanging almost interchangeable views on Tony Blair and David Beckham. Gordon Brown taped even relatively meaningless matches and watched them in full late at night.

Miliband asked the question out of genuine curiosity. Now that everyone in politics claims to be progressive and football commands even more attention, the answer matters more.

Even those indifferent to football probably noticed the sense of heightened drama that followed the outcome of two clashes last Sunday. Manchester City slaughtered Spurs 5-1. A few hours later Manchester United took a deep breath and beat Arsenal 8-2. The latter result was followed by much talk in particular about how the once feted Arsenal manager, Arsène Wenger, had lost the plot, not least because one of his best players had moved to Manchester City.

As part of my research for this column I made the sacrifice of attending the Spurs v Man City game last Sunday, in which Wenger's former best player made his debut. Indeed I make the sacrifice on behalf of readers regularly as I am a season-ticket holder at Spurs. I can report that in advance of the game there was the familiar sense of excitement and anticipation, as if 90 minutes of nerve-wracking, closely fought football was about to be played in which either side might win.

The sense of competition was a total illusion. Those who were excited, including me, were victims of a hype that destroys reason. Spurs are rich. Their players are ridiculously rich, but Manchester City are much, much richer and their players are even more ridiculously rich, some of them earning £200,000 a week, pocket money for their owner, a Sheikh worth many billions of pounds. If he wants a player, he can offer them wealth to die for. Most other clubs cannot do so.

Such affluence explains why all the speculation about whether or not Wenger has lost his supreme managerial abilities is meaningless. The departure of his best player was widely seen as a failure. What could he do? The player was already earning in a day what most earn in a year. Now he was being offered three times as much. He was one of those who inevitably outplayed Spurs. There is no competition in the Premier League, only pretence of competition. There are three super-rich clubs and they will form the top three at the end of the season.

All else is hot air. The ridiculously rich will beat the wealthy who will beat the less wealthy. There was not even a triumph for Manchester at the weekend. Most of the payers are from other countries and will return to them as soon as they can, usually making a parting statement about the amount of rain in Manchester. The Premier League brings to life the dangers of lightly regulated sectors where a form of crazed hysteria replaces the disciplines of more effective markets. The parallel with the banks is especially vivid, the lack of accountability, the fear of any outside authority intervening, a sense of recklessness unbound.

There is another parallel too. In different ways all three main parties are becoming gripped by the politics of the undeserving rich. Tories twitch nervously as polls suggest they are still seen as a party for the wealthy. Liberal Democrats seek a wealth tax based on land rather than income. Ed Miliband's espousal of the squeezed middle is a rewriting of New Labour's most effective soundbite about standing for the many and not the few.

Miliband's office has been struck by studies in the US that show how above a level of perceived worth incomes accelerate suddenly towards the stratosphere. In most fields there is some connection between levels of pay, the marketplace, worth and ability, but at the highest a spurious, deranged market operates. Football provides again the most accessible model, where some players on £150,000 a week do not get picked for months. The bankers and their bonuses are another.

The solutions are less clear- cut than the glaring problem, which is why the politics of the undeserving rich are far from straightforward. The Premier League is prestigious, a big earner and hosts some of the world's stars. The imposition of tougher regulations to bring in genuine competition might leave us with a bunch of mediocre footballers if new rules are not applied across the rest of Europe. British banks are part of a global marketplace and the frail British economy is still pathetically dependent on a recovery in the financial sector. Although burdened by outdated assumptions, there are reasons why a curious combination of Gordon Brown, Alistair Darling and George Osborne are or were cautious about taking on the banks.

There is though one big difference between the Premier League and banks beyond the latter's obviously mightier significance. Followers of football wallow in irrationality. They forgive undeserved wealth and want their clubs to spend more ridiculous sums rather than less. In contrast the wealthiest bankers are not forgiven. Recent polls suggest they are as loathed with the same intensity as when the financial crisis erupted. The voters are on the side of those who seek radical reform, implemented fast.

The final recommendations of the Vickers report next month will define more rigidly what banks can and cannot do. Vince Cable is a keen advocate of sweeping change. George Osborne plays for time. But the fans are already whistling to bring the banking saga to some form of cathartic resolution and are on Cable's side.

Miliband's question has a qualified answer. Anyone who claims to be a progressive has cause to be alarmed by the madness of the Premier League but has much more political leeway and urgent cause to reform the banks.