We go live now to absolutely nothing.
Something that stood out for me from all the recent Election coverage (quite apart from the fascinating 24 hr footage of people waiting for things to happen) was the frequent mention of either the “voice of the electorate” or “listening to the voice of the people”. This came frequently from journalists and from the enormous variety of pundits that were on 24 hour rotation in those heady days when nobody really knew what was going on.
Now I’m more than willing to put such cliches down to the fact that with a Hung Parliament, few people alive that remembered the last one and coalition talks happening in secret, it was simply very difficult to find anything really worth talking about, and at such times 24 hour news is more than happy to resort to hackneyed catchphrases and soundbites, but it raises an interesting question. If the people had spoken, what had they actually said? Of course pundits of every political colour were ready to interpret what the people had said for us: for some the people had said that Labour had lost, others that the Conservatives hadn’t won, and still others that the people wanted a coalition or new type of politics, or to make their anger at politicians heard.
But of course, “the people” said nothing of the sort because “the people” are made up of individuals, each with their own motivations, their own prejudices and their own way of seeing the world. And all each individual did was put a cross on a piece of paper to indicate which candidate they wanted to represent them in Parliament. Sure, some people voted tactically, although as we saw on the night, the swings weren’t where everyone thought they’d be, predicted successes and failures didn’t pan out and the only accurate forecast came, for once, from the exit polls, but ultimately the “people” didn’t say anything. We didn’t all get together and decide we wanted radical change, or more of the same, or voice our anger. Each of us, individually (at least the 65% of eligible voters who could be bothered) went down and made our decisions alone.
Many of us didn’t get the result we wanted, at least 50% of votes cast were for losing candidates, so in terms of the people speaking, actually only 50% were heard, or at least, the other 50% were heard and subsequently ignored.
Now perhaps electoral reform of some kind could remedy this to some extent, and give greater representation proportionally, or at least allow people’s votes to count a little, even if their first choice is a “loser”, but I’m trying to make a wider point here: the “people” are not one homogeneous mass. We do not speak with one voice, actually we disagree with each other a lot of the time.
I live nextdoor to people who drive the most ridiculous cars imaginable. Huge 4×4s that are of no conceivable use in the urban environment in which we live. An old man a few doors away can often be heard complaining to the nearby Asian shopkeeper about the number of Eastern European immigrants in the area. I share a house with someone who voted Conservative. On all these issues I fundamentally disagree with all these people, but I still share a house, a street, a community with them.
In everyday life compromise is a perfectly normal thing, an essential thing, because individuals are all different. We don’t speak with one voice, we disagree, we argue, but in all but the most extreme and unusual circumstances we just get on with our lives as best we can, because we have little choice. And most of us realise that for all our differences and disagreements, the things we have in common are more numerous and more important.
So “the people” didn’t speak on May 6th. 30 million separate individuals put a cross on a piece of paper. That cross was a crude and inadequate representation of their hopes and fears, albeit one that has been long and hard fought for.
As another politician once said “democracy is the worst form of government except all those other forms that have been tried from time to time” – let’s not pretend it’s anything else.
The Financial Services Authority have today leapt into action and put together some stringent measures to ensure the security of the proverbial barn door now that the frolicsome pony of the UK’s economy has successfully bolted, eaten lots of sugar lumps, and subsequently been mown down by a truck.
Among their hard-nosed, profound changes to our current banking system are the following:-
- A change in the purpose and function of the FSA so it focuses on financial firms’ strategies and identifies when they might get into trouble.
Now I’m curious to know if I’m the only person who looks at that and wonders what the FSA were doing before. Financial Services Authority: that says, to me at least, an authority to oversee financial services, so if they weren’t looking at what financial services were doing, and that surely includes their overall strategies, what were they looking at?
- Banks being required to build up healthy reserves in economic boom times.
Why do we need to tell banks to do that? Seriously, that’s like having to tell a bloke running a fish and chip shop to take the chips out of the fryer when they’re cooked, or telling a bin man to chuck the contents of the bin in the back of the lorry, we assume the person behind the counter in the chip shop knows what they’re doing, and we assume the bin man knows what he’s doing, why do we have to tell the people who run banks, who earn in a year what we’re likely to earn in 20, how to do the basics of their job? More worryingly, why do we have to force them to do the basics of their job?
Going even further, this is just a tacit admission that our current system is inherently tied to boom and bust. Here’s a thought: a financial system that, almost by definition, leads to periods when people lose their houses and jobs through no fault of their own, is not a very good system.
- Risk taking to be discouraged through forcing banks to hold more capital and a bonus system that discourages risk taking.
Again, stuff that banks should be doing anyway. Basically this is saying that prior to this “profound change” in the FSA’s thinking, it was absolutely fine and dandy for a bank to take your savings, quite literally gamble them, and, whether the gamble paid off or not, give a massive sum of money to the person who did the gambling. Oh, and it’s also just peachy for banks to make up money out of thin air with just a tiny fraction of the amount being backed up by actual assets. The very fact that this is being regarded as a profound change indicates that bankers are a bunch of uncaring, overpaid scumbags, and the FSA a bunch of uncaring, oblivious idiots.
- Credit rating agencies to be regulated.
Hang on… you mean they weren’t regulated before? Credit rating agencies basically define the value or worth of packages of debt. That should be calculated according to the interest being paid on the debt and the likelihood of payments being defaulted. It gets complicated but essentially that’s what they’re there to do. I’d say that’s quite a big deal, because the debts we’re talking about are often mortgages, and that’s basically a contractual representation of your house. Basically what they did was rated high risk mortgages as high value because of the high rates of interest being paid on them, and ignored the risk of people defaulting on those payments. That was stupid, but it happened because there wasn’t any regulation, and because the credit ratings agencies basically found a way of making money out of doing it. They found a way of making money out of doing something incredibly risky and stupid, and they did it, a lot. They were able to get away with it because the idea of regulating them was seen as intrusive government.
Now all the above is essentially about the FSA, their changes, and the state of play before those changes. I’m asking why those changes are regarded as profound when they seem to be pretty much common sense, and should have been in place all along, and I’m asking why the services being regulated didn’t recognise and do something about the problems they were well aware they were creating?
The answer is that they found a way to make lots and lots of money by doing stupid, risky things with other people’s money, and the FSA, and all other relevant authorities, were quite happy for them to do it because it looked like that Holy Grail of capitalism: economic growth.
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