By Dr Matthew Ashton
In the space of just over four years we've had the credit crunch, the expenses scandal, the phone-hacking scandal, and now the latest revelations about Britain's top banks. Sometimes it feels like we're stuck in a time-loop with the same basic events repeating themselves over and over, just with the names changed. The excuses are eerily similar as well. "It was a few bad apples." "No one really broke the law." "It was someone else's fault."
In every scandal there's usually a tipping point. A critical mass of outrage is attained where the public metaphorically go to their windows and shout, "I'm as mad as hell and I'm not going to take it anymore". It's only at this point that our political classes are forced to do something. Currently politicians of all parties, especially those who had previously praised banks and the financial sector to the skies, are in a mad rush to disown them. From the way they're speaking you'd think that George Osborne and Ed Balls had never met a banker in their lives. In this sense parallels with the phone-hacking scandal are obvious.
The trouble is, public anger is a fickle thing. It quickly burns itself out and we're distracted by the latest story or fad to appear on TV. An inquiry, usually set up in the heat of the moment, investigates for a year or two, and then reports back once everyone's forgotten about it. At that point whoever's in power will feel free to kick the most useful recommendations into the political wilderness and it'll be back to business as usual. If you look back over the last 30 years you can see the same pattern being repeated time and time again.
It might not do any harm to take a step back and look at some of the lessons learnt from the Great Depression of the 1930s. In America Franklin D Roosevelt and the Congress passed huge amounts of legislation to clamp down on the banks' 'casino culture' which had got them into the mess in the first place. It's sobering to note that various governments over the last few decades have spent a lot of time and effort dismantling this regulatory framework in a desperate attempt to keep economic growth going. A growth cycle we now know was built on a mountain of debt.
We need to create a new system that provides transparency, enforceable regulation and deterrence. Many commentators have already pointed out that the fine handed down by the FSA is just over ten days or so of Barclay's operating profits. It's a bit like footballers who are fined a week's wages; a proverbial drop in the ocean. Governments are always keen to talk about ways of making people do the right thing, but in this case they're obviously ineffective.
Probably no one will stand trial either and that will just further acerbate public anger. In an age where people have been jailed for stealing a bottle of water, others do worse and get off with a slap on the wrists. In 1956 the American sociologist C Wright Mills wrote about the 'Power Elite'; the idea that a small group of unaccountable politicians and financiers increasingly governed all aspect of our society. Looking at the current debacle it's hard not to think that he was right.
Doing something about the so called 'bankers' entitlement culture' is just as important as improving regulation though. Unfortunately you can't just change the way people think overnight. Since the late 1980s we seem to have produced an entire generation of people who saw Gordon Gekko's 'greed is good' speech less as a salutary warning of unchecked materialism, but as a mantra to live by. Looking at the emails bandied back and forth at Barclays, the most troubling element isn't so much that they were so open about what they were doing, as the fact that it's almost as if they didn't realise they were doing anything wrong at all. This is a culture that needs to be stamped out. How you go about doing this is the tricky part. Doubtless there will be many suggestions in the coming months ranging from teaching ethics in schools to making people read the Sermon on the Mount.
In the short-term, though, the public need to show that they mean business. This means keeping up the pressure on those in power till they actually do something about the problem. Otherwise ten years down the line we'll just see history repeating itself.
Dr Matthew Ashton is a politics lecturer at Nottingham Trent University. Visit his blog.
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