The fundamental division in modern politics is between corporatists and believers in free markets. So what, you might say, that has been a fundamental division for quite a while. This time it is different, however. As a general rule, the more right wing a politician or commentator is seen to be, the more likely he or she is to support the propping up of lame ducks and the requisitioning of public money to subsidise grasping workers. Meanwhile those who support breaking up the banks so that they are no longer too big to fail are variously described as lefties, the enemies of wealth creation, banker bashers and the like. The fact that the trust-busting we desire would allow the separated high street and investment banks to succeed or fail on their own merits is everywhere ignored.
Even by the surreal standards of Britain in a crisis, the conventional labelling of the divisions in public life is bizarre. Consider these estimates of the burden bankers have dumped on the &”hard-working tax-payers” supposedly conservative politicians claim to support above all others.
• Chris Dillow of the Investors Chronicle points out that in 2010 the combined profits of Barclays, Lloyds and RBS were £10.2bn, meaning that banks might be almost worthless without that implicit state aid. Dillow speculates, pertinently, that if public subsidy on this scale carries on much longer, Tories will find it hard to claim that their party believes ‘in the Thatcherite virtues of self-reliance and standing on your own two feet’ without being laughed to scorn.
• Aditya Chakrabortty of the Guardian takes the IMF’s calculation that Britain has put £1.2 trillion behind the finance sector and calculates that every man, woman and child in Britain has made an involuntary donation of £19,271 a head, which they may not get back.
• Manchester University’s Centre for Research on Socio-Cultural Change (Cresc) calculates that the taxes paid by finance between 2002 and 2008 , came to only £193bn — and were immediately wiped out by the upfront costs of the banking bail-out.
My rule does not always apply. Ed Miliband and Ed Balls are almost as timid about banking reform as George Osborne and David Cameron, and Matthew Hancock, Nadhim Zahawi and several other of the young conservative MPs know that Britain cannot carry on with a policy of socialism for the rich.
But my wider point about modern corporatism being a right-wing more than a left-wing phenomenon still holds. The Telegraph and the Economist have become wailing walls for the City’s apologists. To quote the most egregious example to hand the Telegraph leader writer says this morning of Bob Diamond’s resignation, ‘The mob has cornered another victim.’ Inside the paper, columnist after columnist argues that reform would be counter-productive, impossible, ill-considered and dangerous — as if the status quo had not delivered us into danger’s hands already.
As a journalist, I find the indifference of conservative writers to their readers’ interests quite shocking. It is their readers’ whose taxes have been seized; their readers in small businesses who were &”mis-sold” — and what a soothing mind numbing euphemism for &”fraud” mis-selling is — insurance on terms that came close to duress. Yet the journalists who claim to speak for them, and the Tory MPs who claim to represent them find 101 reasons for doing nothing.
Politically, there is no real pressure on George Osborne to implement even the puny reforms of the Vickers Commission. It is left to the Financial Times, regarded as a pink newspaper in every sense of the word by unthinking conservatives, to state the obvious this morning and say that the casino culture of investment banking has corrupted high street banking and we need a complete separation on Glass-Steegal lines.
Today’s hypocrisies cannot last for two reasons. First the gap between what Conservatives say and what they do will soon become an electoral liability. No centre-right party can expect to prosper if it puts the interests of the state-subsidised rich before the interests of the middle class. Second, inertia is destroying what’s left of the City’s reputation. Unless radical reform begins soon, the world will see it as a pirate state which you visit, rob or be robbed but never to conduct honest business.
More Spectator for less. Subscribe and receive 12 issues delivered for just £12, with full web and app access. Join us.