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Posts Tagged ‘moral capatilism’

Osborne’s threats to break up Banks: True banking reform will take leadership by example rather than the issue of diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second

February 7, 2013 Leave a comment

Commercial Altruism is perhaps an aspiration, but a term which certainly describes the kind of ethics that we need to see exhibited more often within industry and certainly within the Financial Sectors where its absence has been so painfully apparent.

Any resistance to George Osborne’s plans to require Banks to split their retail and less-stable investment arms in attempt to avoid further Taxpayer-funded bail-outs will hardly come as a surprise,  and particularly so when politicians themselves hardly exhibit anything near that type of mentality. But is this really all that the Government actually has within its power to do?

Few could actually believe the sums thrown at the rescue packages of the Banks which had effectively beached themselves through little more than acts of greed and complete disregard for anything other than maximising profit on the part of a few – all at the cost of people who have paid perhaps not just once through fees; but twice by then paying out on the losses when speculation – upon what is effectively thin air – crashed to the floor, as anything without true foundation surely would. The true wonder is how they kept the charade going for so long.

Forcing banks to ‘ringfence’ funds and therefore prevent further Government intervention through the creation of dedicated retail arms, is hardly likely to encourage a growth in benefit to domestic or small business customers. It is in fact more likely to increase the cost of basic banking services to people who already struggle to make ends meet and to those small businesses that need to be subsidised themselves, rather than to be given no option but to subsidise focussed services that banks are currently reluctant to give.

The development and provision of a an easy-to-access or ‘peoples’ bank which would provide the basic account services that everyone is entitled to access is the responsibility of Government, and should be set up as such.

Providing basic free-banking services in this way would provide Government with many advantages such as access to unfettered borrowing streams without 3rd party profit margins being included. But it could also support the administration of ‘smart’ card payments to retailers by customers, restricting the purchase of certain items by those being encouraged into work, with the added benefit of instantly losing the stigma which would be associated with payments made with a non-bank-derived payment card.

Better still, a Government-based bank run as a public service and with a customer focused culture, rather than one based upon benefits to employees and stakeholders may be able to provide many of the products which those on low incomes currently seek such as ‘payday loans’ without the utterly unrealistic levels of interest, and also provide the low-cost services and low-margin lending which new and existing small businesses need in order to survive and then thrive as we have so very long been seeking.

Creation of such a new bank – or indeed adaption of one of those that the Taxpayer already owns – would require a radical change in thinking and the type of leadership which has been sadly lacking in British politics for far too long. But it could be done.

The real question here is whether the Chancellor and the Government really want to affect change in the way that the Financial Sectors operate.

True banking reform will take a lot more effort than simply telling the banks to split their operations or even go back to employing managers within every branch.

Reform will take leadership by example and the provision of the best services possible for those who have the least money first; not by sound-biting newsworthy diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second.

Rail fare hikes and tough talk on welfare waste: Today’s problems will not simply be solved by continually taking more from pockets when there is even less to replace it.

January 2, 2013 1 comment

With a 4.2% average rise in ticket prices hitting rail commuters today, just how long do politicians think that rises in the cost of essential services, utilities and products will remain ‘sustainable’?

Stories such as this one and also the attack on welfare payouts by Iain Duncan Smith in just the past two days alone demonstrate just how little emphasis there really is in dealing with the root causes of problems, which may be unpalatable to those in power, but are nonetheless very real indeed.

As a businessman with both conservative and capitalist principles, I have enthusiastically embraced the opportunity to be both enterprising and entrepreneurial throughout my career. However, I also learned very early on that there are basic laws at work within business, one of which is that costs will generally be fixed, but profit will always be variable.

Where this goes wrong in the economy is in situations where those in control of businesses are able to fix minimum profit margins and then seek the cost of investment and renewal through price hikes which usually only affect people and other businesses who themselves have no ability to raise their own incomes or margins to cover those very same costs.

Those reading this who have experience of the commercial sector in its broadest sense will know that the circumstances which generally allow this darker side of capitalism to thrive, only exist within monopolies or within industries which provide services or products which people must have; many of which were once in public hands.

The history which has given privately owned businesses the ability to dictate the ‘breadline’ or to become able to ‘profit in misery’ is a long one. Profligate spending by idealistic politicians who believe in the principle of something for nothing, simply created a situation which left others with a more realistic understanding of the way that an economy really works with little choice in the way they had to respond.

The age of privatisation was soon born and responsibility for its evolution cannot be levelled at the door of any one Conservative, Labour or Coalition Government, as all have played their part since the 1960’s.

What can equally be said is that no one person who can ask for the votes of many thousands of people, can reasonably expect to retain any sense of respect as an MP if they have accepted that responsibility and then failed both to recognise and then to act upon the damage and pain that such levels of power are causing in the wrong hands.

Yes we need travel fares that make a job worth travelling for. Yes we need reform of welfare, benefits and taxation so that there is an incentive for all to work and stay in this Country. Yes we need managed investment in just about every area of life and infrastructure that we could conceivably imagine.

But we also need Government which is responsible, confident in taking risks and ready to deliver reforms which may well include legislative restructuring of businesses offering essential services in order to limit what they actually make.

The failure of Government to ensure and safeguard basic costs for independent living is a root cause of many of today’s problems and will not simply be solved by continually taking more from pockets when there is even less to replace it.

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