Don't wreck the City, warns Cameron
David Cameron has warned in an FT article that, with huge and valid concerns about the stability and performance of financial institutions, it is important to avoid the kind of populist over-reaction which would prevent them from doing their legitimate job.
This is particularly important in a country like Britain where the City of London provides a significant proportion of our national income.
We do need to review the regulatory climate, but it is important not to introduce the kind of excessive and over-bureaucractic regime which will simply send business abroad.
So far the mainstream Labour party has avoided this pitfall, but the "usual suspects" are starting to come up with attacks on capitalism, and even Polly Toynbee made a very tasteless comment about wanting to see more City bankers committing suicide.
A few more examples of such comments, as Conservative Home pointed out:
"The good news is, there'll now be a realisation - even George Bush sees this now - that we need international regulatory mechanisms that will ensure, for example, that these people and operations actually pay tax." - Ken Livingstone
"In the face of a credit-fuelled financial crisis, we're going to have to re-regulate finance and taxation." - Caroline Lucas MEP
"There is a consensus forming that says an unregulated financial system is a disaster." - Professor Sheila Rowbotham
David Cameron is right to warn that a panicked over-reaction to present difficulties could mean that London's financial industries will be badly damaged for the future. In the long term, even remote areas of the country such as Copeland could find that we in turn lose out badly if the huge engine of wealth creation which the City represents stops pulling the British economy along.
This is particularly important in a country like Britain where the City of London provides a significant proportion of our national income.
We do need to review the regulatory climate, but it is important not to introduce the kind of excessive and over-bureaucractic regime which will simply send business abroad.
So far the mainstream Labour party has avoided this pitfall, but the "usual suspects" are starting to come up with attacks on capitalism, and even Polly Toynbee made a very tasteless comment about wanting to see more City bankers committing suicide.
A few more examples of such comments, as Conservative Home pointed out:
"The good news is, there'll now be a realisation - even George Bush sees this now - that we need international regulatory mechanisms that will ensure, for example, that these people and operations actually pay tax." - Ken Livingstone
"In the face of a credit-fuelled financial crisis, we're going to have to re-regulate finance and taxation." - Caroline Lucas MEP
"There is a consensus forming that says an unregulated financial system is a disaster." - Professor Sheila Rowbotham
David Cameron is right to warn that a panicked over-reaction to present difficulties could mean that London's financial industries will be badly damaged for the future. In the long term, even remote areas of the country such as Copeland could find that we in turn lose out badly if the huge engine of wealth creation which the City represents stops pulling the British economy along.
Comments
Yes, I keep hearing this argument, but what exactly is the "job" that these people do? In theory it is simply putting people with money to invest in touch with people who need it to do productive things with it (real wealth creation). It is most certainly not rocket science, and does not require the operatives to be paid vast sums to do it. Anything more complicated than this is not wealth creation any more than gambling on horses is.
The reason these jobs are very highly paid is that a very small improved percentage margin on the more effective investment of huge sums of money can be equivalent to an enormous salary. By the same token an incompetent city trader can literally cost his employers (and a lot of innocent people) billions of pounds. So it is in the interests of city employers to pay large salaries to people who are good at the job - and to fire anyone who screws up.
There is a happy medium here. After a dire sequence of mismanagement such as we have seen, it is quite reasonable to ask if the regulatory regime is right. But if we put in place an alternative system which is so bureaucratic and restrictive that it stifles the ability of the City of London to compete in world capital markets, this country will lose billions of pounds in overseas earnings.
And believe me Stanley, you won't like the consequence for jobs and investment in the rest of the economy, or for the tax revenues generated by the City which pay for a lot of schools and hospitals, if that happens.