One of my early, and, as it turned out, multiple, unsuccessful encounters with girls involved lecturing some unsuspecting sixth-former about why she shouldn’t open her student bank account with Barclays. The reason, as anyone over 40 will tell you, is because Barclays Bank was targeted by the Anti-Apartheid Movement in the 1980s for its links with the South African regime. Campuses were plastered with Boycott Barclays posters. It became known to us lefties as Boer-clays. Who says socialists have no sense of humour? Anyway, she wasn’t impressed, and went off instead with a ‘casual’.
The boycott, on the other hand, triumphed. Barclays’ share of the student market slumped, so much so that in 1986 they pulled out of South Africa. I have the leaflet they put in branches to explain themselves in a box file marked ‘AAM’ in the loft. It was too late by then. For my generation, Barclays’ hands were dripping in the blood of Sharpville and Soweto. I’ve associated that blue livery with racism for the past 30 years.
I didn’t think I could loathe them any more than I did, up until this week. The Financial Services Authority report shows that in the years leading up to the financial crash, traders and managers at Barclays¬ persistently made fake reports to push the London Interbank Offered Rate rate higher or lower to make more money for themselves. It was greed on a vast, deliberate and sustained scale. Greed as endemic culture. Greed unfettered by morality, responsibility or restraint.
The City of London, once a byword for trustworthiness (albeit of the old boys’ network variety), has taken a trashing in international public opinion. As the FSA investigation continues, more banks will be under the microscope, and who knows what unpleasant bacillus will be discovered. The FSA report initially caused Barclays’ shares to drop by 15.5 per cent, wiping £3.7bn off their value. Other banks will experience the same pain. It’s the end of the line. Greed, it transpires, is not good.
In 2011, Ed Miliband talked about ‘producers and predators’ in his conference speech. He said:
‘Let me tell you what the 21st century choice is: Are you on the side of the wealth creators or the asset strippers? The producers or the predators? Producers train, invest, invent, sell. Things Britain does brilliantly. Predators are just interested in the fast buck, taking what they can out of the business.’
At the time, you’ll recall some confusion, and some deliberate misinterpretation of what he might mean. That’s the trouble with abstract concepts, especially when they are echoes of the work of obscure economists. On Ed’s reading list at Harvard would have been the work of Hershel I Grossman, Brown University’s neo-Keynesian professor of economics until his death in 2004. His paper, Producers and Predators, in the Pacific Economic Review in 1998, considered a series of general-equilibrium models in which people can choose between the two. Proof perhaps that as Keynes said, we are usually slaves of some defunct economist.
Now, the abstract concept finds its concrete exemplar. If you want to know what Ed meant by predators, knock on the door of No 1 Churchill Place and ask for Bob Diamond. With Barclays, we have the perfect example of why markets need regulation, and why capitalism must be responsible. Why it is wrong that Barclays should receive a slap on the wrists, in the same week that the Coryton oil refinery is closing, with 850 job losses, and Vestas announced they won’t be investing in a wind turbine factory in Sheerness in Kent, costing two thousand manufacturing jobs.
We can now make these arguments with confidence because they are on the right side of public opinion. Ed Miliband was right to call for criminal prosecutions in his speech to the Unite conference in Brighton. He was not only playing to the gallery. Had he made the same points to passers-by on the seafront, he would have also struck a chord.
It’s important not to get carried away. In A Very British Coup, Labour’s Harry Perkins is swept into office on the back of a scandal involving fraud in the City. He heads up a radical leftwing government which pays its bills by borrowing from the Soviets, and decommissions its nuclear weapons live on television. It’s a work of fiction. But the Barclays’ scandal helps frame a wider argument about what Labour should do, post-Brown, post-New Labour. There is now an open door to a conversation about how consumers can be protected, how wealth is created and how institutions should be shaped. It’s linked to a bigger mission of rebuilding Britain: our media after phonehacking, our politics after the expenses scandal, our economy after the crash.
For the first time since 2010, Labour has not only earned permission to be heard, we might have something worth listening to.
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Paul Richards writes a weekly column for Progress, Paul’s week in politics. He tweets @LabourPaul
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“We can now make these arguments with confidence because they are on the right side of public opinion.”
Why bother with leadership when you can wait for public opinion to make your mind up?
Ed played it well and called it right with his early intervention. Even Cameron joined in after he’d caught a whiff of the coffee – I sometimes wonder if that was the ‘public opinion’ that softened you up.
We should discriminate in favour of good companies, but to do that we have to know how they behave across the globe.
Let us implement an international bar-code system for tracking their products, and the sources that they use, so that we know what has happened to the environment and workers along the way.
Imagine having a product trace from food back to farm, or digital product back to factory. Then we could make a proper judgment of a company’s behaviour.
We also need to think about ‘how’ we might reward the better companies. For instance, how do we persuade them to keep their head-offices here in the UK?